The content of this newsletter was obtained from press releases from Realogy Corporation
and Coldwell Banker Residential Brokerage in recent weeks
The past few weeks have been an economic roller coaster. We have watched the market dip and climb as fear, frustration and questions in the stock and real estate markets mount.
What we are experiencing is the results of combining over-inflated pricing with unsound lending practices and greed. How many of you really believe that a home valued at $150,000 in 2001 should really be worth $447,000 in 2005? As a result of borrowing based on inflated prices, we began to see the foreclosures soar and by the end of summer the results took their toll bringing down major investment firms and banks.
As this situation took years to emerge, so may the recovery. However, we now see economic, political and business leaders work together to plan a recover strategy rather than attempting to individually fix this enormous problem. This lays the foundation for a solution instead of hoping that the problem fixes itself.
On the positive side, we now have prices approaching that 2001 value level. We also still have very attractive interest rates in the 6% range. (In 2001 interest rates were in the 7% range) There is a positive up-tick in the market as smart investors and home-buyers are snapping up those bargains. As a result, the inventory in the greater Sacramento market decreased from an 11+ month supply in July to a 5-1/2 month supply in September. We have seen an increase in units and conversely as decrease in price of the distressed properties, but they are selling. In many cases, we have seen the return of multiple offers and steady open house attendees starting as well.
There is no doubt that the state of the markets has much to do with consumer confidence and trust in the financial sectors. The credit crisis weighs heavily on everyone’s mind, and once that is eased, it will aid in an economic rebound.
To help with that, Realogy Corporation, the parent company of CENTURY 21®, Coldwell Banker®, ERA®, Sotheby's International Realty® brands. approached the U.S. Department of Treasury with a practical solution to help stimulate the housing market and lead to a broader economic recovery. The proposal calls for a short-term government buy-down of mortgage rates to at least 4.5%, for a 30-year fixed rate mortgage. This incentive would apply to the purchase of all new and/or existing homes sold up to $1 million in price. As recently as October 15th, Realogy conducted a national survey about mortgage rates with responses from its residential brokerage companies the results of which underscore the rationale behind its proposal. The company thinks the pent-up consumer demand for housing, is more than sufficient to stabilize housing with 95% of its brokers expecting an increase in home sales up to 25% and would have strong stabilizing impact on average home sales prices.
Folks, why wait for the Government? I have been successfully writing offers with seller concessions where in the sellers contribute toward the buyer's closing costs including but not limited to buying down the interest rates for years. If you wait for the pack, you will most definitely be competing for homes and perhaps having to pay more than if you act now!
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# posted by
Viki Benbow @ 1:04 PM
