Tuesday Jun 16 2009
Real estate market seeing signs of life
By: Dena Kouremetis and Beth Mergens
It took awhile, but numbers don’t lie. Real estate is on the upswing. With home sales up by 13.6 percent in Sacramento County, prices are down and interest rates seem to be holding. According to DataQuick, Sacramento has seen a reduction in price point of 30 percent since 2008, prompting the real estate community to look forward to a promising summer for real estate sales if interest rates hold steady. A hefty absorption of inventory seems to be under way. Sacramento County, weighing in with 4,786 homes before April, saw 2,130 homes close by the end of that month (Placer County came in at 457 homes closed and El Dorado County trailed with 155). The numbers seem to be trending consistently, with many Realtors beginning to see multiple offers above asking price on the more desirable properties — a bellwether of change to industry experts. The Wall Street Journal reports that the supply of homes available for sale in 28 major metropolitan areas at the end of May was down 3.9 percent from a month earlier, according to figures compiled by ZipRealty Inc., a real-estate brokerage firm based in Emeryville. The ZipRealty data cover all single-family homes, condominiums and town houses listed on local multiple-listing services in metro areas where the firm operates. On a national basis, housing sales and pending sales contracts are up, according to Realtytimes.com — dramatically in some markets — and a rebounding real estate sector could soon start stimulating the broader economy. Pending home sales jumped by 6.7 percent in April across the nation. That was the third straight month of significant increases, and the highest pending sale total for any month in the past seven years. Even Federal Reserve Chairman Ben Bernanke told Congress recently that the housing market is stabilizing. Studies are also showing that another wave of adjustable rate mortgages originated during the first half-decade boom years may also hit soon, leaving homeowners fleeing mortgage payment adjustments that may prove to be too much for them, but presenting even more opportunity for investors and first time buyers as even more affordably-priced inventory hits the market. Local bankers tell us that the interest rates are slowly climbing and we’re up from 4.6 to 5.25 percent in some instances. For every quarter-point increase in the interest rate, buyers can expect to pay anywhere from $30-$130 more per month depending on the loan amount. For a $300,000 home, for example, borrowers can expect to see an increase of approximately $50 per month. This is beginning to create some urgency, since conventional wisdom tells us that rates tend to increase while inventories begin to decrease as we near the end of the buying season. Predictions are based on an average of two to three months “incubation” time for a home purchase from start to finish. Another piece of good news is the $8,000 tax credit being offered in the economic stimulus package can be used for closing costs. For a VA loan this can mean buyers will incur virtually no costs to purchase a home. There are also FHA loans available with purchasers needing as little as 3.5 percent down. On a $300,000 home that’s only $10,500 down with most of the closing costs covered. There are many opportunities for vets and their families as well as those who need a helping hand through FHA. As an example, FHA offers a loan to improve a property that rolls the costs of the improvements into the loan. For more information about ways to take advantage of these programs, contact a qualified loan representative who specializes in FHA/VA loan programs. Re/Max broker associate Beth Mergens cowrote this column. She can be reached at 947-3993 or at FolsomLakeHomes.com. Dena Kouremetis may be contacted at firstname.lastname@example.org.