Real Estate Information Archive

Interest rates have fallen again!  4 5/8% on a 30 year fixed rate!  We have been so busy lately with the stimulus money expiring that I haven't sent a tip for nearly 2 months.  We were concerned about home sales falling, but thank goodness interest rates fell instead.  If you want to buy or sell, now may be the opportune time, however if you are staying put you may need to consider refinancing.  Call me for reputable lenders.  Don't be tempted to use a lender you find on the internet, or you'll most likely not be happy with the result.

Interest rates just keep getting better.  About 6 months ago I had forecast 7% rates by Christmas.  I’m pleased to say…I was wrong.  I may have missed the timing, but I’m still forecasting rates climbing in the not too distant future.  If you are planning on buying, selling or refinancing now is the time.  Call if you need a good lender.  I endorse Market Mortgage and Colony Mortgage.  This week a 30 year loan was 4.75% and a 15 year loan was 4.25%.   Time to lock in these rates!

Someone asked me this week, “Should I buy now, or wait till spring and hope home prices drop another 10%?  Here’s my answer.

If you could control interest rates, unemployment, layoffs, factory closings, terrorist attacks, tax laws, etc etc. then you could wait and take the chance. Problem is, there are so many variables that affect the cost that you can’t take the chance.   Here’s something to think about.  A $300,000 house purchased today with a 5.5% loan will actually cost less than a $270,000 house purchased with a 6.5% loan.  The chances are greater that interest will go up 1% than the values fall 10%.   

There is an old saying, which I live by, “The best time to go fishing is… when you can.”   

I say, “The best time to buy a house … is when you can.”  If your budget and circumstances allow you to buy now, then don’t wait.  

Reminds me of a story I heard…. well, I better save that for another day!

2009 Looks Good!

Let’s review 2008 first.  Residential sales totaled 18,302. That’s down from 20,783 in 2007, a 11.decline.   Average sale price was also down.  Depending on your area and price range from as little as 2.9% to as much as 15%. 

Obviously, the higher price ranges and areas with a lot of foreclosures were hit the hardest.  Home sales are down 23.2% from 2005…the pinnacle year in central Ohio home sales.

That’s the bad news.

Here’s the good news.  Since the first of the year the real estate business has been on a tear!  MLS has just 11,494 homes currently listed.  That is fantastic news!  What I consider balanced is when listings are 50% of annual sales.  That is what we averaged for the years before and during the run up…24,000 annual sales and about 12,000 active listings.  We are currently at 62%.  That means we are still in a buyer’s market, but it is not as bad as it was. 

JOHN’S 2009 CENTRAL OHIO FORECAST

Listing inventory will increase compared to sales, keeping us in a buyer’s market.  Sales will increase 5% to 19,200.  Interest rates will hover between 4.5% and 5% for new purchases because the government will control the rates charged by Fannie Mae and Freddie Mac. 

The unrealistically low rates will drive some mortgage companies out of business, or at least to consolidate with other companies.  They will then be just a loan packager for Fannie or Freddie.   In the long run that means less competition, which means higher fees and rates.  The other scenario is the government will be the only lender.  Who thinks they will run a lean, efficient, cost effective company?

If you have been reading my blogs for the last year, you know that I believe this is the best time ever to buy a house.  We have a 2 year window where low prices and low rates can be had.  As we come out of this downturn, adjustment, market correction…whatever you call it, rates will gradually increase.  I’m guessing in the 7% to 8% range.  Prices will gradually recover…at a rate of 1%–2% a year, taking 15 years to reach the 2005 values. 

Taxes will be a serious problem for the 57% who pay taxes.  This bailout has to be paid for, not to mention Social Security will need bailed out soon.

RECAP

The 4^th quarter 2008 will be marked as the bottom of the housing crises.  The economy will slowly recover throughout the year.  2010 will show some more improvement, reaching a balanced residential real estate market in 2011 (when annual sales are double the active listings).  Commercial real estate will not see any relief in the next few years, possibly getting worse.    

Everyone will need to figure out how they protect and grow their nest egg.  I think the very best way to do it is with single family rentals.

Interest Rates have dropped to 5.5% on a 30 year fixed loan! The lowest since last February.  The P&I (principal & interest) payment on $200,000 at 5.5% saves $128.56 per month compared to a 6.5% loan.

Or

Another way to look at this is your same payment now buys $20,000 more house!  How cool is that!

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Now is the time to buy… unless you are a real optimist and think rates will fall further!  

Despite what you’ve heard, there are still loans available to qualified borrowers.  There is still a first time homebuyer tax credit of up to $7500. 

What are you waiting for?