mortgage rates

2009 East Bay Real Estate Pricing Strategies – Jim Walberg’s Recommendations!

When a Seller is considering a pricing strategy for their home, it is critical for them to not get caught in the trap of listing a bit high and hoping for someone to pay top dollar.

As we move through the last few days of 2008 there will be a large number of Sellers who will be putting their homes up for sale in the East Bay in the first quarter of 2009.  There are many factors that are now in play that will require a Seller to be VERY smart regarding their pricing strategy.  It appears that consumers are still thinking that the price corrections of the past 13 months are not over.  Consumer confidence  continues to be a key factor as to why many Buyers are still waiting in the wings and not making offers.

The East Bay is still in what the mortgage lenders and banks  have listed as a “declining market”  when they are having homes appraised.  The worst situation for a Seller today is to price their home at the top of other similar homes in their market area.  The situation to avoid at all cost is price cuts after price cuts because the home started way to high.  This creates a situation of “death by a thousand cuts”.  The home contracts a “virus”  among Buyers as if there must be something wrong with the home, and it attracts the “bottom feeder”  Buyers thinking it must be a home that could be stolen.  And, from my experience, there are very few Sellers that want to consider pricing their home aggressively from the first day it is on the market.

The 2009 price strategies include finding a Realtor who very experienced with a Buyer’s market, and who clearly understands local market conditions.  Next there are several critical steps in the pricing process that must be addressed.

1. Review similar homes that have sold in your local market area in the last six weeks.  Remember, all real estate is local, not national.  Carefully study these sold homes regarding their condition, location, closed price and days on the market.
2. Prepare your home in turn-key condition.  The large majority of Buyers are not investors.  This is the home they will be living in.  With the large number of homes from which to chose, a Buyer is typically not looking for a fixer-upper.  We also recommend that a stager be hired to prepare the interior of the home in model home condition.
3. Location and condition are still key factors when you are finally ready to pick a price. The price of the home needs to be the top one or two values of the current comparable listings.

After the home has been launched for sale, if it doesn’t sell quickly, drop the price fast so you are not caught in downward spiral of price reductions.   For the Sellers that follow these basic rules of the pricing game for 2009, there are Buyers who will be taking action and purchase homes.  And, interest rates are GREAT!  There are Buyers who have been waiting in the wings that need a home in the first quarter of 2009.  Make sure you are the Seller who delivers the best package and price possible for this group of 2009 Buyers.

For more information regarding pricing and marketing strategies for Sellers, contact me anytime.  Your East Bay real estate detective is always on duty.

mortgage rates

East Bay Mortgage Rates Are Not The Issue! Credit Is The Issue!

Today’s mortgage issues in the East Bay is actually the availability of credit to home buyers, and the rising unemployment rates.

The Feds have done a great job in making sure that interest rates are VERY attractive for Buyers.  And, because of this fact, the number of mortgage applications last month were up over 50% from October!  ( However, we are still have 23% less mortgage applications than this time last year. )  There are two “wild cards” that have shown up that are having more of an impact on mortgages than interest rates – availability of credit, and rising unemployment.

The unavailability of credit has become very complicated.  The Feds have poured BILLIONS of dollars into the bailout banks the past ten months.  The banks are grateful, and you and I are on the hook for all those dollars.  The issue that Congress did not foresee is that the banks are now holding onto their new found liquidity.  The intent of the bailouts have been to allow the banks to get liquidity back into the housing markets.  How the banks are able to horde cash right now is by making the securing of credit very difficult.  Several years ago it was not a problem for anyone to get credit.  Today the pendulum has swung the complete opposite direction.  Very few people are able to get mortgage credit today.  There is an exception – FHA – Fannie Mae and Freddie Mac.  These loans are all Federally funded,  and these are non-jumbo loans.  A jumbo mortgage loan is one where it is above the limits of FHA – Fannie Mae and Freddie Mac – above $630,000.

An even bigger factor may be the rising unemployment numbers.  This one is a bit more complicated.  It relates to the increase in foreclosures that is coming because of having a rising population of people who don’t have jobs and are not able to pay their bills.  This issue may be the BIGGEST issue our economy will have for the next year or so.  FEAR is not only paralyzing consumers from taking action to purchase a home, it is impacting business owners who are making decisions regarding cutting payroll costs because of their fear of what economic calamity is coming in 2009.   Take AT&T who is headquartered in San Ramon.  Nationally, they will be laying off 12,000 employees!  Yikes!  Fortunately, very few are exiting out of their Contra Costa facilities.  But, this one decision will greatly impact real estate values. 

THE key to our economy turning around has to do with a healthy residential real estate market.  The health of our National real estate economy will not surface until the wave of foreclosures has passed.  We are still in for some challenging times, Nationally, regarding a further increase in foreclosures. 

With all of this sobering information, remember, ALL real estate is local.  We are so fortunate that the health of real estate in the East Bay, and the Tri-Valley are in a much more healthy condition than many regions of our country.  To show you have local real estate is, Danville has a notice of foreclosure rate of around 8%.  If you go just 20 miles east to the Antioch/Brentwood areas it is over 50%.  Again, all real estate is local.  Leave your thoughts regarding what you are seeing in your markets.  Until next time.