In the past few weeks the real estate market showed multiple signs of a rebound of some sort. In 20 metropolitan areas prices rose 0.2% in August but were still down 3.8% year over year. This may all change soon. In September, pending sales were down 4.6%. Could this be another beginning of a triple dip? With Freddie Mac requesting for another $6 billion of your tax money and holding about 60,000 REOs from the market, which will take approx. 15 years to sell off, I don’t think our country’s rebound in a lot of areas will happen anytime soon and hope that the triple dip is not too severe.
Some help is on the way. The Federal Housing Financing Agency is trying to help change the market. They are making a few changes to the Home Affordable Refinancing Program to attract more borrowers and stimulate the mortgage industry and helping more homeowners. The National Association of REALTORS are also concerned with the state of our real estate market and has a 5 point plan that could get us out of this triple dip situation and stabilize the market. With any change, it will take a while for the changes to make a difference. Let’s hope that it won’t be too long.
As we are getting into the last quarter of the year, San Francisco and the Bay Area have gone through a lot of changes. They could be good or bad depending on how you look at it. As I have mentioned on another post, what will the city be like in the next 5 years? I believe it should be at a point of recovery. We’ll see.
The economy has driven our home values down and there is no end in site. Many areas in the nation has experienced major price reductions. Not all areas have been hit but California has 6 areas that had the largest drop in value out of the top 10 areas nationwide. The prices have decreased more then 60% from 5 years ago. This situation will not get any better anytime soon due to the 1,000,000+ foreclosures that the banks are holding this year and another 1,000.000+ foreclosures in next 2 years. It will take a few years to sell off all of the phantom inventory before any appreciation can be realized in these areas.
With all of the budget problems we are going through, how will it affect interest rates? Well according to NAR Chief Economist Lawrence Yun, rates may increase however, there are other factors that could keep rates down.
Right now the rates have hit an all time low, 4.15%, and will stay low for another 2 years. This is due to the faltering economy. Although rates are at a all time low, sales of homes fell last month by 3.5% compared to the same time last year.
This is an excellent time for buyers to purchase their home.
If you think we’re the only country facing problems, then you haven’t been paying attention to our other neighbors in Europe. They are experiencing economical problems as well!! In fact, their problems do help our country but it could be a sign of what can happen to the U.S..
If we can’t stop our spending and fix our current problems, we will be creating an economical monster for our children. This beast will not be easily defeated. As our problem debtors become larger (the beast), the REO housing inventory becomes larger, and will take more time to be sold off.
Although home sales have increased, the prices have decreased in 118 markets across the country. Prices have declined approx. 7.5% in March from a year ago. This is the eighth straight month of declining prices. So what’s keeping the sales going? I believe that the low interest rates and affordable prices are keeping sales alive.
San Francisco is showing signs of recovery along with San Mateo county. With gas prices continuing to rise, many buyers are moving back to big cities where they don’t have to use their car. This may be one reason why San Francisco has been experiencing a brisk recovery.
Bank owned inventory nationally grew to a record high of 2.2 million in March and foreclosures starts increased by 33% month over month. This may sound bad but foreclosure sales have increased and delinquencies are down by 11% which is the lowest since 2008.
Pending sales have increased which is a good sign that the demand is strong and the inventory will decrease hopefully faster then any increase. The U.S. is expected to add at least 750,000 new households in 2011 which is a healthy demand. A lot of these new homeowners are a result of lower home prices that are cheaper to buy then to rent, low interest rates, and more confidence in the recovery of the economy.
“The good news is that recent home buyers are staying well within budget, leading to exceptionally low loan default rates among home buyers over the past two years,” Yun added.
Home sales rose slightly last month. This is the sixth month in a row that home sales have increased. Lawrence Yun, NAR chief economist, says “We’re clearly on a recovery path”. This is a good sign and sales should continue to increase.
There are all types of buyers out taking advantage of the market. First time buyers purchased 33% of homes sold in March and all cash buyers purchased 35% of the homes sold, for example. With the market current market conditions, it makes more sense to purchase a property then renting.
Home sales have fallen in February and is normal for a uneven recovery. According to Lawrence Yun, NAR chief economist, even though properties are more affordable and the economy is improving, we will continue to see a rocky recovery as long as we have problems with tight credit and lower prices.
With January increase of home sales, it could be a sign that things maybe turning around. Property sales increased 2.7%, nationally, and represents the first time in 7 months that sales were higher then a year ago. 23% of the sales were by investors and there was an increase of all cash purchases representing the highest level ever.
Even though we are having economic problems, it is still a great time to purchase a property. Interest rates are still pretty low and there are plenty of inventory. This will change, but when? Why not get something now and grow with your investment. If you are ready, here are 5 affordable areas and 5 very expensive areas. No matter where you go, the prices are definitely less then the were in 2007.
Sales in San Francisco has been steady and returning to a healthy pace. Sales rose by 20.7% from a year ago, January 2010.
Don’t miss this great opportunity to realize your dream of owning your own home. You might be surprised to know that it could be cheaper or as much as your rent.
