With the Economic Stimulus Package and the Foreclosure Prevention Plan underway, many Americans are anxious to move forward, realizing that there will still be weeks and months of discussion and fine-tuning before all elements will be understood. At the end of the day, some elements will be popular with the majority, perceived as helpful to our recovery – and some elements will remain under heavy criticism and largely unpopular. It’s the American way. But I hope most will agree that it’s time to get back into a position where we feel secure, where we feel confident and where we can once again make strong decisions regarding our future…and that includes decisions we make about real estate.
Many buyers have been on the sidelines. They’ve been waiting to see what will happen to interest rates and to see what the results of the Economic Stimulus Package would be. Some have been on the fence regarding a personal real estate decision even though their down payment and their jobs have been safe and secure. You can’t really blame them for being cautious – but things are definitely starting to change at the entry price levels. Most new offerings listed at a competitive asking price are receiving multiple offers again. Many older listings that have taken notable price reductions are experiencing the same thing.
Now I realize that every individual situation is different so please don’t take this as a broad based brush that I am painting with, but what I can say is that buyers may truly be in one of the best positions than they have been in some 50 years to purchase a home. Consider the benefits to today’s homebuyer:
• New $8,000 first time home buyer credit (and in most cases, the buyer does not have to repay the tax credit).
• Reinstatement of FHA, Freddie Mac and Fannie Mae loan limits. These limits were equal to the greater of 125% of the 2008 local area median home price or $271,050 for FHA and $417,000 for Fannie and Freddie, with an overall maximum cap of $729,750.
• Historically low interest rates. In my February Reality Check message I shared with you how changes in mortgage rates can affect a consumer’s purchasing power. The fact is, right now interest rates are low—certainly by historical standards—and those low rates translate to increased purchasing power for buyers.
• Though we’ve seen decreasing inventory in many of our markets over the last several weeks, we still do have quite a bit of inventory in many markets. This translates to more choices for buyers. We are also anticipating that Spring will bring on a lot of good, new inventory for us and that should bring in a surge of new buyers—for today’s buyer’s, that’s competition for you.
My point is that Buyers may not want to make the mistake of waiting. Sitting on the sidelines could cost plenty in terms of higher housing prices, increased competition, fewer choices and higher interest rates. We live in one of the most desirable areas in the world and regardless of the recent slowing in the market, there is still high demand where value is perceived –normally value is perceived with respect to condition and competitive pricing.
The current housing market offers a unique window of opportunity for confident buyers. The exciting news is that for the first time in quite a while, the stars are in alignment for consumers: mortgage rates remain at historic lows, loan limits have been increased, there is an $8,000 first time home buyer credit, and in some areas a good selection of homes to choose from. The only way to know that the market has “hit rock bottom” is when it is on its way up and by then, the window of opportunity is gone. Among the ongoing concerns consumers currently have regarding our economy and real estate should be one additional one: 10 years from now, we could be looking back at this market, and wish we would have bought a lot more San Francisco Bay Area real estate
Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage