In this blog I am going to put the real estate market, nationally and in the Greater Reno - Tahoe area, in a nutshell for you.
Nutshell Highlights:
- Pending Sales Are Up
- Bottom of the Market
- Reno Market Snapshot
- Slow Growth
- Tax Credit (First Time Buyers)
- Mortgage Loans
- Inflation and Mortgage Rates
Pending Sales: Nationwide homes which entered escrow were up by 5.3%. The South made the biggest jump with an increase of 9.3% and the Western states were second in increased pending sales with an increase of 4.6%. The Northeastern states pending sales increased by 3.4%while the Midwestern states saw an increase of 1.3%.
Bottom of the Market: The housing recession appears to have reached bottom and is on the mend. Pending sale reports were up in every region of the country, indicating a definite turn-around in the housing market. Pending sales (homes entering escrow) are strong indicators of the real estate market's direction because pending sales become the closed sale reports for the next two to three months.
Reno Market Snapshot: Inventory is down slightly. Pending sales have held steady in both July and August. Foreclosures are still a driving force as well as short sales, keeping home prices very competitive and the most affordable in years. It is a great time for buyers to make homeownership theirs.
Slow Growth: The real estate market does appear to be turning around although analysts are predicting that growth in the market will be slow to moderate for the next year or so. When the housing market began its downward spiral most of the nation was considered to be overvalued. Today, the National City Corporation's Housing Valuation Analysis tells quite a different story. Most areas are considered to be valued correctly or to even be undervalued. Buyers in every region of the nation are recognizing this fact and are entering the real estate market in larger numbers.
Tax Credit: The Housing and Economic Recovery Act has, for a very limited time, made available to first time buyers a tax credit up to $7,500. Analysts are estimating that the tax credit could create two million real estate transactions, stimulating the market even more. The tax credit is like a 15 year, interest free loan. The money must be paid back to the IRS with a $500 recapture tax debit. The tax credit may or may not be a wise choice for you. For your personal financial situation you should speak with a financial planner or tax consultant.
Note: First time buyer is defined as anyone who has not owned a home in the past three years.
Mortgage Loan/Rates: Mortgage guidelines are changing. Due to tighten credit standards and changing guidelines, speaking to a mortgage lender now is a very wise choice. A qualified lender will be able to help you determine your buying power and the best time for you to buy. An example of this is the FHA loan down payment requirement which is approximately 3% but will be increasing to 3.5% after January 1, 2009FHA is currently the most popular of loans for first-time buyers due to its low down program and less stringent credit guidelines.
Inflation and Interest Rates: Fears of recession diminish each day. Experts are now predicting that the economy is in a slow growth period and will most likely continue in that vain for the next few years. However, the Feds are carefully watching the inflation rate which rose 0.3% according to the latest reports. Historically, if the economy experiences an inflationary period, interest rates rise, as they did last week. Today's rates are 6.57% up from 6.375%.
Interest rates greatly affect your purchasing power. Waiting for home prices to decrease further may not be the wisest decision if interest rates rise. Many economists are predicting that the interest rates will go up after the election. Currently, the Feds have made no move to raise or lower the short tem interest rate and continue to hold to their "wait and see" policy.
Related Articles:
Washington Report: Housing and Economic Reform Act
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