September 29, 2009

As the news continues to get better for the economy, it still doesn’t seem to help those that are still taking pay cuts, getting laid off or forced into jobs that pay much less than a previous job. It is tough out there!!

I guess the good news is that homebuyers, or should I say property buyers, have never had such a choice of properties at such “affordable” prices. The “affordable index” is telling us that because of interest rates, the low prices, tax breaks and federal and state backed financing, now is the time to purchase a home. Especially if you qualify as a first time homebuyer.

Interest rates for 30 year fixed are currently around 5.04% which is a full 1% less than a year ago. How does this affect a payment? On a $200,000 loan, the payment would be about $125/mo less than a year ago. This gives a buyer about $25,000 more buying power for the same payment.

Another phenomenon that seems to be evolving is the increasing number of short sales (you owe more than it is worth). While this situation has been with us for a while, it has taken a back seat to the foreclosure/REO sales that have dominated our market for the past few months. We will have the foreclosure problem for a while yet and the short sale will be coming up more often. Many Realtors have tried to avoid the short sale properties as the process is long and frustrating as buyers (and sellers) await word from all the entities that have an interest in the note as to whether they will accept the offer. It is hoped that new federal pressure may help speed up the process and we, as Realtors, with new education and experience, can help the homeowner make wise decisions in this respect.

A quick stat: U.S. existing home sales compared to 1 year ago:

$0-$100,000 +38.8%

$100,000-$250,000 +8.7%

$250,000-$500,000 -6.2%

$500,000-$750,000 -8.9%

$750,000-$1,000,000 -10.6%

$1,000,000-$2,000,000 -23.3%

$2,000,000+ -32.4%

(source: Bubble Meter.com)