Home sales continue to rise

Home sales continued to rise nationally climbing to over 6 million for the first time since February of 2007. More importantly compared to this time last year home sales rose over 23%. The news is likely to be even better in the local DC market. Realtors are telling me if a home is priced correctly in the "hot markets" that multiple offers are arriving within days of listing. If a home is still sitting for 30 days or more it's over priced, needs some TLC or may not be in the best market.
With unemployment over 10% and so many homes that are underwater it can be much harder to sell or refinance. Additionally HVCC is a total disaster and causing buyers and sellers heartburn. I am telling my clients now that it doesn't really matter what price you agree for the house it's going to come down to a (likely) out of market appraiser coming in and doing the quickest job he can. I also have never seen the amount of paperwork that banks now require it's truly different for each loan that is now in the closing stage. Even with the same lender we get different rules and requirements for loans closing within days of each other. There are several reasons that the home sales were so high. The first time home buyer credit was slated to end November 30th but has been extended thru June 30th 2010. It has also been expanded to include current homeowners but they do only get $6,500 thru June 2010. The income limits were raised as well to 125k for singles and 250k for couples. You can expect to see reduced numbers for the next 2-3 months, some of which is normal and some because of the glut of purchases that are now getting finished.

Of course mortgage rates are among the lowest in history.We are talking in the 4.85% range for conventional loans under 417k and 5.125% for jumbo if you have excellent credit. Most ads I see on the Internet combine two or three programs into one ad but believe me it's not one size fits all for loans these days. You have to talk a lender who takes the time to get the information that determines your rate. They are, credit, income, assets, reserves and what what type of home you want to buy. And don't forget about the down payment. As I wrote in last weeks blog I expect to see rates climb in March if not earlier when the Federal reserve stops feeding the artificial demand for MBS. Interesting note also, condos really jumped up at over 13% for the time period. Home prices still declined from last October but the decline was the smallest in more than a year though. Foreclosures are still driving prices down overall and will continue to do so for the next few years in certain markets. For example, I searched quickly with just one company that does foreclosure auctions. I found only two in the 20854 zip code and none in Bethesda. Germantown though had 7 different homes. To sum up alot of information some of which contradicts itself, I still feel that it's an extremely good time to buy a home. Rates are low, prices haven't jumped like in past years and there are tax credits available. There are also temporary loan limits that can help you get a good loan over 417k. For awhile it was impossible to get a rate of less than 8% on a jumbo loan until Fannie and Freddie stepped up. Yes you may see small decreases in price in the short term but if you are on a 30 year fixed at a rate of 5% or below does it really matter? Long term the investment pays for itself. Americans aren't treating their homes like credit cards anyway these days mainly because the banks won't let them. Will that return some day as banks and homeowners forget how bad it is right now? That is the only thing I am sure about as I write this.

Thanks,
Brent
Loan Officer