If you are a Buyer have you noticed that there are not many houses currently on the market in the East Bay? Inventory is at one of it’s lowest levels in the last twelve months. And, those houses that are on the market are not that spectacular. What typically happens in the yearly real estate cycles is that January has one of the lowest months of inventory, AND there are many Buyers who want to buy homes. In addition, there are several other factors that are highly motivating Buyers – buyer tax incentives until April 30th, and the expectation of mortgage interest rates rising all the way through 2010. The Buyers are absolutely correct regarding those buying factors! SO…if I was a Seller, knowing what I know about real estate trends and the 2010 market, I would get my home ready for sale right NOW! The best prepared homes that are in turn key condition, and are priced at current market rates will get the highest prices that will be achieved in 2010!
An additional factor for home Buyers are the changes that will be announced tomorrow. At some point the Buyers are going to slow down their thirst from cheap homes because it is getting more difficult to qualify for loans. FHA home loans have created new ways to create revenue to the government agency. Here are the latest changes for Buyers wanting an FHA home loan;
- The 3.5% down payment is still in effect.
- Mortgage insurance costs are increasing from 1.75% to 2.25%.
- Credit scores – FICO, will be at a minimum of 580.
- Seller concessions will be reduced from 6% to 3%.
- FHA will report lender performance ranking to assist Buyers in their selection of loans.
In addition, Sellers will be feeling the effects of the increase in Short Sales and bank foreclosures in the $1 million+ price range for 12 months or more. The trend of $1 million+ slice of the market is upward and is projected to continue. This will dramatically influence the appraisers who must sign their names to their value report to banks as to what a home is actually worth.
SO…if you are a Seller, get your home on the market as fast as you can. As the year unfolds, I, Jim Walberg, predicts that the highest prices for closed escrows in the East Bay will be April and May. That means that those closed escrows have to be opened in late February, March and early April.