CAR Releases 2009 Housing Survey
INDUSTRY NEWS, SHORT SALES
July 27th, 2009
The California Association of Realtors released their annual survey of home buyers. Factors motivating buyers to buy now center on favorable home prices, record-low mortgage interest rates and concern that interest rates may climb in the near future. More specifically, 68% cited price declines as the main reason they decided to buy now while 39% were motivated by low interest rates and 23% feared future interest rate spikes.
Nearly half the buyers purchased a home through a traditional market sale. 38% purchased a foreclosed property and only 13% bought a short sale. Just over half the sales are distress sales-REO or short payoff properties. Buyers of distressed sale properties reported more difficulty obtaining financing. Buyers rated their level of difficulty on a scale of 1 to 10. Distress sales were rated at a level of difficulty as 8.9 compared to 7.7 for traditional properties.
A local mortgage broker offered a theory as to why banks are making short sales difficult. Banks can write off the losses when they take a property back in foreclosure. Banks can also package and sell the properties they acquire to other banks recovering some of their capital. They can then ask for TARP funds to offset a portion of their losses.
Low mortgage rates and more affordable home priceshave contributed to a housing market rebound in 2008 and 2009 after two years of sharp declines according to CAR President, Jim Liptak. State and federal tax credits are cited as additional factors helping the market recovery. However, money set aside for the state tax credit, allocated to buyers of new homes, has been largely exhausted.
Looking ahead, the concern I hear over and over again from financial analysts is that mortgage rates could increase significantly due to the increasing national debt. The more money the feds print, the sooner this day of reckoning may come!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
