First things first...Happy New Year! I am a big believer in having a positive attitude to achieve positive results. 2009 was full of challenges but also with a great deal of forward motion.
With pressure from the Federal Government, banks are being forced to modify some loans. Granted the parameters for modification are tough in the bay area as many homeowners have loans exceeding 729K. But this pressure speaks to a trend to help homeowners keep their homes. Banks have already proven that they are not good at actually owning property and the state of California fines lenders for properties that become a blight on a neighborhood. This law was actually in place by the end of 2008 but was only beginning to be enforced by Summer 2009.
The 1st time buyer credit was extended through April of 2010, a six month extension. I would expect we will see that extended as needed in six month intervals. That will probably go away when we start to see job growth. The credit was also enhanced to benefit existing homeowners for purchasing again. These credits are applied with your income taxes, so if you have purchased a 1st home or another home this past year, have a conversation with your tax professional so that you don't leave any credits on the table.
Rates are still low historically! On average by the end of 2009 most of my buyers, whether first time buyers or otherwise were enjoying rates in the mid to high 5% range. Not too shabby. I also found that most of my buyers were leaning towards more traditional 30 year mortgages. It seems that the interest only programs, while still available and attractively priced, have fallen out of favor with the home buying public. Neg Am loans are virtually non existent and that is something that should have happened a long time ago. Neg Am, negative!!!
Short sales are definitely getting approved but they are taking easily 6 months, with most banks receiving 100,000 short sale applications every month. I expect this number to increase or at the very least hold steady for 2010. Again, for buyers, don't ignore short sales, just be patient and get educated, it makes the wait less painful. For sellers, your agent, must, must, must have experience working with short sales. Far too many Realtors tried to stay away from short sales, virtually ignoring 60% of the market place. There is nothing wrong with purchasing or selling short as long as you have accurate expectations for the process.
Looking into 2010, the flood of bank owned homes has not hit, in fact, it is sunny skies with low inventory throughout the bay area. Though I hear many banks saying there is a wave coming, we have been anticipating that for over a year now and thus far not even a minor storm of new bank owned inventory has hit the market. I will say, buyers are looking for smart deals, so if we do see a jump in inventory, it probably won't last long. I also expect the trend of multiple offers over list price continuing for homes priced aggressively. For homes that are priced below the market, well, let's just say that's a Real Estate version of a "tease". Market value is market value and that is what homes are selling for these days. The best way to get an accurate picture of the market...when you find a home you are interested in buying, have your agent complete a market analysis. That way you know what the home will appraise for, which is fair market value and you won't be underpaying and will be less likely to be outbid.
I look forward to bringing you more updates on the market as the new year gets into full swing.
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