Buyers: As consumer confidence continues to rise, so do county sales. For the eleventh month in a row, home sales have been higher than the year before. The real estate market continues to mirror prior months with extremely strong activity in the sub-500k market. Yet, throughout the market, multiple offers continue to dictate true market value. When homes are priced too low, you may have to make offers slightly above the asking price depending on the desirability of the area and the condition of the property. Investors beware, banks prefer to not sell their homes to non-occupancy owners, so be prepared to come in with a significant amount of cash to be the winning bid. Also, all buyers that plan to purchase a condo or townhome need to be aware that tougher mortgage rules may be included, as lenders are tightening their belts to protect themselves from unsecure investments. You can view all homes for sale, including foreclosures, online at SanDiegobythesea.com If you know anyone who is thinking about buying, please let me know how I may be of assistance.
Sellers: Even when we reach the bottom, this market will continue to be unfavorable to the majority of sellers because of the continued growth of distressed sales in all neighborhoods. It is possible that the foreclosure rate could still spike again as lenders release their moratoriums. Short sales have been, and continue to be, an option prior to letting your property go through foreclosure. But, remember that a short sale may not mean you’re home free. Many sellers who successfully sell their properties as short sales will receive deficiency claims from the mortgage companies trying to collect on their losses. If you intend to sell your property in a traditional manner, it is imperative that you contact a real estate professional that is going to help you compete against other local distressed properties. Visit SanDiegobythesea.com to see how I will sell your property. If you know anyone who is thinking about selling, please let me know how I may be of assistance.
Waiting Buyers Beware
For those of you who are waiting to buy, beware. If the market doesn’t continue to drop dramatically you could be losing some valuable buying power.
Consider a $400,000 home with FHA financing:
$400,000 purchase price
$ 14,400 down payment FHA
$386,000 loan
5% interest, payment $$2,072.13/mo.
If rate rises to 6%, payment would be $2,314.26/mo.
Assuming a buyer can afford payments no higher than $2,072/mo. If this is true, at 6% they can borrow no more than $345,613, meaning they can either pay no more than $358,149 for the home or must make a down payment of about $55,000 (instead of $14,400) to keep the payment the same. This equals about a 10% loss in buying power.
Now, consider an $800,000 home with conventional financing:
$800,000 purchase price
$160,000 down payment
$640,000 loan
5.5% interest rate, payment $3,633.85/mo.
At 6.5% interest rate, payment would be $4,045.24/mo.
Assuming a buyer can afford payments no higher than $3,633.85/mo they can either pay no more than $718,642 for the home or put nearly $225,000 down to maintain the loan amount. They will lose about 10% of his buying power.
The point is that if the rates increase while a buyer waits for that last 10% drop, they might be forced into a smaller home they don't like as much as the larger one the low interest rates make available today.
The interest rates I have chose are close to actuals but the effect of a rate increase is the same no matter what the final numbers are.
Consider a $400,000 home with FHA financing:
$400,000 purchase price
$ 14,400 down payment FHA
$386,000 loan
5% interest, payment $$2,072.13/mo.
If rate rises to 6%, payment would be $2,314.26/mo.
Assuming a buyer can afford payments no higher than $2,072/mo. If this is true, at 6% they can borrow no more than $345,613, meaning they can either pay no more than $358,149 for the home or must make a down payment of about $55,000 (instead of $14,400) to keep the payment the same. This equals about a 10% loss in buying power.
Now, consider an $800,000 home with conventional financing:
$800,000 purchase price
$160,000 down payment
$640,000 loan
5.5% interest rate, payment $3,633.85/mo.
At 6.5% interest rate, payment would be $4,045.24/mo.
Assuming a buyer can afford payments no higher than $3,633.85/mo they can either pay no more than $718,642 for the home or put nearly $225,000 down to maintain the loan amount. They will lose about 10% of his buying power.
The point is that if the rates increase while a buyer waits for that last 10% drop, they might be forced into a smaller home they don't like as much as the larger one the low interest rates make available today.
The interest rates I have chose are close to actuals but the effect of a rate increase is the same no matter what the final numbers are.
More Homes in California Are Selling
The Wall Street Journal - April 28, 2009
California's housing-market slump showed hints of improvement in March, with sales of existing single-family homes increasing 64% from the prior-year period and median home prices rising month-to-month for the first time since August 2007, according to a trade group report.
California's inventory of unsold homes in March fell to a three-year low of five months, according to a report released Monday by the California Association of Realtors. That compares with 12.2 months of inventory the group reported for March 2008.
The state saw sales of 522,980 existing single-family homes in March, compared with 319,290 in the year-earlier period, the report said. Home prices remained sharply down from a year ago: The March median price of $253,000 was up from $247,590 in February 2009 but down 39% from March 2008 levels.
Stimulus efforts helped the state's home sales in the month, said Delores Conway, a professor at the University of Southern California's Marshall School of Business. Some Californians benefited from about $8,000 in credit for first-time home buyers from the federal economic-stimulus plan, and some from an additional $10,000 credit from a state stimulus measure. Depressed prices of houses are luring first-time buyers, she added.
But the March improvements are partly statistical, Ms. Conway added, because the number of sales in March 2008 was especially low. And California's unemployment rate, one of the nation's highest at 11.2%, may also delay any housing-market recovery by resulting in more foreclosures, she said.
Another concern is the recent ending of moratoriums on foreclosures by Fannie Mae, Freddie Mac and some big lenders. That is expected to lead to a new increase in foreclosures in California and elsewhere over the next few months.
California's housing-market slump showed hints of improvement in March, with sales of existing single-family homes increasing 64% from the prior-year period and median home prices rising month-to-month for the first time since August 2007, according to a trade group report.
California's inventory of unsold homes in March fell to a three-year low of five months, according to a report released Monday by the California Association of Realtors. That compares with 12.2 months of inventory the group reported for March 2008.
The state saw sales of 522,980 existing single-family homes in March, compared with 319,290 in the year-earlier period, the report said. Home prices remained sharply down from a year ago: The March median price of $253,000 was up from $247,590 in February 2009 but down 39% from March 2008 levels.
Stimulus efforts helped the state's home sales in the month, said Delores Conway, a professor at the University of Southern California's Marshall School of Business. Some Californians benefited from about $8,000 in credit for first-time home buyers from the federal economic-stimulus plan, and some from an additional $10,000 credit from a state stimulus measure. Depressed prices of houses are luring first-time buyers, she added.
But the March improvements are partly statistical, Ms. Conway added, because the number of sales in March 2008 was especially low. And California's unemployment rate, one of the nation's highest at 11.2%, may also delay any housing-market recovery by resulting in more foreclosures, she said.
Another concern is the recent ending of moratoriums on foreclosures by Fannie Mae, Freddie Mac and some big lenders. That is expected to lead to a new increase in foreclosures in California and elsewhere over the next few months.
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