At this writing (end of March, 2014) it seems like neither buyers or sellers are happy right now with the way our market is trending. I can’t blame them. Buyers are frustrated because of three issues (in no particular order):
1) Rising interest rates- Sure we all read that Lenders are relaxing their loan requirements. I read this morning that Carrington Mortgage is now approving loans with a 550 FICO score. This is a crazy development! BUT…interest rates are about 1% point above this time last year! This translates into higher monthly payments for Buyers. Many are confused and are standing on the sidelines.
2) Rising home prices- Prices in many of our desert areas have shot up over 30% in the last year. Because many markets, primarily Las Vegas and Palm Springs (Coachella Valley) saw a shortage of available homes for sale last year. This caused Realtors to accept listings for almost any price. I have seen listings in areas where the average is under $100 per square foot listed for over $200 per square foot. This has become a real turn-off for Buyers. Many listings seem over priced at this time.
3) Lower FHA limits- This is why this game changer is affecting our desert areas. Many of our buyers come from the Coastal Areas. Many are retiring so they sell their home in these areas and retire/move to the desert. If a major lending source cuts the amount they will lend, Sellers will defer selling and moving instead of accepting less for their home. FHA will no longer insure a significant percentage of buyers in the costal markets, which has had the greatest impact on Boomerang buyers, who can get a mortgage through FHA after a three year wait period, but cannot get a comparable mortgage otherwise. This will become more apparent as inventories shrink in coastal areas and grow in Inland areas like our desert market.
Sellers, on the other hand, are frustrated for other reasons:
1) Inventories are increasing! As we ended 2013 and began 2014 it appeared that the housing market was on the way back. After more than seven years of decline, we were on the upswing. Unfortunately because of the above mentioned problems, the market has not continued to grow at the pace it was last year. This means inventories are increasing and, when there is more available, Buyers become king! And this means Sellers have to take less or offer incentives to Buyers to move their property.
2) Investors have stopped investing and started selling- Again, this is an inventory issue. We saw a flood of investors buying last year. Now they want to take their profit and invest in something else. This will cause an increase in inventory which will equate to a decrease in prices.
3) In many desert markets, new home construction is on the rise. Because the market has been lukewarm for the last couple of months, new home developments are starting to offer incentives that make them very competitive with existing home sales.
Using a professional Realtor like myself can help you understand the market and can make the process more appealing to either a Buyer or Seller. If you need help with our local market, please call or email me. I can provide information to help ease the worry and make you competitive in any of the markets I work.Tweet
The first step in the home buying process should be to secure the money. You need to know how much you can qualify for financing to buy a home. I believe that mortgage rates will be one of this year’s housing . . . → Read More: 10 Mortgage tips for 2014
Well once again it is time for me to dust off my crystal ball and see what I believe will be trending for the new year of 2014 in the desert housing market for California and Nevada. I must say that reviewing my last three years of forecast I find . . . → Read More: Desert Real Estate Market Forecast for 2014 for California and Nevada
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