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!!!!
There are about 78,000 homes that are either vacant and for sale, or under construction. This is an improvement and with a normal level of buying, the homes would sell in 2 1/2 months. The study shows that there is a housing shortage brewing. If this happens, then it would change the market to a seller’s market and buyers will have a hard time purchasing again. The market today is still considered a buyer’s market and there are more bargain hunters out looking for deals. More investors are also very active making all cash purchases. There are 6 cities that are considered to be cheaper then renting the same house. All this may be history if unemployment rises, which it is decreasing today, interest rates continue to rise and become non deductible.
For the third month in a row, mortgage lates, 90 days or more, have declined. This could be another sign of recovery. With fewer defaults, the inventory level of REOs and short sales should go down as well. Could this be the bottom or is it a double dip situation. Only time will provide us with an answer. Either way, now is still a good time to purchase real estate.
In the coming months San Francisco will experience an increase in closed sales because the number of pending sales has increased by 8.9% which represents 2.6 months of the current supply of homes. If supplies continue to decrease and demand stays strong, maybe a seller’s market might be on the horizon.
The market will change if employment increases and interest rates stays affordable. However, if more distressed homes come on the market, we may not see a market shift for a long time or we may see a double dip in prices.
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.
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.
Are you wondering what your home is worth these days? The California Association of REALTORS have published the results. Some areas have experienced some appreciation. My guess is that the valueshave bottomed out and are starting to go up. San Francisco and the peninsula home values seem to be doing better then a lot of other areas.
Have you had an experience working with a short sale? If you did, you’ll agree that there is no guarantee that the home will be sold to you, no matter how long it takes to get an approval and how frustrating it is to not know if you are going to be able to buy the home. Well, the HAFA program is designed to help with the frustrations homeowners, sellers, buyers, and agents experience when going through the short sale process. This program should help speed up the process and help people but there is no guarantee. Only time will tell.
How do you think the real estate market is doing? Is it better or is it worse then when the market went bust? I think the market place here in San Francisco and the Peninsula are doing better. We did go through a major price change in many areas but prices are stabilizing. We are much more fortunate then some other areas in the country.
The National Association of REALTORS have information about the real estate market, in general, and why it’s going to get better. How is your area? Doing better? I hope it is!
