Agent619.com Real Estate

In some housing markets, buyers are back, spurred on primarily by the drop in housing prices.

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In some housing markets, buyers are back, spurred on primarily by the drop in housing prices. In foreclosure central, aka Eastlake/Otay Ranch houses are still sitting, but the good ones are receiving handfuls of offers. Poway is turning over it’s well priced foreclosure and short sale inventory within 1-2 weeks. However in Mira Mesa, it is a feeding frenzy much like throwing chum into a school of sharks! Mira Mesa homes are receiving offers from home buyers who haven’t even seen the property and…they are writing offers $50,000.00 above the listed price!!! Can you please tell me what year it is again…Are you sure it’s 2009 because I could have sworn it feels like 2004 all over again.

That drop has substantially reduced the monthly cost of homeownership, creating conditions where owning a home is less costly than renting one. The greater Phoenix area is down 50% from market highs. Investors are snapping up distressed properties. Absentee buyers accounted for nearly four of every 10 homes sold in April. Investment companies are taking notice as well. CBI Group, a Canadian real estate fund, is purchasing property in the greater Phoenix area. An initial fund was established to acquire 175 housing units, anticipating that rental income will allow the company to recoup their investment in about five years. More recently, the CBI Group has opened an additional fund to purchase another 160 properties.

Similar housing conditions prevail in California and Florida, where brokers are seeing bidding wars on relatively cheap homes in foreclosure. Distressed properties accounted for about half of all home resales nationwide in March. As prices decline, housing affordability has jumped 10% during the first quarter of 2009 to its highest level since recordkeeping began 18 years ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.

Lower borrowing costs are also making real estate more attractive. The Federal Reserve has moved aggressively to push down mortgage rates by purchasing long-term securities. This has brought rates on 15-year and 30-year fixed-rate mortgages to historic lows. Existing home sales rose 2.9% in April to a seasonally adjusted annual rate of 4.68 million. On a month-to-month basis, sales were up 11.6% in the Northeast, 3.5% in the West and 1.8% in the South. Sales in the Midwest fell by 1.8%.

Home builders are also seeing an uptick in business. Toll Brothers Inc. recently announced deposits for new homes rose in the fiscal second quarter from a year ago. And the National Association of Home Builders recently stated this confluence of market conditions amounted to "the best home-buying conditions of a lifetime."

But the bottom line question is: WHERE ARE THESE BUYERS COMING FROM? Whenever the economy slows down, normal people tend to save their cash. Jeff Luzadas, a REALTOR with www.Agent619.com believes that because of the financial market crash of banks, insurance companies like AIG, and investment firms (Bear Stearns and similar), people are distrustful of leaving their hard earned cash in banks right now. On top of that, bank are not even trying to generate good will among its clients with higher interest rates on Saving Accounts or CD’s. So the question is: DO I PUT MY CASH IN THE DISTRUSTFUL BANK OR DO I SPEND IT WISELY ON A BETTER PAYING INVESTMENT? Common wisdom points to spending the money wisely rather than risk it disappearing under inflation or bank scandals. Of course take Luzadas’s response with a grain of salt, but you can’t deny the fact that once people see their bank accounts full of cash and just sitting around without earning interest, another avenue for investment will eventually enter the scene. In this case real estate, at least in San Diego, California.

Is it time to buy your first home or an upgrade home? It depends. If you don’t have $5000.00 in cash for closing costs in addition to 5-20% for a downpayment, then we recommend waiting till you have enough financial stability to save. But if you DO HAVE ENOUGH cash in the bank to pay for closing costs and a down-payment, then it maybe time for you to test the waters and see what’s out there. By the way, San Diego’s MLS, SANDICOR, reports that 2 consecutive month sales price increases for April and May 2009 especially in areas north if I-8 (Claremont, Tierrasanta, Linda Vista, Mira Mesa, Rancho Bernardo, Poway, etc).