My buyers are still experiencing multiple offer situations with all of the available listings here on the San Francisco peninsula, especially with homes that are priced under $500,000. They are getting frustrated and some have stopped searching all together. All I can say is to hang in there and something will come your way. This is still the best time to buy something while interest rates and home prices are still low. Multiple offers will continue if the inventory continues to be scarce. There might be some relief soon as banks start to release their huge shadow inventory. It is estimated that there is more then a million homes that are being held. Will this HELP? I hope so.
There has been more then 610,000 foreclosures last month and represents a 1% increase then the previous quarter. On average it took 336 days to complete the foreclosure process nation wide. New York took 986 days to complete the process while Texas only took 86 days. Wow, Texas seems to be doing something different.
President Obama is expected to help struggling homeowners with their mortgage payments. The Wall Street Journal reports, “The administration’s plan is expected to eliminate “appraisals and extensive underwriting requirements for most borrowers” who are up-to-date on their mortgage and want to refinance at a lower rate”. This should help those who have been keeping up with their payments and were looking for assistance in avoiding foreclosure.
While most the country is having foreclosure problems, there are areas that are still doing well. These areas are the most expensive areas in the United States. The economy today doesn’t seem to hurt these types of properties. In fact, it seems to have increased the sales activity in this price range.
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.
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.
The Senate is proposing to change the FHA down payment to 5% and decrese the loan limits. Why make it harder to qualify for a loan when FHA is critical in providing affordable financing to help decrease the growing foreclosed properties. Currently the nation’s largest lending institutions own more then 872,000 homes which is twice that of 2007. It will take 400 days for lenders to foreclose on the home and 176 days to sell it. This will make our recovery even slower. Although financing isn’t the only factor to a recovery, it is one of the most important factor to decrease the ever growing inventory.
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.
If you plan to purchase a home in the near future, you might want to speed up the process in order to have 3.5% of your closing cost paid by Fannie Mae. That’s right, Fannie Mae is trying to decrease their inventory of REOs. If you close on a HomePath property by June 30, 2011, you’ll be able to save 3.5% of the purchase price in closing cost. So act now!!!!
In January, pending home sales declined however, the data is based on contracts signed in January not closings. According to Lawrence Yun, NAR Chief Economist, “The housing market is healing with sales fluctuating at times, depending on the flow of distressed properties coming on the market,” he said. He expects the recovery will be a straight upward path because there is still an elevated level of shadow inventory of distressed homes and interest rates are still historically low.
According to the Wall Street Journal, there are plenty of signs that the housing market finally bottoming out. If investors and buyers continue to take advantage of the most affordable housing in decades, prices will probably bottom out in 2011.
Lenders have foreclosed on 78,133 properties in January, which is up by 12% from the previous month but it is 11% less then a year ago. Although there has been an increase in default notices, auctions, and bank repossessions in January, it is encouraging to know that the increase is 17% less then a year ago.
5 states are responsible for more then 50% of the nation’s total foreclosure activity; California, Florida, Michigan, Arizona and Illinois. Nevada was the hardest hit state with the highest foreclosure rate in the nation. Bank repossessions increased 16% from December which is more then 5 times the national average. Even though we are seeing more foreclosures, they are less then what it was a year ago. Let’s hope that this is a good sign that we might be on the right track to recovery.
During the 4th quarter of 2010, over half of the metropolitan areas have experienced price gains from a year ago, but the rest of the areas did not. NAR chief economist Lawrence Yun is encouraged by the trend and says the sales in the last quarter of 2010 has absorbed much of the inventory including distress properties. This could be a good sign that we may be recovering. With the continued improvement of the market and more jobs become available, the market will be back to normal.
Interest rates have been a big factor in sustaining the sales of homes. Last year we have seen interest rates at its all time low, but the rates have been inching up. This is a reaction to the housing recovery that we might be experiencing. We may never see rates lower then 5% in the future. In my 30 years of working in this industry, I thought I would never see interest rates lower than 6%, but it did happen. If you’re planning to finance a purchase or refinancing an existing property, you may want to do it now before the rates go sky high.