Jan
13
As you know the market started to decline last year around this time. Much do to the Sub-Prime market fallout which is the result of many foreclosures across the country. To date over 200 lenders have closed up shop as their loans have not been paid by the original borrowers. Our area also has been affected. Add to this unnatural amount of homes being added to the market inventory is the “usual” amount of homes that go on the market for natural reasons, downsizing, job transfers, up-grading, and unfortunately divorce….
All of these factors have created an overage of inventory. Now at a time when lenders have tightened their lending requirements to what they should have been all along, this industry has some “digging out” to do. For too long people were not held accountable for their credit health and were able to purchase homes they never should have… So yes, much of the extensive inventory is because they are…”in over their heads”. Another unfortunate factor in some of these newer developments is that they are now competing with new construction sites offering homes similar in price with financial incentives… These incentives in the past (i.e.. adjustable rate mortgages) are what helped builders to rapidly fill their new developments. Many sellers have withdrawn from the market simply because they can’t afford to go so low in price and they are not a corporate entity that can offer “volume discounts”
Now though, the discounts are usually tied to discounts in fees associated with the purchase. And often the companies that offer the discounts (lenders, title services etc.) are financially related in some way to the builder. An example of this fallout is what is very publicly happening with Countrywide. Their lending practices over the few years is haunting them today as many homeowners cannot afford their mortgages as their rates are adjusting upward exponentially. Their credit is declining rapidly as they are unable to make their mortgage payments, not allowing them to qualify for another “better” loan. And with the overage of homes on the market their property values are declining, in many cases to less than what they owe. The homes are not appraising for what the homeowner needs in a loan to refinance out of their nightmare.
While tragic for them and the other sellers who are in the market for “natural ” reasons this is a great time to buy. There is much competition out there to aide in negotiating for buyers. Additionally, interest rates are declining! For borrowers with healthy credit the market has creeped below 6% in both purchase and refinance rates. If there ever was a time to purchase a second home it is now. But caution to the investor who is looking for the quick “flip” of the past. Rather be in the market for long term personal goals and real estate enjoyment. You can request a current Market Snaphot Link on my website JeanieMarker.com to get an up to the minute report of the areas you are watching as well as the type of home you are considering. This will help you really determine if what you are considering is a good value as well as an enjoyable purchase.
Ron with Delaware Mortgage Services and his girlfriend Beth at the Chesapeake Inn.
Locals Enjoying the view of the C&D Canal!
June 30th
Comments (0)