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SPRING '08 Market Update...from Don Valantine, Your Real Estate Professional (Revised 6-11-08)
GETTING A LOAN IS A BIT MORE DIFFICULT THESE DAYS...
The days of freewheeling mortgage loans is past. Borrowers should be aware that there will be tighter standards for most loan programs. Interest rates have recently been impacted by the lower bond market and increasing oil prices. A 30 year fixed rate is around 6.75%. Rates can vary from lender to lender depending on each person's qualifications.
Homeowners looking to purchase or refinance must accept the new market reality that has made the loan process more difficult for some borrowers. Two realities now exist: 1) credit is now tighter than in recent years. 2) home values have been falling in most areas. Borrowers should be ready to face certain issues when seeking a loan. They may be asked to document all income, including debts and assets. Loans may take longer to process than before. If your loan officer asks for specific info, provide it as soon as possible. Borrowers with credit (FICO) scores of 680 or higher should have no problem qualifying. A loan officer needs your FICO score to be able to quote you an accurate interest rate. It depends on your score.
Don can recommend a good lender to you if you don't already have one.
Click here for latest rate update http://www.bankrate.com/brm/default.asp.
SHOULD WE BUY NOW OR WAIT?...
Many home buyers are asking if they should take advantage of the lower prices we are now seeing...or should they wait for the market to drop even further. Answer: You have to look at the overall picture. Will prices go down even more? Possibly this is true. But, timing the market is extremely difficult. There are many factors to consider...your credit history, current employment, how much cash reserves you have in the bank, etc.
Even if prices go down more, interest rates might go up and offset any perceived savings. Meanwhile, you are still paying rent with no tax benefits and no equity. If you wait a year or 2, there is no gaurantee that you will still have your job and income the same as you have now. With a job loss, you likely will not qualify at all. So, you have to weigh in all the factors.
Another buying strategy is....if you expect prices to fall say another 3-5% you could just make an offer factoring in that reduction. Many sellers are entertaining lower offers right now, especially if they've been on the market for awhile.
For more info click here http://www.bankrate.com/brm/news/realestateguide2008/first-time-home-buyers-a1.asp?prodtype=mtg
SANTA CLARITA SALES SHOW RENEWED ACTIVITY...
Home and condominium sales during March and April in the Santa Clarita Valley showed renewed activity on a month-to-month basis, the Southland Regional Association of Realtors® reported.
A total of 299 escrows closed in March, and in April 324 escrows closed. May is expected to be even higher, so the sales volume is on the rise.
"Has the worst passed? Perhaps, although it will still take many months to workout the impact that foreclosures have on the market," said Doreen Chastain-Shine, president of the Association's Santa Clarita Valley Division. "But buyers are out looking at properties, with some of them making offers and others still wondering if now is the time to act."
Pending escrows - a measure of future resale activity - were surprisingly robust.
"Clearly, the market has shifted gears," SRAR said, "although it will take months before we'll know with certainty that the market has stabilized, but it certainly looks like it's moving in that direction."
SHORT SALES AND REO'S LEAD THE PACK...
Most homes on the market (currently around 2000) are either a short-sale or a foreclosure of some kind. A short-sale is when the seller owes more than the property is worth...sometimes called 'upside down'. An REO is a 'bank owned' property, also called a foreclosure. Many buyers are thinking they can just walk in and make an offer on these one day, and be in escrow the next. This is NOT the case! Since both of these require lender approval, there is a waiting delay of several weeks to a few months just to hear back from the lender on your offer! Buyers need to be very patient during this time. Often, you are competing with several other buyers on the same property, which will likely mean you have to offer more for the property than it is listed for. Lender are short-staffed and overloaded with more properties than they can handle.
NOTE: often these properties are deliberately listed LOW to attract as many buyers as possible. Lenders do this because they want to get the highest offer to pay off the debt. This is why it is difficult to buy a foreclosure 'cheap' or for the listed price.
PRICES STILL DECLINING, BUT SALES VOLUME IS UP...
Prices will continue to soften, but sellers will still make a good profit if they've lived in the home for at least a few years and have a decent amount of equity and aren't too greedy. If the house doesn't sell in 90-100 days, sellers should take a good hard look at what they are trying to accomplish. Those who listen to the advice of a seasoned real estate professional will price the house wisely...IF they want to sell it. The days of asking 50-100K higher than the last sale on your street are over. A good pricing strategy is to list the house for 5% less than the most recent sale. Ask me for my report entitled....Pricing Mistakes Sellers Make. Plus there are other things sellers can do which will help your home sell quickly. It's all about positioning yourself...ask me.
SELLERS NEED TO BE PATIENT...
It's taking an average of 100 days to put a house into escrow, and often longer. Sellers need to be more accommodating to buyers if they want to sell the house: Things like sellers picking up buyer's closing costs, doing repairs, allowing buyer contingencies, even seller financing...all of these make it easier for buyers to purchase. And remember.... price is still the MOST important factor when selling your home.
INTEREST RATES ARE EXCELLENT...
Rates have increased recently due to a struggling bond market and higher oil prices. Currently rates are in the high 6's for 30 year fixed loans...still a very good rate.
DON'T BELIEVE THE NEWS MEDIA...
Most people watch the evening news 'doom and gloom' about the real estate market, and draw false conclusions. Remember, the media always look for controversy and negativity. Often the lead story will begin with negative comments like....'when will the bottom fall out?' or 'is the bubble about to burst?' The media has been saying this for years. The problem is that they tend to broad brush information like this. Activity is definitely less than in previous years, but that is not the same as a market crash or bursting bubbles. You're better off talking to a real estate professional who can show you the real numbers in black and white. Don't fall for the media hype and broad brush.
ATTENTION HOME BUYERS: Since rates are still near historic lows... now is a good time to take advantage before rates go up... If you choose to wait, you might be priced out of the market. The winter months are often a great time to shop for a home. Fewer buyers mean less competition, and better deals!
This e-news brief is designed to keep you up-to-date on market conditions and current trends. For available listings and other important info, please access 'my featured listings'. Don't hesitate to contact me with all of your real estate questions and needs. I am here to help when you need me.-Don Valantine 661-803-8896
~Expect the Best~ |