· All regions experienced PHSI increases in June. The West’s index rose 4.6 percent to 101. A reading of 100 is equal to the average level of sales activity in 2001, when the PHSI started. Sales have increased consistently in recent months in areas such as Sacramento, Calif., Las Vegas; and Fort. Myers, Fla., where affordability conditions have greatly improved.

· Despite a decrease in existing home sales in June, NAR is forecasting that the recently signed federal housing bill will assist with the market’s recovery. NAR also predicts that the provision in the bill allowing first-time home buyers to receive a $7,500 tax credit will increase home sales, which could be sustained into 2009.

· Although private lenders cater to borrowers with poor credit scores or unusual financing needs, they do not approve everyone. Private lenders still require assurance that borrowers can repay the loan within the agreed-upon time limit, and that borrowers have equity in the property. Many private lenders require borrowers to have a minimum of 25 percent equity. If the borrower is unable to repay the loan, the private lender can sell the property, similar to repossession by a bank.

· While private lending may seem like a viable option for some borrowers, it also has its disadvantages. For example, interest rates for private money loans are higher than the rates offered by standard financial institutions to prime borrowers. It is not uncommon for a private lender to offer an interest rate of 10 percent or more. Additionally, the terms with a private lender are shorter than with a traditional bank, sometimes as short as five years. The payments, however, are calculated as a 30-year loan. Some loans, both by private lenders and traditional banks, also have balloon payments, meaning that once the loan matures, the remaining balance in due in one lump sum. With a bank, the balloon payment is normally due after 30 years, whereas a private lender typically requires the balloon payment after one or two years.

· Some borrowers with high credit scores also are turning to private lenders for assistance, because private lenders do not require a property to be appraised prior to funding the loan. Private lenders benefit from the partnership because they earn more interest by lending to a borrower than they would if their money was in a traditional savings account. However, private lenders are difficult to find and most only operate within limited geographical areas, because they like to view the properties they’re lending against and prefer to know the market in that area.

· New housing starts fell to 975,000 in April, from a peak of 2.27 million in January 2006. In the past 35 years, new housing starts have dropped from more than two million to less than one million only three other times. In each of those cases, the housing market rebounded within one quarter, according to Karl Case, co-developer of The Standard and Poor’s S&P/Case-Shiller Home Price Indices.

· Although home prices decreased 15.8 percent year-over-year in May, they have only decreased 0.9 percent on a month-over-month comparison. This is the smallest monthly decrease since September 2007 and another sign that the housing market is in recovery mode, according to Case.

· The California Association of Mortgage Brokers (CAMB) is calling for more lenient guidelines to allow borrowers with good credit and sizeable down payments to qualify for a home loan, regardless of proof of income. Due to the strict lending standards, some would-be home buyers are being denied home loans due to their inability to prove their income. Often, these borrowers are self-employed or public-sector employees, such as firefighters or teachers. Many traditional credit lenders will not include overtime or secondary jobs as a borrower’s income, according to CAMB. Although CAMB is not advocating for "ultra-liberal lending practices," such as those used during the peak of the subprime mortgage market, it is advocating for exceptions to underwriting criteria that would allow this type of borrower to qualify for a traditional home loan.

· On average, homes are taking approximately 10 to 12 weeks to sell, compared with four or five weeks at the height of the five-year housing boom. However, in California, single-family existing homes are taking an average of seven weeks. Some analysts believe that California’s homes are selling at a quicker pace in part because of the availability of the large volume of deeply discounted distressed properties in many parts of the state. With lower prices and favorable interest rates, affordability also has improved significantly in recent months, paving the way for many buyers to purchase their first home.

· In addition to conforming loans, mortgage insurance also is becoming harder to obtain for some borrowers. Many lenders require borrowers to have a 20 percent down payment or the borrower must purchase mortgage insurance. Prior to the mortgage meltdown, consumers were able to bypass purchasing mortgage insurance by providing a 10 percent down payment, obtaining a loan for 80 percent of the home’s purchase price, and a separate "piggyback" loan for the remaining 10 percent. However, due to the high default rate in loans of this nature, most lenders are no longer permitting that practice. It is unlikely that borrowers without a 20 percent down payment will obtain a conventional loan. However, borrowers do have other alternatives, such as obtaining an FHA-insured loan or a loan through the California Housing Finance Agency.