I read an interesting article in the Washington Post today. It was about the reduced number of foreclosures and the greatly reduced discount of buying a foreclosure. These have both been obvious to any agent that is active in the Sacramento market, but it is always interesting to see the national market and media realize it too. The quote that I like the most out of the article is “Zillow found that in Las Vegas and Phoenix, there is “no discernible difference” between foreclosure and non-foreclosure sales. Discounts have shrank to less than 1 percent in Sacramento, 3 percent in the Miami-Fort Lauderdale area and barely 4 percent in Los Angeles.” While I never refer to Zillow for specific property prices, they are a huge number crunching organization and have a vast amount of data at their command. For them to state that the discount for a foreclosed property in Sacramento is only 1% is a pretty significant statement. The market has shifted greatly and inventory is down to less than one months supply, the lowest it has been in over a decade. Prices have been climbing since December and multiple offers are common. To top it all off, the national news is now reporting all about the tight market. The housing market has definitely...Read More
Monthly Payments of Home Buyers Almost at 1981 Levels?
OK, when I saw this headline I had to read the article. Monthly Payments for Home Buyers On October 6, 2011, in Economist Commentaries, by Lawrence Yun, Chief Economist A home buyer purchasing a typical American home at the prevailing average mortgage rate today would have a mortgage payment of $698 a month. This figure is not much different from what a home buyer would have faced 30 years ago. In 1981, home prices were much lower but mortgage rates were reaching 18 percent. Today, home prices have come down by about 33 percent on average from the bubble years, but prices still remain comfortably higher than those of the 1980s. However, thanks to record low mortgage rates, the monthly payment obligations have been greatly reduced. After reading the article I still didn’t believe it and had to run the numbers for myself. I decided to take real world numbers, here in Sacramento, on a listing that I currently have in Downtown. I mean, maybe this is true for a home in Columbus GA, but it can’t be true here… The condo that I have listed at 958 Q Street is listed for $195,000. When it was first built in 1982 the units in it’s complex were selling for $55,000. Back then you had interest rates at 18%. If you did a 3.5% down loan like today’s common FHA loans, factoring in average rates for tax and insurance, your payment would have been $867 per month (not counting HOA or any possible PMI). Today you can get a FHA loan at 4% (one of my buyers just locked at 3.675 with no points!). That makes a payment of $1167 per month or about $290 more today than 30 years ago. I was feeling pretty smug for about 5 seconds until I started to think about what $867 would have bought me 30 years ago compared to today. Going back to my youth when a quarter bought you a candy bar and now I think they cost a buck, I had to go to an online inflation calculator. $867 from 1981 after adjusted for inflation is $2150 today! Well, me and my short lived smug self will just have to contemplate these numbers and the buying power of today’s interest rates over a long over due candy...Read More
Pricing your home to sell
I get regular questions on how to price a home to sell. Location and Condition are very important, but if it’s not priced right, it won’t sell. This article speaks to many of the points in pricing, but I think it leans a little heavier on the Sold comps than the For Sale competition in the market. Most buyers will look at all the properties for sale and compare your listing to them and only after they have made the decision to purchase your property will it be compared to what has recently sold. If you aren’t competitive, you won’t ever make it to the point of being compared to past sales. • How to Use Comparable Sales to Price Your HomeBefore you put your home up for sale, use the right comparable sales to find the perfect...Read More