Wednesday, April 23, 2008

These Are the Good Ol’ Days, Make the Best of Them … What Is Right With Today’s Market.

We believe these are the good ol’ days for reasons that we are happy to share. One of the most exciting changes is the big supply of homes available to choose from. Instead of taking what you can get and compromising your true wants and needs as was happening to Buyers in 2005, Buyers now have a wide variety to choose from so they get exactly what they want in a home. This is well illustrated by the fact that in July of 2005 there were only 3 homes under $300,000 in the Ranchos part of our Valley. Today there are 64 homes offered under $300,000, 13 of which are under $200,000!

In 2005 Buyers were being “shoehorned” into homes at the edge of, and sometimes over, their ability to pay. This was done with subprime loans, teaser rate loans, and sometimes just plain fraud. Buyers were happy to buy, but many are now paying dearly for their stretch. Today’s borrower has some wonderful loan opportunities that make their home purchase a comfortable, safe endeavor. These include increased FHA loan amounts and enhanced loans that are easier to get with scaled down guidelines.

In the height of the market run up we often had to extend the time for closing because vendors, i.e.- physical inspectors, appraisers, etc., were so backed up. What took 3-4 weeks to schedule then can be done in a few days now. Escrows can close in a short period of time even with a new loan instead of the drawn out uncertainty of overworked and often overwhelmed staff and underwriters.

Interest rates are about the same today for a 30 year fixed loan as they were in 2005. The benefit for Buyers is the down and monthly payments are less. Consider these statistics provided by Jake Fair of Bank of America, the $325,000 home in 2005 required $65,000 down, $1,247 monthly payment, and an annual income of $33,253. In some neighborhoods the same home can be purchased for $225,000, a down of $45,000, $1,079 monthly payment, and an income requirement of $28,000 – a savings of $20,000 up front and almost $200 a month!

Neighborhood characteristics are changing as the Buyers are changing from investors to happy homeowners that show pride of ownership. In a wave of change investors are pulling back and primary residence homeowners are outpacing investors. Homeowners typically have an interest in the property not demonstrated by transient tenants that aren’t as concerned about the yard. It’s a good time to get in to transitioning neighborhoods at an affordable price.

Our Advice: Real estate is a good long term investment, especially a primary residence where you enjoy not only the financial return, but also the emotional return of living in and enjoying the property. People are buying now with reasonable expectations, one might say normal expectations. There is less competition today from the “get rich quick” artists that were buying wildly and driving prices up in the “hey day”. Your offer will be reasonably considered by a Seller today – be reasonable with your offer and you will have a healthy escrow.

These are the “good ol’ days” … make the best of them. Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, , or 775-781-5472

1 comment:

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