Buyers, it’s all about finding the seller who really wants, or needs, to sell. The only way to find out is to make offers.
Sellers, price your property aggressively and be willing to negotiate. Remember, what you lose on the selling side, you’ll make up for on the buying side. The real estate market is very hard to generalize. It is a market made up of many micro markets. For complete information on a particular neighborhood or for an evaluation of your home’s worth, call me at 760-533-2540.
Freddie Mac to Stop Buying Some Sub-Prime Loans
- HSH Market Trends
Less-easy credit found a new champion in Freddie Mac this week, which announced that it would stop buying subprime loans with certain characteristics by September 2007. The company also announced that non-subprime borrowers will need to be qualified at the fully-indexed, rather than introductory, interest rate for ARMs.
Qualifying a borrower at a higher interest rate, weighed against the same income, doesn’t mean that the borrower cannot get a loan, but it does have the net effect of lowering the maximum loan for which that borrower can qualify. That smaller loan amount, in turn, means that although the borrower can get a loan, it might not be enough to afford available properties -- which would effectively shut that borrower out of the market.
From a risk standpoint, that’s a reasonable stance, but along with other tightening measures coming into play in the market, this will have the effect of lessening the demand for homes. As the housing market is stumbling a bit already, with just the barest signs of stability evident, that’s not particularly good news.
Especially if you’re a homebuilder. Sales of New Homes, which had managed to hold above 1 million annualized during the downturn, finally collapsed through that level in January, falling 17% to only a 937,000 annualized rate of sale. Inventory levels bloated back to 6.8 months of available supply, while prices are about 2% below year-ago levels. Although winter weather is thought to have played a role in the decline, the South and West also saw sizable reductions in sales during the month. As one would expect, Construction Spending has also faltered of late, declining by 0.8% in January, pulled down by the continued reductions in spending on residential projects.
Existing Homes fared better. After hitting a low last September, sales have generally drifted higher, though mildly. Sales of used homes rose by 3% during January, lifting to an annualized 6.46 million units sold. Inventory levels held at 6.6 months supply at the current rate of sale, while prices eased by 2.5% for the month.
Excessive mortgage liquidity served to extend and expand the housing boom, and at least some of that liquidity -- perhaps a lot of it -- is on its way out of that segment of the market. Lessening liquidity may also begin to affect the gray area of mortgage finance between prime and subprime, known collectively as “alt-A” lending. To what degree that may occur, we’ll need to wait and see. At the moment, subprime lending changes are happening and those will likely continue.
Less-easy credit found a new champion in Freddie Mac this week, which announced that it would stop buying subprime loans with certain characteristics by September 2007. The company also announced that non-subprime borrowers will need to be qualified at the fully-indexed, rather than introductory, interest rate for ARMs.
Qualifying a borrower at a higher interest rate, weighed against the same income, doesn’t mean that the borrower cannot get a loan, but it does have the net effect of lowering the maximum loan for which that borrower can qualify. That smaller loan amount, in turn, means that although the borrower can get a loan, it might not be enough to afford available properties -- which would effectively shut that borrower out of the market.
From a risk standpoint, that’s a reasonable stance, but along with other tightening measures coming into play in the market, this will have the effect of lessening the demand for homes. As the housing market is stumbling a bit already, with just the barest signs of stability evident, that’s not particularly good news.
Especially if you’re a homebuilder. Sales of New Homes, which had managed to hold above 1 million annualized during the downturn, finally collapsed through that level in January, falling 17% to only a 937,000 annualized rate of sale. Inventory levels bloated back to 6.8 months of available supply, while prices are about 2% below year-ago levels. Although winter weather is thought to have played a role in the decline, the South and West also saw sizable reductions in sales during the month. As one would expect, Construction Spending has also faltered of late, declining by 0.8% in January, pulled down by the continued reductions in spending on residential projects.
Existing Homes fared better. After hitting a low last September, sales have generally drifted higher, though mildly. Sales of used homes rose by 3% during January, lifting to an annualized 6.46 million units sold. Inventory levels held at 6.6 months supply at the current rate of sale, while prices eased by 2.5% for the month.
Excessive mortgage liquidity served to extend and expand the housing boom, and at least some of that liquidity -- perhaps a lot of it -- is on its way out of that segment of the market. Lessening liquidity may also begin to affect the gray area of mortgage finance between prime and subprime, known collectively as “alt-A” lending. To what degree that may occur, we’ll need to wait and see. At the moment, subprime lending changes are happening and those will likely continue.
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