Market Changes, Prime Rate Reductions vs Home Mortgage Rate Increases
There is a very defined difference now from the last six months that has made many of us optimistic for the year. I had many folks last year who wanted to wait with their purchase because of falling home prices, and many home sellers were still hanging tough with their prices. Obstinate sellers who have not kept up with the market, have continued to suffer from falling home prices and are now much easier to work with as they realize their predicament. Home Buyers I have been talking with over the last year or two are now calling me to make their initial consultations. I like that! That did not happen last year. That is another reason why I'm optimistic.
Last Fall, I had a large number of home sales that began escrow but did not finish because of mortgage changes during escrow, and seller's not willing to compromise on terms. That is changing now. Mortgage programs are beginning to gel and lender standards are stabilizing from the free fall - here today, gone tomorrow - conditions that existed last Fall. Our buyer climate is much different this year and presents fewer fundamental changes. We have a much better chance to make it through each escrow this year.
The next challenge our industry faces will be how to reconcile falling interest rates from the Fed with rising home loan interest rates. Investors are worried about the bond market. As the Fed lowers it's interest rates, the bond market suffers and mortgage investors in the secondary market raise their home mortgage interest rates. Home buyers will tend to save more money on their home purchases with a lower interest rate than on a modest home price decrease. We have seen interest rates fall in January, then turn around and move up steadily through February. Those rate changes will have a far bigger impact on buyers than a 7% to 10% decrease in home prices. Do the math on any home you care to pick and I'll bet you see what I mean.
I think we need to carefully watch to see if the cost of mortgage loans continues to increase. If the Fed continues to cut the Prime Rate, the response from secondary investors & the bond market may be to raise the cost of home mortgage interest rates. It is possible that rising home loan interest rates could more than offset falling home prices. Home buyers may pay less and have more to choose from if they buy now.
Sellers will most likely continue to experience an eroding of home prices, with stiff competition from bank foreclosures until the number of foreclosures falls in a year or two.
Just the way I see it today. Warmest Regards,
Mark Thorngren htttp://www.markthorngren.com
The Bakersfield Chamber of Commerce writes in their Community Profile "The town of Bakersfield was named after one of its early settlers, Colonel Thomas Baker. The Colonel planted a ten-acre parcel of land with alfalfa that was used by travelers to feed their animals when traveling from Visalia to Los Angeles. The field was called Baker's field. In 1869 he was appointed to survey a formal township and it was suggested the new town be named Bakersfield since it was already known to travelers as Baker's field." The local housing market is hibernating. The homes here appreciated very little in the last year! You can find a brand new 3 bedroom home for under 350K. Luxury homes normally begin at about 550K. Similar homes in Ventura County -further South -will typically sell for 2 to 3 times this price! Bakersfield has a population approaching 300,000 people and straddles the Kern River. Kern County is the leading oil producing county in the Continental United States and is in the heart of the fourth most productive agricultural county in the nation. The Sierra Nevada, Temblor and Tehachapis Mountain ranges approach the city on 3 sides and provide incredible fishing, camping and boating opportunities. Los Angeles is less than a 2 hour drive South while Fresno is about the same distance to the North. If you don't mind hot summers and you enjoy the invigorating atmosphere of a town experiencing rapid growth, Bakersfield will "knock your socks off." We continue to experience a decrease in home prices. Mixed news for home buyers! We have seen large decreases in home prices and some nice interest rate deductions. At the same time we have seen a long overdue tightening of loan requirements - especially for first time home buyers. We feel this situation will moderate during the coming year, with the raising of the conforming loan limits in FHA loans. But good credit and a healthy downpayment are king right now. To visit the Bakersfield Chamber of Commerce Website and several other Kern County Visitor Websites you are welcome to explore my website links from my Resource Center. Just click on the Buyers Tab and look to the left column for Resource Center. Information on Ventura County and Conejo Valley can also be selected there as well. I have added some new features to my website http://www.markthorngren.com which allow you to check home sales in your neighborhood, receive free reports on real estate topics, and even study a few of my recent blogs. Listen to more information on your free 24 hour recorded HomefFnder Service - (866) 345-7028. Enjoy!
Mark Thorngren www.markthorngren.com
ZIP Code: 93301 Location Characteristics: Bakersfield is located in the San Joaquin Valley and backs up to the Greenhorn Mountains. In many ways the location and views are reminiscent of Salt Lake City. Winters are cooler than further South, but snow is not a normal part of the season. Summers are quite warm and feel more like Texas than California. The community itself has been in the middle of a huge building boom, but this has leveled off in the last year. Commercial and residential properties are blooming everywhere you look. The good news is homes here are affordable, averaging a third of the price of similar properties 70 or 80 miles further South towards LA. As of today's date the local condos start at 80K and double wide mobile homes begin at nearly the same price. Really comfortable single family detached homes can be had in abundance between 200K and 300K and on up. In todays MLS you can find several 3 bedroom homes, brand new or undercontruction for $199,000!
About Mark Thorngren:
I am a "By Referral Only" Real Estate Consultant - which means your needs are my #1 priority. My Business is referral based so that I can spend more time helping folks to find the perfect home, and much less time marketing my services. My goal is to provide exceptional service to you for life. Buying a home is a process which we work hard to make an enjoyable experience. Compare a limousine ride to a taxi cab fare. We want your trip through the home buying process to be comfortable, informative and memorable. We won't "drop you off "and abandon you after we find your perfect dream home. We will make your "ride" smooth and secure - with door to door service. As your Consultant, I will ask you profound, insightful questions to help you discover your greatest needs. I will offer you strategies to save you money, time and effort. As your Negotiator I will be tenacious and thorough in pursuing the best terms and conditions for your home budget. As your Administrator I will carefully oversee all your transactional paperwork, inspections, disclosures and liability issues. I will drain away your stress & strain. It is important that you know that I do have time for you, your family, your friends and business associates and people you like - who could use my help right now.
For free recorded real estate information you are invited to call 1 (866) 345-7028 or dial extension 120 for a client recommendation. Please visit my website at www.markthorngren.com to research all your home needs.
These reports reflect the views and opinions of their authors and are not necessarily the views and opinions of Realty Times.
