Ok, we've all heard the statistics of a 27% drop in the real estate market in July. What a great headline to sell newspapers and get the public's attention and send everybody into a frenzy about "the market." What do you say to somebody when they ask you, "how's the market?" anticipating your foray into a doom and gloom story?
I think that as the professional in the marketplace and someone who works in real estate day in and day out, it's my job to take this opportunity to spin a different angle to the public than they hear on NBC news. Not that I live in a plastic bubble, but it's important that people realize that there are two sides to every story. I like to focus on the upside of the current real estate climate.
We all anticipated a soft July because we knew the tax credit was coming to a close and people had to close on their purchases or loose the credit. so, it was a Government stimulated increase in business, not a natural progression of the economic cycle.
Lawrerece Yun sized it up well in his podcast this week. The people that remained in the market after the tax credit typically fell into 3 groups, investors, 100% cash buyers and people who could afford to purchase expensive homes. The first time homebuyer fell out of the equation. And is still out of the equation....It will likely be several months before we see that pipeline fill up again with normal purchasers. What we do see in todays market are those 3 groups of people and people who are confident and financially secure enough to be able to take advantage of the current housing affordability index.
Lets take a look at that. Take a typical FHA loan with a 97% Loan-to-value ratio FIVE YEARS AGO, at the market peak, on a median priced home in the US. That mortgage amount would have been about $1,650.00.
Take that same FHA loan TODAY, and your mortgage amount would be about $1,1500.00. Thats a $500.00 PER MONTH savings realized over the entire life of the loan. On a 30 year note, that would be $180,000.00 that the consumer would save by acting today and purchasing a home. I don't know many people that wouldn't leap at the opportunity to save $180,000.00.
These are very compelling affordability conditions for buyers that are financially capable of making a purchase in today's market.
Last Thursday, Mortgage buyer Freddie Mac said that the average 30 year rate for a fixed loan was 4.35%. While that is up 4.32% the previous week, that was the lowest number since Freddie Mac began tracking rates in 1971...WOW!
We have seen rates begin to creep back up a bit. The low rates have NOT stimulated a surge in purchases, therefore, it is unlikely that they will go any lower, in fact they may begin to trend upwards. This would tyically be a sign of an improving economy, another good thing. If the consumer confidence index does not increase, we will probably see rates hover where they are for a while.
This is all good news. It's a great time to buy and inventory is still plentiful I am working hard every day to help buyers get into a new home and help sellers position there homes to take advantage of an active buyer's pool out there that is ready to pull the trigger when they find value in a home that they are looking for.
If I can be of any assistance, please don't hesitate to contact me or visit my website at www.LakesRegionNHHomes.com
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