Property values, experts say, may be on the verge of stabilizing for the first time in nine years. The Marin real estate market is no exception, as many areas are showing signs that the bottom is here. Two of the areas that seem to be stabilizing the most is the Mill Valley real estate and Tiburon real estate markets. Across the nation, recent reports indicate that median selling prices are about 3 times median incomes. This is a very comparable ratio to that of the real estate boom during the eighties. Just 3 years ago, when the housing market began its downward turn, this ratio was about 4.6. Factor in the lower interest rates today and homes are even more affordable than they were back then.
Qualifying for a home loan is more difficult than it was in the eighties, but if potential buyers are willing to conform to the standards of that time, they should have no problem in acquiring financing. These standards include a twenty to twenty-five percent down payment, income-tax returns from several years, and a realistic appraisal of the property’s value.
At the current rate of houses selling, the inventory of unsold houses is about twice the norm. Add in the sweeping foreclosures on the way and property values should drop even more. However, the President’s “Homeowner Affordability and Stability Plan” should ease the situation. The plan, along with rock-bottom pricing on homes, should be enough to spark would-be homeowners to enter the market. However, the economy will keep some potential buyers out of the market. Thus, supply of empty homes will continue to surpass demand and prices should continue to drop. Some analyst have recommended the creation of a government agency that would offer to buy homes at an average of 2.9 times the median income in the local area. The agency would not have to actually buy many homes as the offer itself would serve to set a floor on the price of unsold homes. The houses actually purchased by the agency could be rented out until the market turned and then sold at a profit.
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