Source:  CALIFORNIA ASSOCIATION OF REALTORS (C.A.R.)

Despite strong headwinds of tight housing supplies and an affordability squeeze throughout much of 2016, California's housing market ended the year on a positive note, posting a moderate sales pace and home price increases in December, the CALIFORNIA ASSOCIATION OF REALTORS (C.A.R.) said.  Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 411,230 units in December, according to information collected by C.A.R. from more than 90 local REALTOR associations and MLSs statewide.  The statewide sales figure represents what would be the total number of homes sold during 2016 if sales maintained the December pace throughout the year.  It is adjusted to account for seasonal factors that typically influence home sales.

The December figure was down 7 percent from the 442,320 level in November, and down 0.6 percent compared with home sales in December 2015 of a revised 413,700.  Despite the declines, December's sales were on par with the two-year average sales pace of 412,000 maintained since 2015.  Home sales remained above the 400,000 pace for the ninth straight month.

For 2016 as a whole, a preliminary 416,250 single-family homes closed escrow in California, up 1.7 percent from 2015's revised pace of 409,410.  

"December's sales decrease was expected, and was primarily due to unseasonably strong sales last month and December 2015, when new mortgage rules delayed sales that would have closed in November 2015 and pushed closings into December 2015," said C.A.R. President Geoff McIntosh.  "Despite a decline in sales in December, the strong performance in the last quarter of 2016 helped push annual sales above 2015's pace.  The last quarter of 2016, in fact, was the best quarter we've had since the fourth quarter of 2012."

Making Sense of the Story:

- The statewide median price increased for the first time since August and remained above the $500,000 mark for the ninth consecutive month.

- The median price of an existing, single-family detached California home rose 1.5 percent from a revised $501,710 in November to reach $509,060 in December.

- December's median price increased 3.9 percent from the revised $489,770 recorded in December 2015.

- California's housing market experienced sold price growth throughout 2016, with the median price increasing 5.4 percent for the year as a whole to reach $502,250.

Source:  NBC Los Angeles

Gov. Jerry Brown delivered an aggressive defense on Tuesday of California's liberal policies on immigration, health care, and climate change during his State of the State address, vowing to fight the Trump administration and Republicans in Congress if they threaten to roll back state policies.

Brown urged fellow Democrats who have a super-majority in both houses of the Legislature to embrace a spirit of collegiality that been absent in presidential politics and work with their Republican colleagues.

What You Should Know

- Southern California home prices jumped in December, reaching the highest level in more than nine years.

- An improving economy and a shortage of homes for sale propelled prices up 6.8 percent from a year earlier, real estate data firm CoreLogic said last Tuesday.  December's median price of $470,000 was up 1.1 percent from a month earlier.

- In Los Angeles County, the median price last month climbed 4 percent from a year earlier to $520,000; in Orange County, 5.3 percent to $665,000; in Ventura County, 5.9 percent to $519,000; in San Bernadino County, 8.7 percent to $299,000; in Riverside County, 8 percent to $345,750; and in San Diego County, 4.2 percent to $495,000.

- The rise in last month's six-county median price comes after prices stayed largely flat since June, when the regional median hit $465,000 - which at the time was a nine-year high.

Source:  National Association of Realtors

Existing-home sales closed out 2016 as the best year in a decade, even as sales declined in December as the result of ongoing affordability tensions and historically low supply levels, according to the National Association of Realtors.

Total existing-home sales, which are completed transactions that include single-family homes, town-homes, condominiums and co-ops, finished 2016 at 5.45 million sales and surpassed 2015 (5.25 million) as the highest since 2006 (6.48 million).

In December, existing sales decreased 2.8 percent to a seasonally adjusted annual rate of 5.49 million in December from upwardly revised 5.65 million in November.

Lawrence Yun, NAR chief economist, said the housing market's best year since the Great Recession ended on a healthy but somewhat softer note.  "Solid job creation throughout 2016 and exceptionally low mortgage rates translated into a good year for the housing market," he said.  "However, higher mortgage rates and home prices combined with record low inventory levels stunted sales in much of the country in December."

Added Yun, "While a lack of listings and fast rising home prices was a headwind all year, the surge in rates since early November ultimately caught some prospective buyers off guard and dimmed their appetite or ability to buy a home as 2016 came to an end."

Source:  Forbes

There's a huge disparity between the types of homes older Americans will need over the next 20 years and their availability and affordability, according to a Harvard Joint Center for Housing Studies report.

During that time period, the 65+ population is expected to grow from 48 million to 79 million.  But for many, their homes will be physically unsuitable and financially precarious.  Only 3.5 percent of today's housing has three key features of "universal design" (zero-step entrances, single-floor living and wide halls and doorways).  What's more, nearly 6.4 million low-income renters will pay more than 30 percent of their income for housing by 2035.

"The Harvard study was a scary forecast.  The senior sector will be one of the hardest hit for affordability.  The most important thing we can do is find affordable housing for older Americans and contemplate layout and design to accommodate the older population," said Lukas Krause, the Salt Lake City-based CEO of Real Property Management, the largest property management franchise in the nation.

Source:  HousingWire

The Department of Housing and Urban Development's decision to suspend the reduction of Federal Housing Administration mortgage insurance premiums didn't come as a shocker.

FHA mortgage insurance premiums have been under heightened scrutiny ever since the FHA's flagship fund, the Mutual Mortgage Insurance Fund, reached its Congressionally mandated threshold of 2 percent ahead of schedule in November 2015.

The cut will have an impact on future borrowers, said National Association of Realtors President William Brown.

"According to our estimates, roughly 750,000 to 850,000 homebuyers will face higher costs and 30,000 to 40,000 new homebuyers will left on the sidelines in 2017 without the cut, "  Brown said.  "We're disappointed in the decision but will continue making the case to reinstate the cut in the months ahead."

"We hope HUD and the Trump administration will make it a priority to quickly review the reduction in the FHA mortgage insurance premium," said CALIFORNIA ASSOCIATION OF REALTOR (C.A.R.) President Geoff McIntosh.  "Homebuyers in California, who would have saved an average of $860 a year, will be negatively impacted more than any other state by the decision to not reduce the FHA premium."

Source:  CALIFORNIA ASSOCIATION OF REALTORS

Led by the Southern California region, California pending home sales registered gains on a month-to-month and year-to-year basis, portending a moderate increase in sales in the near term, the CALIFORNIA ASSOCIATION OF REALTORS (C.A.R.) said.

The modest sales growth is unlikely to be sustained, however, given the severe shortage of homes for sale and affordability concerns, as indicated in C.A.R.'s December Market Pulse Survey**, which saw fewer listing appointments and less open house traffic.

Based on signed contracts, statewide pending home sales increased in December on a seasonally adjusted basis, with the Pending Home Sales Index (PHSI)* rising 1.9 percent from 115.8 from December 2015 to 118.1 in December 2016 - even with new mortgage rules that pushed sales higher December a year ago.

On a monthly basis, California pending home sales were up 3.3 percent from the November index of 114.4.

- Southern California saw the largest increase in pending sales last month, rising 7.8 percent on an annual basis and decreasing 16.1 percent on a monthly basis.

- On the flip side, in the San Francisco Bay Area as a whole, tight housing supplies and low affordability contributed to a fall in pending sales of 14.2 percent compared to December 2015 and 32.5 percent from November.

- Overall pending sales in the Central Valley improved 0.9 percent from December 2015 and were down 18.4 percent from November.

- The share of homes selling below asking price fell from 57 percent a year ago to 43 percent in December.  Conversely, the share of properties selling above asking price increased to 23 percent from 18 percent in December 2015.  The remaining 34 percent sold at asking price, up from 25 percent in December 2015.

- For homes that sold above asking price, the premium paid over asking price rose to 11 percent, up from 8.4 percent in November and 9.2 percent a year ago.

- The 43 percent of homes that sold below asking price sold for an average of 22 percent below asking price in December, double the November figure of 11 percent, and was up from 13 percent from a year ago.

Source:  Wall St. Journal

Full-fledged recovery for housing is still a while away.  But after a long time of near dormancy, it looks like it is starting to stir, as the conditions for improvement are there.  The job market has continued to strengthen - there were 2.8 million more people working last month than in the same month a year ago.  More people are striking out on their own:  Goldman Sachs estimates the number of newly formed households eclipsed 1 million last year, marking the first time that has happened since 2006.  What's more, the firm estimates 1.2 million new households will be added in each of the next four years.  That being said, the U.S. housing market isn't close to what historically would be considered normal.  Last year, a combined 5.1 million new and used homes were sold in the U.S. - not quite as many as in 1998, when the working-age population was one-fifth lower than it is now.

Source:  Yahoo!  Finance

While rising home prices signal that the housing market has continued to recover from the 2008 financial crisis, these high prices are also being driven up by a growing shortage of home builders and home improvement professionals.  There is a skills gap that is hobbling construction - and it's delaying building projects, shrinking building inventories, and inflating the cost of homes and home-related projects.  The shortage worsened in the years following the 2008 financial crisis, when the dark days of the housing crisis led the construction industry to lose more than 60 percent of its workforce to healthier industries.

Source:  Curbed

The probability of becoming a homeowner jumps 23 percent among adult children who receive a money transfer from their parent, according to a report based on data from the Health and Retirement Survey.  Receiving money from one's parents - defined as a gift of $5,000 or more over the last two years, assistance received by 1 in 17 young adults between ages 20 and 49 - help many get over the hurdle of making a down payment, the biggest obstacle to homeownership, according to half of young renters.  The paper noted that children with parents in the 4th quartile of the wealth distribution are 4.5 percentage points more likely to become homeowners than children with parents in the bottom quartile.  They also determined that age and race can play a significant role.