2009 is at an end and the general opinion is that it was a good year for home buyers. The number of home sales increased by 7.7% over 2008 due to three important factors; home prices dropped to record lows due to short sales and foreclosures, interest rates dropped with 30 year fixed rates as low as 4% and President Obama signed a bill that offered a first time home buyers a tax credit of $8000. For more information on the 2010 version of this bill, go to the Homebuyers Tax Credit Changes.
The First-Time Buyer Housing Affordability Index rose dramatically in 2009. In simple terms, an entry-level home is priced 85% of the median homes sales price, and in 2009-64% of the homes were purchased in the entry-level price range. Compare that to the 2007 when the index was under 30%. This condition is due largely to the number of distress sales; short sales and foreclosures (or bank owned homes).
In today’s market great properties are selling at 30% – 50% below what they sold for in 2006. In Northern California there are lots of good properties listed at the lower end of the price range, giving buyers lots of opportunities and sellers multiple offers.
Any Realtor selling houses in this market will tell you that there is now a shortage of homes on the market in the lower price ranges. Banks have been holding onto REO properties for a variety of reasons, however, this situation may change in the next few months. At this moment in time, home prices seem to have bottomed out and (in some areas) may have even started to increase due to multiple offers and shortage of inventory.
Currently home loan interest rates are low, as low at 4% for 30 year fixed rates. However, investors with cash often have an advantage when negotiating for short sales and bank foreclosed properties. Some banks seem to prefer cash deals, but some are just as happy with a 20% down buyer.
At the TOP end of the market, houses can take much longer to sell resulting in huge price reductions. Homes that were going for $3 million in 2006 are now struggling to sell for $1.5 million. And homes that were going for $1.5 million are now going for $800,000 to $900,000.
So now is the time to take advantage of the huge drop in California real estate prices. For certain, there will be a recovery and it may not be too far away. There some great homes for sale out there, but in this market you have to be patient, alert and responsive, and above all have your money (and/or loans) ready to go. It is also important to work with an experienced (C21MM) real estate agent that you can have confidence in.
Originally, the federal tax credit for first-time home buyers was scheduled to end November 30, 2009. The big news for November came when a new bill was passed that not only extended the Federal Housing Tax Credit to first-time home buyers ($8,000) to April 30, 2010, but also expanded the scope of the credit to include home buyers purchasing second homes (with a $6500 tax credit). For more information, be sure to contact a Century 21 M & M Real Estate agent.
The extension and expansion of this Federal Tax Credit for Home Buyers should ensure continued improvements in the California housing market well into 2010. And many insiders are predicting a new influx of foreclosure inventory to be released in early in the year.
At the close of 2009, John Melo, CEO, and Larry Matos, President/Broker would like to express their appreciation to the thousands of home buyers and sellers who did business with Century 21 M & M Real Estate during this year. They would also like to thank the outstanding Realtors and Staff associated with Century 21 M & M Real Estate for their efforts in providing ‘award winning’ service to our clients during 2009.
John Melo states “As a real estate company we look forward to helping 2010 home buyers and sellers find homes in the coming months. After all, who knows how long we will be able to enjoy the benefits of the current market conditions.”
All of us at Century 21 M & M Real Estate would like to wish you and your families a Happy and Prosperous New Year!