Down But Not Out- Purchasing In Today’s Real Estate Market
It’s no secret that the residential real estate market has taken a turn for the worse in the past year or two. The question is- how much worse will it get?
The answer, unfortunately, is, it depends.
Certain areas such as south Florida are going to continue to slide as more inventory is being delivered to a market that already is already saturated with homes for sale.
Nationwide house prices have fallen 6.5% as of October, since peaking in June 2006, according to the S&P/Case-Shiller Home Price index, which measures home values in 20 cities. Daniel Mudd, chief executive of government-sponsored mortgage investor Fannie Mae, expects prices to decline another 4% to 5% in 2008.
However, data also shows that many areas have already hit bottom and begun to level off. The latest quarterly home price data from the Office of Federal Housing Enterprise Oversight found that while significant declines have occurred in dozens of speculative markets during the past year, prices were flat or up in 204 of the 287 metropolitan markets surveyed.
Mark Zandi, chief economist at economic-research site Moody’s Economy.com, predicts a bottom to the housing market sometime in 2008, but only if the economy stays relatively strong.
In many areas, where prices have already had their decline, it can be a great time to be a buyer as long as the timeframe is long-term. Sellers are offering significant price discounts and will pay for the buyer’s closing costs in most cases as well. Builders and condo developers take it a step further by offering free parking, discounted condo fees, even a new car. It is important to work with a knowledgeable, experienced Realtor to assist in the negotiations. They will know what the sellers are willing to do to attract buyers and how to structure the contract.
“It is the best time to buy a new house,” says Harley E. Rouda Jr., chief executive officer and managing partner of real-estate firm Real Living Inc. “Builders are being very aggressive in terms of selling down their inventories.”
In Central Virginia, local builders are lowering their asking prices and advertising incentives such as offering to pay buyers’ closings costs, where they never used to do that before,” says Jim Duncan, a Realtor with Century 21 Manley Associates in Charlottesville, Va. “The one national builder in our market is offering upgrade incentives, such as ‘free’ rooms and other enticements. Builders, as are other sellers, are adjusting to the changing market. Buyers have room to negotiate on new construction for the first time in many years.”
And amidst the negative real estate and mortgage industry news that seems to appear daily, mortgage interest rates have actually fallen to their lowest point in 2 years according to the most recent data on 1/07/08 from mortgage giant Freddie Mac. “The 30-year fixed-rate average sank to 5.57 percent, and the 15-year fixed rate slid to 5.11 percent. The 1-year adjustable rate was down at 5.38 percent.”
2008 may not be the best real estate market for sellers but there will be many buyers who come out on top.
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