That’s because lenders have been quietly selling second mortgages and home equity lines left unpaid after foreclosures and short sales. The buyers: collection agencies, which in some states have years to make a claim. If they win court judgments, these collectors could have years to pursue borrowers with repayment plans, and even garnish their wages, said Scott CoBen, a Sacramento bankruptcy attorney.

“The only relief a consumer will have is entering into a debt negotiating plan or filing for bankruptcy,” said Sylvia Alayon, a vice president with the New York-based Consumer Mortgage Audit Center. The firm provides mortgage analysis to lenders, advocacy groups and attorneys.

The phenomenon suggests an ominous, looming echo of today’s real estate meltdown. As debt collectors surely seek at least partial repayment of millions of dollars in unpaid home loans, some say renewed financial stresses on tens of thousands of local consumers could dampen economic recovery.

“I think there will be a lot of unhappy people when it hits,” said CoBen. “We saw this in the ’90s. This is not really new. Just when you think you’re back on your feet, you’re making money and the economy’s good, they hit you with this.”

Alayon said most people are so stressed out and exhausted by trying to save their homes today that they are unaware they could face another hit later. And many who are losing homes don’t get the advice necessary to prevent future fallout, say nonprofit loan counselors.

“You’ve got tens of thousands of people in California who have this hanging over their heads who don’t even know it,” said Scott Thompson, principal at for-profit Mortgage Resolution Services in Carmichael, Calif. He fears a new wave of bankruptcies might flatten people just starting to recover from losing their homes.

“So many of these are people with 750 or 800 credit scores who made a bad decision,” said Thompson. “Or they’re people who suffered income cuts. These are people, in terms of the economy, whom we need to participate.”

But an entire industry is gearing up to buy their debt at deep discounts and collect what they can, Alayon said. “It’s a big business and investors are coming out of the woodwork. It’s a very lucrative business,” she said. Real estate insiders and financial players know it as “scratch and dent.”

Regionally, no one knows for sure how much unpaid debt is on the line. CoBen said people who used their borrowings for a traditional loan on a house in which they lived generally have little to worry about. But borrowers may be vulnerable in years ahead—generally, those who defaulted not only on their first mortgage but also on a home equity loan or second mortgage.

In California, banks can’t collect from borrowers for primary, so-called “first-lien,” loans that go unpaid. When a house is foreclosed or sold through a short sale, the lender of the first loan gets the house back or the proceeds from another buyer.

But banks also made thousands of “second-lien” loans, including those used to finance 20% down payments during the housing boom. A separate category of “seconds” includes home equity loans and home equity lines of credit. Nationally, about 3.4% of those loans are currently delinquent, according to Foresight.

Owners are generally, but not always, on the hook for the second loans left over from a foreclosure or short sale. Most investor mortgages, too, leave the borrower liable for potential unpaid debt. In many short sales, experienced real estate agents or attorneys can negotiate away debt obligations for the second-lien loan. But many inexperienced borrowers don’t know that, and sign final-hour agreements giving lenders the right to pursue them later.

“Seek advice,” counseled Doug Robinson, spokesman for national nonprofit mortgage counselor NeighborWorks America. He said nonprofit counselors can help. “Often when you work with a real estate agent, they’re not really equipped to handle the repercussions. They’re set up to make the sale,” he said.

Government forces are already moving to limit potential damage to millions now struggling with home loans. A new Obama administration short sale program aims to prevent banks that hold second-lien loans from pursuing collections from homeowners after the short sale. It goes into effect April 5, 2010 and works this way: Sellers will receive notice that their servicer has steered part of the sales proceeds to secondary lien holders “in exchange for release and full satisfaction of their liens.” This release would apply only to short sales done through the administration’s Home Affordable Foreclosure Alternatives program.

In California, Democratic state Sen. Ellen Corbett recently introduced SB 1178, which would expand California’s protections for some people who refinance and take on a second mortgage.

People who refinance, but use the funds to improve their homes or to stay in their homes with a better interest rate, would be protected. Lenders could not seek court judgments to collect from these borrowers in the event of foreclosure or short sales.

“If you refinance a property and aren’t using the money for personal reasons, you shouldn’t lose your personal protections,” said California Association of Realtors lobbyist Alex Creel. He said the idea has been around for years but has become more urgent as thousands lose income and fall into mortgage trouble. The bill would apply to all foreclosures or short sales that occur after it becomes law. It doesn’t matter when the loan was made, Creel said. SB 1178 is still in the early stages of consideration. It must clear both houses of the Legislature and be signed by Gov. Arnold Schwarzenegger by Sept. 30 in order to take effect.

Copyright© 2010 RISMedia

Valerie Fitzgerald specializes in luxury residential real estate in Beverly Hills, Bel Air, Brentwood, Santa Monica and Malibu. Valerie has more than 20 years of real estate experience and is known for her solid reputation in the West Los Angeles brokerage community. She’s also the author of the book published by Simon and Schuster Heart and Sold: How to Survive and Build a Recession-Proof Business. Buy it here.

Check out Valerie Fitzgerald Beverly Hills Real Estate Listings

The new incentives recently began and are eligible for buyers who will live in the home. According to Fannie Mae, the offers must be accepted on or after January 28, 2010 and they have to close before May first for properties on its site: Homepath.com

So what’s the special offer? Buyers can receive up to 3.5 percent of the sales price for closing costs or the purchase of a new Whirlpool appliance or even a combination of the two.

There are more incentives. The government’s current buyer incentive programs include the extension of the First-Time Homebuyer Credit through April 20, 2010 (there’s a 60-day cushion to complete closing beyond that date). This program broadens the reach to include existing homeowners. Here is a quick look at eligibility and the incentives:

• $8,000 tax credit for first-time homebuyers
• $6,500 tax credit for existing homebuyers who have lived in their current residence for at least five years but want to relocate to a new primary residence
• Increased income limits for individuals and couples Tips for buying a home owned by Fannie Mae.

What you see is what you get. When you are buying a property owned by Fannie Mae, there are a few things that you should know. According to its website, Fannie Mae may make some repairs to a property but probably not much. “Fannie Mae sells each property “as is,” which means that the buyer accepts the property “as is.” Fannie Mae is not responsible for fixing any problems after settlement.”

Home inspections. Fannie Mae also recommends what I have written about for years—hire a qualified home inspector to give you an accurate report on the current condition of the home. For a relatively small amount of money, this can save you a lot and give you a greater understanding of what problems exist currently or might soon develop.

No contingencies. If your home is on the market and you’re shopping for a new one but need to close on your primary residence, Fannie Mae isn’t the way to go. “Fannie Mae will not accept offers contingent on the sale of your current home. Other types of contingencies will be considered on a case-by-case basis.”

Get prequalified. This is really important for a lot of reasons regardless of whether you’re buying a home owned by Fannie Mae. There are more restrictions these days when it comes to getting home loans. So, knowing that you’re prequalified to purchase a home at a specific price will make shopping for the home that fits your budget easier. But Fannie Mae cautions, “A loan prequalification doesn’t mean your loan is approved. You must apply for a loan separately, after you are prequalified and your purchase offer is accepted.”

Making an offer. Just as with most real estate transactions, making an offer on a home requires a lot of research. Your real estate agent can get you vital information and when you’re ready, the offer is submitted via your agent. “Fannie Mae depends on the expertise of local real estate sales professionals and accepts offers only through our real estate listing agents. You may work with any real estate sales professional to submit an offer to the real estate agent who has listed the property.” Buying a home has become more affordable than ever and, with more incentives, it may be time to do some spring house hunting.

Total existing-home sales, including single-family and condominium units, increased to a seasonally adjusted annual rate of 6.03 million in the fourth quarter, a 27.2% increase from the fourth quarter of 2008, according to the National Assn. of Realtors.

Distressed property — either bank-owned homes or those sold by homeowners who can’t make their payments — accounted for 32% of all transactions in the fourth quarter, a decline from 37% a year earlier.

Sales increased from the third quarter in 48 states and the District of Columbia; 32 states saw double-digit gains. Year-over-year sales were higher in 49 states and the district. All but three states registered double-digit annual increases.

“The surge in home sales was driven by buyers responding strongly to the tax credit combined with record-low mortgage interest rates,” said Lawrence Yun, chief economist for the Realtors group. “With inventory levels trending down over the past 18 months, we expect broadly balanced housing market conditions in much of the country by late spring with more areas showing higher prices.”

The national median existing single-family price was $172,900, a 2.9% increase from the third quarter and a decline of 4.1% from the fourth quarter of 2008. The median is the point at which half of the homes sold for more and half sold for less.

The median price for a condominium in 54 metro areas was $177,300 in the fourth quarter, a decline of 4.8% from the fourth quarter of 2008. Eleven metro areas showed increases in the median condo price from a year earlier and 43 areas had declines. In the third quarter only four metros experienced annual price gains.

Sales of previously owned homes in the West jumped 16.2% in the fourth quarter to an annual rate of 1.38 million and are 18.2% above a year ago. The median existing single-family home price in the West was $227,200 in the fourth quarter, a decline of 8.9% from the fourth quarter of 2008.

– L.A. Times Alejandro Lazo

The new law:

• Extends deadlines for purchasing and closing on a home
• Authorizes the credit for long-time homeowners buying a replacement principal residence
• Raises the income limitations for homeowners claiming the credit

Q. What is the credit?
A. The first-time homebuyer credit is a new tax credit included in the Housing and Economic Recovery Act of 2008. For homes purchased in 2008, the credit operates like an interest-free loan because it must be repaid over a 15-year period.
The credit was expanded in 2009 for homes purchased in 2009, increasing the amount of the credit and eliminating the requirement to repay the credit, unless the home ceases to be your principal residence within the 36-month period beginning on the purchase date. It was further expanded in late 2009 to extend deadlines and to allow long-time homeowners buying replacement homes and people with higher incomes to qualify for the credit. (11/12/09)

Q. How much is the credit?

A. The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 ($8,000 if you purchased your home in 2009 or early 2010) for either a single taxpayer or a married couple filing a joint return, but only half of that amount for married persons filing separate returns. The full credit is available for homes costing $75,000 or more ($80,000 in 2009 or early 2010). Long-time homeowners who buy a replacement home after Nov. 6, 2009, or in early 2010 may qualify for a credit of up to $6,500, or $3,250 for a married person filing a separate return. (11/19/09)

Q. Which home purchases qualify for the first-time homebuyer credit?

A. Any home purchased as your principal residence and located in the United States qualifies. You must buy the home after April 8, 2008, and before May. 1, 2010 (with closing to take place before July 1), to qualify for the credit. For a home that you construct, the purchase date is considered to be the first date you occupy the home.

Normally, taxpayers (including spouse, if married) who owned a principal residence at any time during the three years prior to the date of purchase are not eligible for the credit. This means that you can qualify for the credit if you (and your spouse, if married) have not owned a home in the three years prior to a purchase. However, a long-time homeowner can also get the credit for a qualifying replacement home purchased after Nov. 6, 2009. To qualify, you must have owned and used the same home as your principal residence for at least five consecutive years of the eight-year period ending on the date you by your new principal residence.

If you make an eligible purchase in 2008, you claim the first-time homebuyer credit on your 2008 tax return. For an eligible purchase in 2009, you can choose to claim the credit on either your 2008 or 2009 income tax return. For an eligible purchase in 2010, you can choose to claim the credit on either your 2009 or 2010 return. (11/19/09)
Read the rest of the story at http://budurl.com/1stTimeBuyerCredit.

Valerie Fitzgerald has been in West Los Angeles real estate for 20 years and specializes in luxury markets and developments in neighborhoods like Beverly Hills, Bel Air, Brentwood, Santa Monica and Malibu.

Learn more about Valerie at http://valeriefitzgerald.com/valerie-fitzgerald.

Underneath this apparent good news, however, were some disquieting signs of deterioration.

The Standard & Poor’s/Case-Shiller home price index, a widely watched measure of the housing markets in 20 metropolitan areas, rose 0.4 percent from September on a seasonally adjusted basis. It was the fifth consecutive month that prices were up.

But seasonal adjustments tend to hide any weakness in the cooler months, when fewer houses are sold. On an unadjusted basis, the index was flat in October.

“We’ve started to see the possibility of either a leveling off of prices for a few months or perhaps a double-dip,” said Maureen Maitland, the vice president for index services at S.& P.

Analysts have predicted for months that prices will resume their slump this winter, although most expect the drop to be moderate.

Housing remains under severe stress, and the government’s extensive and expensive support of the market is reaching its limit. While the tax credit has been renewed until next spring, its effects will probably diminish. And the Federal Reserve says it will gradually end its program to push down interest rates in the first quarter, in effect making houses more expensive.

Meanwhile, foreclosures are continuing to affect the market, and credit remains tight.

Dan Greenhaus, chief economic strategist for Miller Tabak and Company, wrote in a research note that “it is more than likely that prices have a bit further to fall which should help continue supply/demand rebalancing and help fix the ongoing issues in the housing market.”

The Case-Shiller index is down 7.3 percent from October a year ago and is off 29.5 percent from its peak.

Prices fell or were flat in nine of the 20 cities surveyed in October, the same as in September. But the recovery is beginning to diverge sharply by metro area, Wells Fargo’s chief economist, John Silvia, noted.

In the last three months, prices in San Francisco increased at an annual rate of 25 percent while Minneapolis was up 17 percent and Los Angeles rose 11 percent. Phoenix, long a laggard, rose 13 percent.

But New York, Portland and Boston were up less than 2 percent.

Las Vegas, the epicenter of the housing crash, shows no signs of recovery. Prices have fallen there for 38 months, and are now barely above the level at which they began the decade.

From the New York Times

The Valerie Fitzgerald Group specializes in luxury residential real estate in Beverly Hills, Bel Air, Brentwood, Santa Monica and Malibu. Valerie has more than 20 years of real estate experience and is known for her solid reputation in the West Los Angeles brokerage community. She’s also the author of Heart and Sold: How to Survive and Build a Recession-Proof Business.

Those of us who live and breathe residential real estate are well aware of the adverse effects this process can produce for both buyers and sellers, and how much more difficult it can make a successful close of escrow.

One of the key problems is the lack of knowledge these outside appraisers have on local residential markets. This brings into question: who really understands the true value of a home? Is it the experienced real estate agent, the buyer making the offer, or the appraiser crunching numbers based solely on statistics, who has never seen comparable properties? Does the appraiser know how to take into account the condition of the property, whether it’s been recently remodeled, the amount of flat land, the views, or the better location?

If you knew that when you bought or sold a home after May 1 of this year that your real estate agent was not allowed to speak to the appraiser, wouldn’t you be concerned? Isn’t it important for our professions to be working together and sharing important information about the market and home values? I’ve seen a number of deals fall through lately — at the last minute — because an appraiser who usually works in the Valley or Orange County turned in an appraised valuation that was far off the escrow sale price. As you can imagine, this can cause a deal to fall apart.

As professionals we were all on the same team until this change came along — make your concerns heard! CAR is supporting legislation that would put an 18-month moratorium on this new procedure, and I encourage you to contact your local legislators and ask them to do the same.

Here’s to all of our success!

Appraisal SHAKEUP

HOW TO COPE WITH THE NEW RULES FOR APPRAISALS

Challenging. Problematic. Wild. Bizarre.

These are but a few of the choice words REALTORS® have used to describe the new Home Valuation Code of Conduct (HVCC), which dictates certain practices lenders must follow with respect to appraisals related to loans they intend to sell to Fannie Mae or Freddie Mac.

The HVCC was worked out through an agreement between Fannie Mae, Freddie Mac, and the New York Attorney General’s Office (NYAG) in response to an investigation by the NYAG into Fannie and Freddie. The purpose of the HVCC is to insulate the appraisal process from undue influences by placing tight controls and restrictions on the ordering of the appraiser, as well as guidelines for communicating with the appraiser during the process. HVCC is a private agreement.

HVCC does NOT apply to FHA or VA loans.

The code, which became effective May 1, specifically prohibits practices that may influence or attempt to influence an appraiser’s opinion of a home’s value. For example, the code requires lenders to order appraisals themselves, rather than accept any appraisal completed by an appraiser who was chosen, hired, or paid by a mortgage broker, real estate agent, or other third party. The code allows an appraisal to be transferred from one lender to another, but only if the original lender gives written assurance that the appraisal is HVCC-compliant and the new lender accepts that assurance.

REALTORS Report HVCC Snafus

The HVCC mentions real estate brokers only parenthetically, yet REALTORS® have reported a variety of negative effects on real estate sales transactions.

Specifically, REALTORS® have noticed:

> A significant (and otherwise inexplicable) increase in the cost of appraisals.

> Valuations that have differed dramatically from perceived market values.

> An increase in alleged factual errors in appraisals.

> Delays of several days or as long as three weeks in completion of appraisals.

> Appraisers who’ve been assigned to value properties as far as 40 miles away.

New Rules Require New Practices

So how can REALTORS® cope with those challenges? Here are some suggestions:

>Allow for delays. Mary Lynn Pinto, a mortgage broker and broker/owner of Bayshore Real Estate Services in Salinas, says brokers need to write into real  estate sales contracts longer timeframes for removing appraisal contingencies. “The recommendation is to allow more time for contingency removal and contract periods,” she says. “We have a little less control than we used to in setting the contract dates.”

> Qualify the appraiser. Guy Rivera, a senior loan officer with Pacific Riviera Mortgage in Santa Barbara,

says REALTORS® should qualify the appraiser when he or she makes an appointment to inspect a home.To do so, the REALTOR® should ask about the appraiser’s experience and knowledge of the local area, Rivera suggests. A few questions REALTORS ® might want to ask are:

* How long have you appraised homes in this area?

* How many properties do you typically appraise in this area each month?

* How many properties do you typically appraise each day or on a given day?

* What are your data sources and how often are those sources updated?

If an unqualified appraiser shows up to inspect a home, the REALTOR ® should not let him into the home, Rivera suggests.

“We sent back a Ventura County appraiser who came up to do an appraisal in Santa Barbara County. We sent him away,” he says.

> Offer comparable sales data. The HVCC states: “It would be inappropriate for an appraiser to use

comparable sales data provided by the real estate broker who is handling the sale of the subject property, unless the appraiser verifies the accuracy of the data provided with another source and makes an independent investigation to determine that the comparable sales provided were the best available.”

That seems to suggest REALTORS ® can provide comps, but appraisers may choose to refuse, reject, or ignore the REALTOR ® ’s information if the appraiser can’t verify the accuracy of the information or

determines that other comps are better suited for the purposes of the appraisal.

Pinto says the REALTOR® should give the appraiser a current comparable market analysis (CMA) and explain the local market areas, even though that extra effort may be burdensome and the appraiser’s response may be disappointing.

“Don’t pull out the CMA you did to get the listing and hope that will work. You have to update it and give it to the appraiser at the time of the inspection. Don’t wait until after the inspection, and don’t do it through the lender,” she advises.

Here’s a related tip from Rivera: The REALTOR® may want to black out the sales prices on the comps that are given to the appraiser to allow him or her to accept the information and look up the details as part of his or her own investigation.

“Black out the prices, but have like properties and educate the appraiser as to the neighborhoods,” he suggests.

> Complain to Congress. REALTORS ® may have little opportunity to lodge formal complaints about the

HVCC through the mechanics of the code itself since the Independent Valuation Protection Institute (IVPI) envisioned within the code has not been implemented. The IVPI was supposed to set up and operate a telephone hotline and e-mail address to receive complaints.

Given that lack of redress, REALTORS ® should call their elected representatives and make their concerns heard, Pinto suggests. California Congressman Gary Miller has introduced H.R. 3044, which would place an 18-month moratorium on the recently imposed HVCC. C.A.R. is supporting H.R. 3044, and is asking California’s Congressional Delegation to sign onto the bill as a cosponsor.

“We are working hard to get an 18-month postponement,” Pinto says. “I would encourage REALTORS® to get a hold of their Congress people.”

HVCC Help

Office of Real Estate Appraisers: Stay abreast of California HVCC developments at www.orea.ca.gov.

President Obama signed legislation Friday to extend unemployment benefits to American workers. The law also includes provisions that vastly expand the number of people eligible for home-buyer credits by boosting the income eligibility limits, giving buyers more time, creating a $6,500 credit for longtime homeowners and launching more-accommodating rules for members of the military. Here are the details.

The $8,000 credit

If you were locked out of the first-time home-buyer credit in the past simply because you earned too much, there’s good news.

Now you can qualify for the full $8,000 first-time home-buyer credit with a single income of up to $125,000 and married income of up to $225,000. Those who earn more will be phased out.

The credit ends completely once single income exceeds $145,000 and married income exceeds $245,000. Still, that’s a big boost from the previous law that shut off the credit for singles earning more than $95,000 and married couples who earned more than $170,000. Other eligibility rules…

* You must not have owned another home for at least the previous three years.

* You must buy a home (or have a binding contract to buy) by April 30, 2010. Under the new law, if the sale doesn’t close on time, you can still get the credit as long as you’ve got a binding contract on the ending date, said Jackie Perlman, tax analyst with the Tax Institute at H&R Block in Kansas City.

* You must be older than 18 and not claimed as a dependent by any other taxpayer.

* The property you purchase cannot have been acquired from a relative.

* You must attach a copy of your settlement statement with your tax return to claim the credit.

* Most buyers also must continue to own this new home for at least three years. If they sell in less time, the government will demand that they pay the credit back, said Clint Stretch, director of tax policy with Deloitte Tax.

Special rules for military

The government will not require repayment of the credit if you are a member of the military and had to sell or stop using the home as a residence because of extended duty, however.

In addition, those serving outside of the U.S. during any part of 2009 or early 2010 will get an additional year to claim the credit. In other words, the credit ends for most people on April 30, 2010, but it lasts until April 30, 2011, for active-duty service members working overseas.

The $6,500 credit

The new law carves out an additional credit for current homeowners.

If you have owned and lived in a home for at least five consecutive years of the last eight years, you could qualify for a $6,500 tax credit, if you buy a new home between now and April 30.

The “five-of-eight” requirement means that this credit could accommodate people who lost their homes in the last year or two to foreclosure or even sold a house and didn’t immediately replace it, said John. W. Roth, senior tax analyst with CCH Inc., a Riverwoods, Ill., publisher of tax information.

Would you have to sell your residence for it to qualify for the $6,500 credit, if you wanted to buy a new one? Not necessarily, Roth said. The home you purchase must become your principal residence, so you would have to move there. But nothing in the law says you cannot keep your existing residence as a second home or rental, he said.

If you do choose to sell your existing residence, you need to pay close attention to how much you earn on that sale, Stretch said. That’s because taxable profits from the sale of your residence will be added to your other earnings to determine whether your adjusted gross income exceeds the allowable thresholds.

This credit also phases out for singles earning more than $125,000 and married couples earning more than $225,000.

On the bright side, some profits from the sale of a personal residence don’t count. That’s because taxpayers are allowed to exclude up to $250,000 per person or $500,000 per couple in profits on the sale of their personal residence from tax, if they lived in that home for two of the last five years, Stretch said. Only profits exceeding those excluded amounts would be included in income, he noted.

Getting muddled? Let’s look at an example to clarify.

John and Sue Smith own a home that they bought for $100,000 in 1965. They’re now retired and want to scale back, selling that home, which is now worth $750,000, and buying a smaller home with the help of the new $6,500 credit.

Their net profit on this sale would be $650,000, but they can exclude $500,000 of that gain from tax, based on existing law. They will have to add the remaining $150,000 capital gain to their adjusted gross income to determine whether they can qualify for the new credit.

If all of their other income adds up to less than $75,000, they have no worries because the $150,000 and $75,000 add up to $225,000 — the beginning of the credit’s phase-out range for married couples. If they earn more, however, they begin to lose their ability to take the credit.

There are other arcane rules relating to profits earned on the sale of a home, so those with substantial profits may want to consult a tax professional before banking on the credit.

“It’s really confusing,” Roth allowed. “It’s as if they took the old law and threw it in a Mixmaster. Some things still apply; others don’t. The time frames are all new. This is going to keep a lot of tax accountants in business for a long time.”

From the Los Angeles Times

The Valerie Fitzgerald Group specializes in luxury residential real estate in Beverly Hills, Bel Air, Brentwood, Santa Monica and Malibu. Valerie has more than 20 years of real estate experience and is known for her solid reputation in the West Los Angeles brokerage community. She’s also the author of Heart and Sold: How to Survive and Build a Recession-Proof Business.

The Standard & Poor’s/Case-Shiller index of home prices in 20 metropolitan areas showed a 1% increase in the seasonally adjusted median price of homes from July to August. The index has posted month-to-month gains since June.

“I think we have reached some kind of bottom,” David Blitzer, chairman of S&P’s Index Committee, said. U.S. home prices continued to decline in August, falling 11.3% when compared to the same month a year earlier, though not as steeply as past months, according to the data released this morning.

“This one looks real at this point,” Blitzer said. “The question more to me is whether this is going to sort of flatten out or if it is going to go straight up; if you get a month that goes down [going forward], I don’t think that it is much of a concern.”

Looking at the seasonally adjusted monthly data, 17 of the metro areas tracked by the index showed improvements in August when compared to July. Meanwhile, 19 out of the 20 markets showed moderation in their year-over-year rates of decline.

As of August, home prices across the United States are at their pre-bubble levels of autumn 2003, according to the index.

Southern California cities — San Diego and, in particular, Los Angeles — have seen notable gains, separating themselves from other Sun Belt cities, including Las Vegas and Phoenix, Blitzer said.

Los Angeles area prices in August improved 1.3% over July on a seasonally adjusted basis. The median price was down 12% when compared to the same month a year earlier. Home prices in San Diego rose 1.5% on a seasonal basis from July but fell 8.9% when compared to August 2008.

San Francisco area homes gained 2.6% on a seasonally adjusted basis over the month of July, an increase second only to Minneapolis. On a year-over-year basis, San Francisco area homes declined 12.5% in August.

Only the cities of Las Vegas, Charlotte, N.C., and Cleveland reported monthly declines in August. August home prices in the Las Vegas area dropped 0.3% when compared to July. Las Vegas also had the biggest year-over-year drop, falling 29.9% in August.

Las Vegas is “reeling” from the drop in tourism, oversupply in housing, construction crash and high unemployment, Michael D. Larson, a housing analyst with Weiss Research said.

Phoenix fared better, posting a 1% median home price increase in August over July. It also saw the second largest drop in the year-over-year number, down 25.1%.

Housing market analysts cited the federal government’s $8,000 federal tax credit for first-time buyers as an important factor in the housing market’s recovery of late. The credit applies to home sales that close through Nov. 30 and is part of the $787-billion federal stimulus package enacted in February.

Larson of Weiss Research said that while the credit played an important role, the most significant factor driving the housing market was the relative affordability of homes.

“The real question is what happens now,” he said. “You are going to see some give-back, you are probably going to see a pause in the recovery. But I think the fundamental story is that housing got way too expensive and now you could argue that housing is cheap again and that is what it boils down to in 50 words or less.”

From the L.A. Times alejandro.lazo@latimes.com

The Valerie Fitzgerald Group specializes in luxury residential real estate in Beverly Hills, Bel Air, Brentwood, Santa Monica and Malibu. Valerie has more than 20 years of real estate experience and is known for her solid reputation in the West Los Angeles brokerage community. She’s also the author of Heart and Sold: How to Survive and Build a Recession-Proof Business.