Wed 28 Oct 2009
How’s the Market?
Posted by Vicki Lloyd under Lake Forest, Market Conditions, Real Estate
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Sales volume is UP! Median price is increasing! Inventory is low! Sellers are receiving multiple offers! Foreclosures are declining! These are the headlines I am seeing daily, on television, in newspapers, in on-line discussion forums, and in my email inbox. Hooray – the real estate meltdown is over! If you believe all that you hear, and have been wanting to sell your home, you might be breaking out the bubbly right now and thinking about packing.
The sales volume is up because the prices have now fallen to the point that more people can afford them. First time buyers are driving the lower end of the market, and they are also competing with investors who recognize the immediate positive cash flows that are available.
A 2-bedroom condo bought for $200,000 with a 3.5% down payment and an FHA loan of $193,000 at 5.5% interest would have a mortgage payament of about $1150, including mortgage insurance. After adding in $300 HOA dues and 1% taxes (no Mello-Roos) the total payment comes to about $1600, which is only a little more than you would pay to rent the same place! Being able to re-decorate to your own taste, along with some tax advantages, have convinced many first time buyers to jump on these properties!
The median price is up because we are running out of the lowest priced properties. You could say that the bottom is hitting the bottom! The first time buyers and investors are keeping the prices at those levels because when they go lower, multiple offers are driving them up. There are a lot of first time buyers who have been scrambling over the last month to pick their home and get into escrow in time to close by the November 30th deadline for the $8,000 tax credit. Investors are also joining in the bidding wars (and often winning when they have a lot of cash to put down) because the rental income from these properties make it worthwhile to own them.
The latest numbers came out from DataQuick yesterday and everybody is wanting to know what they really mean. I’m working on an analysis right now to try to figure out what really counts and what is just a blip. I have several obligations that will keep me out of the office today, but hopefully I will get it finished and posted this evening. Please check back soon!
See past posts:
September Sales Report for Lake Forest
