Many economists are predicting a significant hike in home prices over the next 5 years, so if you are a renter who has been debating on whether or not now is the right time to buy, you may want to take a close look at the numbers. In her article, Ten Cities To Go From Renting To Buying, Francesca Levy states that although renting isn’t always cheaper than buying in the ten cities mentioned in the article, home buyers are likely to get a good return on their investment.
The good news is that sales on existing homes, both single family and condos, continue to increase and inventories are decreasing in Miami-Dade county.
The bad news is in the foreclosure numbers for 2009. The numbers include all properties that are in some stage of the foreclosure process.
Since the unemployment rate is so high in Florida, foreclosures are expected to continue to add to inventories on the market in 2010. Miami-Dade’s new on-line foreclosure program and the government’s Home Affordable Refinance Program should help keep the foreclosure rate lower than 2009’s.
I came across a great article that explains the effect of interest rates on your purchasing power so well, that I have to blog about it. Now that inventories are decreasing and we are running into an April 30, 2010 deadline for tax credits, you have to read it if you have been on the fence about whether or not now is the right time to buy real estate.
The article, If You Don’t Buy a House Now, You’re Stupid or Broke may have an offensive title, but the graphs that it contains illustrate historic interest rates and increasing trends and the explanation on how an increase in rates affect what you will pay in principal in interest are easy to understand. In a nutshell:
Okay, you have been hearing that now is the time to buy a home, but maybe you are still unsure of why, when there is so much inventory on the market and so much insecurity in the economy. Here are 7 specific reasons:
Now, you may be a naysayer and agree with someone who stated that the price of real estate is going to go down another 33%, but those of us that are active in the market are not seeing it. We are seeing inventories decreasing, foreigners and investors coming back into the market that they had shied away from during the boom years and buyers getting some very good buys. Miami is on sale and many properties are selling for less than what it would cost to build the exact same structure on the same lot. Are you going to be someone who says, “Shoulda, woulda, coulda” or someone who feels lucky that they got into the market when they could?
In an attempt to work through the more than 110,000 open foreclosures and the 7,000 new ones that are filed each month, Miami-Dade County has put them on-line. Registration is free and allows you access to the county’s foreclosures. If you want to bid, you will be required to put down a refundable 5% deposit.
After rising for the past four weeks, long-term mortgage rates fell last week. Freddie Mac reported 30- year fixed rate mortgages averaged around 5.09%, down from 5.14% last week.
The Fed’s Mortgage Backed Security (MBS) purchase program ends on March 31, 2010. This purchase program is what has kept mortgage rates so low for the better part of 2009 and once the Fed stops purchasing MBSs the demand will drop. Since the supply of MBSs is still high, this will have a downward affect on bond prices which, in turn, will make home mortgage rates rise.
This will affect the purchasing power of home buyers.
At the end of November, the United States Treasury Department released new rules attempting to encourage banks to speed up short sales. The rules create a uniform process and documents that all banks must use as well as provide cash incentives to banks willing to participate. The new rules are starting to work…I actually had a previously unapproved short sale close faster and with less problems than a regular sale that went under contract at around the same time.
This is great news for buyers and sellers as it will help us move through the inventory levels that much faster. In order to qualify, a seller must:
I just came from a closing that almost didn’t happen because of the strict lending requirements lenders have. Mind you, the Buyer has been under contract on a regular sale for over a month and was putting 40% down. Last night the bank decided it needed more information on the source of his original $5,000 deposit, given back in early October. When he provided his bank statement showing the $5,000, the latest bank statement also showed a significant deposit, a gift from his sister to help with the down payment. This initiated a request from the lender for a letter from the sister saying it was a gift. He got the letter, but this morning they wanted a copy of the sister’s account where the money came from. She forwarded the statement showing the debit being made to her account. Unfortunately for all parties involved, the sister is married and doesn’t share her husband’s last name, which lead to another request for information. We finally closed a little before 9:00 p.m.
I have no problem with lenders tightening up their lending requirements and wanting to track the money. I do have an issue with them doing so the day before the closing, jeopardizing the transaction, and stressing out all parties, who are usually stressed out enough on the day of a closing.
Moral of the story?