I see a lot of misinformation posted on this site from those who have their own personal agenda. One poster says it's not a time for paralysis - it is a time for concern and performing your due diligence.
Doing nothing is a great option and that's what those of us who understand this marketplace are advocating.
Employment (NOT Housing) will lead the recovery - get employement stabilized and the housing situation will improve. Interest rates are somewhat irrelevant in a declining RE marketplace. Every one % increase in interest rates translates into a 10% decline in housing prices.'
The one comment about a % increase in Prime loans being a good thing is totally misleading as Prime and Jumbo loans are the next segment to take a hit, with a much greater impact on housing prices and stability than what happened in the sub prime segment. Combine that with the Option ARMs coming due and this implosion continues until 2012.
We are not even close to seeing a bottom in prices in homes 'priced' at $500K and above. They have another 30-40% decline before the proverbial bottom is reached.
I'd rather pay more in an interest rate than lose equity $$$$ as the market continues to tank.
Right now, we are seeing deflation in housing in the Charleston marketplace especially in land, materials, labor. You can build today for much less than what some of these higher end homes are listed at.
There is a huge shadow inventory of homes that haven't even hit the marketplace yet and when they do, prices will fall further.
Wait, and wait some more and you will have your choice of homes at the price you are willing to pay.
"Sales of existing homes priced above $750,000 made up 2.3 percent of all sales in the first three months of this year, the Realtorsâ€™ group said. Thatâ€™s down from 4.4 percent of homes sold in 2007, before high-priced mortgages dried up.
â€œThe high end is the worst performing sector of the residential real estate market, unquestionably,â€ said Bernard Baumohl, Chief Global Economist of the Princeton, N.J.-based Economic Outlook Group.
The recession and collateral damage in the stock markets, have knocked many luxury buyers out of the market. Falling home prices coupled with new appraisal rules have scuttled many deals. And, lenders have jacked up interest rates and down payment levels for high-priced mortgages.
Since the credit crunch began in the fall of 2007, few investors have been willing to buy mortgage-backed securities because of soaring default rates. The governmentâ€™s Fannie Mae and Freddie Mac are virtually the only buyers left, but they cannot purchase mortgages above $729,500. That means any lender who makes a mortgage above that amount â€” known as a jumbo loan â€” will have to keep the loan on its books.
To compensate for that risk, lenders charge higher interest rates. The average rate for 30-year fixed rate jumbo loan was 6.91 percent last week, according to a survey by Bankrate.com, compared with 5.7 percent on a conventional 30-year fixed rate home loan. That higher rate, for example, means a borrower with a 30-year $750,000 loan would pay almost $600 more a month than at the lower rate.
Rates can be even higher for second homes, which are considered investment properties and therefore riskier for lenders. Second-home buyers play a large role in the luxury market, from Marthaâ€™s Vineyard to the ski areas of Colorado.
â€œThe second home market is pretty dead,â€ Baumohl said. â€œBanks are being very careful who they provide loans to.â€
here is a link to current charleston County foreclosure list
The # of filed foreclosures since Jan1 number in the hundreds.....however the system is slightly bogged down which means we are not even seeing the tip of the iceberg. I personally know of bank owned homes that are just sitting vacant and not assigned to an agent yet - what does this indicate? perhaps even the banks are worried about flooding the market with their inventory.....
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Couple that with no move up buyers and the inevitable lifting of the SC moritorium on foreclosures in the short term and you have a recipe for disaster.
Another element that is likely to contribute to more foreclosures are the 3 year ARMs that were issues in 2006 and are about to mature. Following that we will see the 5 year ARMs come due. Combine this with continued rise in unemployment and the depletion of personal credit lines and we're in for more trouble. These foreclosures and short-sales will continue to place downward pressure on all home values until they are cleared out and the existing home inventory begins to sell. Although we may be close to the bottom of pricing in general, the recovery will be long and slow with prices not returning to todays levels until as far out as 2014. Mixed good news, given all the money printing the Fed is doing, inflation is inevitable. Which means the price of a loaf of bread is probably going up, but so too should house prices. Hang on, it should continue to be an interesting ride.
However, there is a silver lining in the market. Buyers are returning in large numbers and REO's are selling in a few days with multiple offers being the norm. I too believe that a new wave of foreclosures is due soon but, at least here, the savvy buyers are ready, willing and able.
It is an exciting time to be a Realtor in the Valley of the Sun. See more at http://RalphandTricia.com
Full stats are there for all of Charleston county. Are more coming ? Now doubt there will be more. How many is unclear. 86% of current loans in Charleston are prime, up from 83.6% two years ago. A positive.
The mortgage broker with my company would be happy to give you more statistical insight, Greg Meyer, 843-414-1600. Another resource is the College of Charleston's Dr. Tim Allen.
49 Broad St
Charleston, SC 29401