I must hear this question at least 20 times a day, from past clients to my referral partners and other mortgage brokers. Since I'm an optimist, my answer is always a resounding "yes" and lately I'm believing myself more and more.
Although we've been hearing negative news for quite some time now things aren't as grim as they may seem. This morning was no exception with a nice front page article entitled '1 in 7 Homes is Underwater - Mortgage Meltdown' contributed by the San Jose Mercury News.
While it may be true that 1 in 7 homeowners in Santa Clara County owe more on their home than it is worth, if you look at the statistics you'll see that not every neighborhood is the same - some neighborhoods have larger price declines while other neighborhoods have seen little to no decline at all, like in Cupertino, for example, "only 1 percent of owners who purchased their homes since 2003 were underwater in the third quarter" of this year. And for those borrowers who do owe more than what their homes are worth, as long as they can hold on and make their mortgage payments, the value of their home will eventually rise again. And for the other unfortunate homeowners who find that they can no longer afford their mortgage payments, loan modifications and even short sales are becoming streamlined and easier to negotiate.
By the way, the best thing to do if you find that you are underwater and feel that you cannot or will not be able to make your payments anymore is to call your lender or mortgage servicer and find out what options you have. Other resources exist such as the Hope Now Alliance or you can look up your local HUD counselor who can assist you as well. Don't hesitate to contact your real estate agent or mortgage broker either as they can be helpful as well.
For some positive news, I found an article published by Realty Times, 'Real Estate Outlook: Home Sales Rise' that suggests that home sales are on the rise in California. According to the author, "Resales of existing homes jumped by 5.5 percent last week -- that was the largest monthly increase since July of 2003, in the middle of the housing boom. In the western states, sales were up a record 34.4 percent!"
And according to RisMedia's article, 'Good news for Real Estate? Largest monthly home sale percentage increase in 5 years reported', the month of October showed the highest gain in home sales in 13 months and the highest pecentage gain in over 5 years. Although alot of the gain in sales can be contributed to the increased demand for foreclosure properties, this may be interpreted as a start to a turn-around in our market - the demand for the lowest priced homes is continuing to outpace supply - which should lead to a rebound in price stability accross the board.
Along with falling inventory, mortgage interest rates are still at historic lows. Buyers can get 30 year fixed mortgage financing in the high 5% to low 6% range, which in historic perspective is outstanding. The hardest lesson to face on the financing side is that programs have been tightening up even disappearing making it difficult for buyers to qualify without perfect credit score or large down payments. Although there is still plenty of useful down payment assistance programs for qualifying first time home buyers.
And for real estate investors, or even those looking to get out of the stock market and into a more secure investment, real estate is looking more appetizing by the day. The credit crunch continues to put upward pressure on the rental market making everything from single family residences to multiple unit properties more attractive than ever, especially if investors can get these properties at 30% to 40% discounts off their 2005 values.
We're in a market where in five years you'll hear everyone saying that they wish they had purchased properties back in 2008. There is only continuing evidence that this may become reality sooner than most people think, especially with the expected decrease in foreclosures to come from additional legislation pointed at assisting delinquent homeowners. As well as news from major lenders such as Chase Bank and CitiMortgage announcing new plans to increase their efforts at modifying their existing delinquent loans while agreeing to stop pre-foreclosure filings for the next 90 days.
With the supply of new foreclosures that may be coming onto the market decreasing, and with home sales already picking up, combined with an aggressive charge led by Capital Hill to loosen our lending standards, we just might feel that sunlight at the end of the tunnel sooner than later!
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