What difference does a year make? All would-be home buyers, waiting for the market to bottom, should consider the following: While it's true that the best environment home buyers have ever seen may have been from January to late May of this year, outstanding opportunities still exist for those who act soon. If you are planning to buy a home, there are important dates on the calendar that you need to take note of so you can act accordingly. These dates represent money-saving opportunities for consumers.
We may never see rates this low again: In response to the faltering economy in late 2008, the Federal Reserve announced they would start buying Mortgage Backed Securities (MBS). Immediately after this announcement, 30-yr. fixed rates plunged into the mid 4% range. What you need know is, this program by the "Fed" expires on 12/31/09. With the Fed having bought up to 85% of the MBS since March, when the program expires, the rise in mortgage rates may be as dramatic as the drop this past November, returning to levels well above 6%.
Want $8k for buying a home? The $8,000 tax credit for first time home buyers (anyone who has not owned a home the past 3 years qualifies) is set to expire on November 30, 2009. Buy a home and close escrow on December 1st, and you may have just lost $8k.
Homes have never been more affordable: The National Association of Realtors® keeps track of what is known as the "Home Affordability Index." The Home Affordability Index is arrived at as a function of both median home prices, available interest rates, and median family income. The index represents the amount of monthly income that is required to pay a mortgage payment. In 2005, approximately 23.3% of a family's monthly income was required to pay a mortgage payment. With falling home prices and interest rates, the percentage of monthly income required to pay a mortgage payment is now approximately 15%. This means that for a family at the median income level purchasing a home priced at the median income level, the monthly mortgage payment has declined nearly 36%.
It is always easy to look back and identify times people should have acted, and this could well be one of those times people will look back and say, "Wow, I could have bought a home in 2009!"
Regional Snapshot: Available inventory of homes for sale in Sacramento county dropped to 5,628 with 1,766 home sales last month. Home buyers are now looking at only 3 months of inventory, which in a typical market would be termed a "sellers market." Of the 1766 sales, 963 were bank owned (55%), 219 were short sales (16%) and the average home sales price rose again to $201,457.
Folsom: Folsom closed out June with 60 home sales. 15 (25%) were bank owned sales and 12 (20%) were short sales, making distressed home sales 45% of the total volume. The average home sales price was $383,000 with an average of $184 per square foot. Folsom is now down to a 4.5 month supply of inventory. Excluding short-sales, Folsom is down to a 3 month supply of inventory.
El Dorado Hills: There were 55 home sales in EDH in June. 17 (31%) were bank owned and 5 (11%) were short-sales, making 42% distressed home sales. The average sales price rose to $525k with an avg. of $161 per square foot. Inventory is now at 6.4 months.
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