SINCE foreclosures started to rise sharply in 2007, struggling borrowers have been offered a lot of help online. Some is well-meaning, but some is simply a scam in the form of expensive “debt relief” services that may be offered free elsewhere.

This month Fannie Mae, the government-sponsored entity that helps set lending standards for most mortgages, started a Web site,KnowYourOptions.com, that has elements setting it apart from most of those aiming to prevent foreclosure. Everything on the site is available in Spanish or English, for example, which helps to reach the large number of Hispanic borrowers who mortgage executives and analysts said were the targets of subprime lenders in 2005 and 2006.

In some areas of the site, a guide offers videotaped explanations of what users might accomplish in that section. For instance, in a section titled “Take Action,” the spokeswoman advises among other things that “you can’t get help until you contact your mortgage company,” while explaining how to get started.

To encourage borrowers to take that step, the site includes video testimonials from people who have experienced similar issues. A section on forbearance, for instance, features a video from an owner who qualified for such help, and one from a housing counselor about the process…Read more.

But with statistics, context is everything, and these articles show a fundamental lack of understanding of current context and specifically what’s going on in SF.

The first chart below is of the last 2 years’ home sales in SF. July 2010 is indeed well below May 2010, as well as well below July 09 and July 08. However, this is almost completely a function of the fact that deals that would have naturally and typically accepted offers (ratified) in May 2010 were rushed into April so as to meet the Federal Tax Credit deadline. Because of that crush of April ratifications, closed sales in May and June soared way over the sales rate of past years, AND May ratifications this year were much lower than normal. Typically May is one of the highest ratification months of the year; low May ratifications translated to lower July closings. Typically, July is one of the highest closed sales months because of the high May ratifications. With the unusual events this year, the numbers were thrown off – which created the dramatic percentage declines everyone is chattering on about.

Remember: closed sales are 30 – 60 days behind the market (the time of offers being accepted). To get a sense of current market activity, one looks atratifications, as in the second chart below.

In the third chart below, the Months’ Supply of Inventory for SF  houses and condos is shown over the past 2 years. MSI, at a moderately low 3.8 months of inventory, hasn’t budged in three months – again one can see the effect of the April tax credit rush on the chart — and it is almost exactly the same as in July 08 and July 09.  (The lower the MSI, the hotter the market.)

Closed Home Sales in SF over the past 25 Months:

Below, we see the huge surge of ratifications in April which (stealing normal early May ratifications) led to the large decline in May. Thus May’s number of accepted offers is below past years. But June 2010 ratifications are above last year’s. And July’s ratifications are above July 2009 and July 2008. That is not an indication of a collapsing market. Yes, the market surged in April due to the expiring tax credit, but except for the initial effect on May ratifications (and the resulting effect on July closings), the expiring tax credit hasn’t affected June and July ratifications at all.

Accepted Offers on SF Homes over the past 25 Months:

Since the SF home market started recovering in spring 2009 from the “crash” of autumn 2008, Months’ Supply of Inventory has been very stable, delineating a relatively stable market, running typically between 3 to 4 months of inventory. This is generally considered a moderately low MSI, signifying a relatively strong and consistent buyer demand. Again, it is unchanged for three months, and almost identical to the MSI recorded one year ago and two years ago.

Months’ Supply of Inventory: San Francisco Houses & Condos

Homeownership almost seems like a dirty word in today’s society. People are blogging, tweeting and facebooking their belief that buying a home is just plain stupid. I respect their opinion on the issue though I totally disagree. Why?

This might be the best time to buy a home in American real estate history.

Some might think I’m crazy. Cynics might think that I am saying this because I still hold a real estate license (though I have not listed nor sold a home in ten years). My reason for saying it is actually quite simple. Owning a home makes more sense than not owning a home for the vast majority of families in this country. Let me give you five reasons why.

1. Real Estate is a Great Long Term Investment

Don’t take my word on this. This is what Mike Mandel, former chief economist atBusinessWeek and current Senior Fellow at Wharton’s Mack Center for Technological Innovation, had to say:

We’ve just had the biggest boom and bust in real estate in recent history. Nevertheless, real estate has still greatly outperformed the stock market over the past ten years.

Below is his chart actually showing the difference between real estate and the stock market.

2. A Home Is a Better Place to Raise a Family

Don’t take my word on this. When Fannie Mae asked current renters for the major reason to buy a house in their  National Housing Survey 2010, these were the answers renters gave (they could pick multiple answers):

• 78% said it was a good place to raise children
• 75% said because they would feel safe
• 70% said because you have control of your own space

3. A Home Creates a Sense of Community

Don’t take my word on this. The Federal Reserve Bank of New York just published a paper The Homeownership Gap. The paper explained:

Because owners have a financial interest in their property, they have incentives to take measures that will maintain or increase the value of that property. Some of these measures—such as fixing a leaky roof—are closely related to the house itself. Others, such as investing resources in the betterment of the neighborhood and the community, have broader beneficial effects on the local area, creating what economists call “positive externalities.”

Read more

Here is another link to a table that shows the sales activity for last year, by zipcode, for the cities of the Bay Area.