Housing Trends for Summer 2011

Just read this article on bankrate.com, a site I frequent.  Here is the gist of their article and my view of it.

1.  Interest rates are historically low.  You need to jump in and not wait for them to get lower, as it is predicted at end of summer they will start to rise IF our economy shows improvement.  You know I got a new car this year at 0% interest.  If you are waiting to get a house for that - DON'T.  It isn't going to happen.

2.  Owning is getting to be cheaper than renting.  I agree, but sometimes NOT.  Because you get to take off mortgage interest and property taxes from your IRS return, that is a nice tax break.  When renting, the landlord gets that break and you get to pay it for him.
But if your sewer line plugs, or the air conditioner breaks on an "owned home" you get to fix it, and while renting - just call the landlord.  So those two may outweigh each other.  The beauty of ownership is that you can paint, wallpaper, carpet, tile to your taste.  If you want to tear down a wall and put mirrors on the ceiling (WHAT!) that's your perogative and you don't have to get permission.  However when renting, once the lease is out, you can pick up and move.  With a house, you are stuck until it sells or until you decide to rent it - which isn't so bad.  Rental market is 97% right now, and I'm sure you could get someone in there within a week at the rate things are moving.

3.  People have been slow to buy for several reasons.  Scared of falling house values.  That could be a good reason to buy.  What goes down, usually comes back up - like the stock market.  Remember 2008 and the market dropped and everyone said they lost their retirement and sold everything they could?  I didn't.  My philosophy, readjust to safer things but I bought.  Today I'm basically where I was in 2008, except for what I've taken out to live on and make a down payment on that new car.  (Stupid thing to do.  I should not have taken it out for down payment as it was making me money and the 0% car loan isn't costing interest - but I was thinking of size of monthly payments).  Back to housing.  People are slow to buy also because it's harder to get a loan; however, yesterday I got an email from man at First United Bank and he says they are lowering conventional FICO score from 640 to 620; that's good news. 

4.  Renting is increasing.  Yes, all those people with FICO below 640 haven't been able to get a loan, so they have to rent, no choice in the matter.  Those who got into debt and lost their homes, have no choice but to rent.  Wah lah.  renting is increasing.  You don't have to be a rocket scientist to understand this little detail.

5.  If you are willing to do a little "remodelling" you can get a great deal on a house.  Repos are usually not in the best of shape.  Funny, but people get mad at banks when they say they are taking back the property because the buyer didn't pay what they said they'd pay.  I don't understand this.  If I borrowed $50 from you and said I'd pay it back next week, and I didn't, you'd be the one mad, not me!!  But people get mad and do bad things to homes before the bank takes them back.  I went in one in San Antonio where the people cut the electrical lines on the box, kicked in the siding all down one side of the house, kicked in one hole in every single wall of the 2 story house and took the doors off the closets, and then if that wasn't enough, they poured oil down the carpet on the stairs.  NASTY.  My daughter and I wanted to wash our hands for sure after visiting this little beauty.  So expect work on a repo, but golly gee, they are selling for 30% lower than a regular house.  Say you buy a $200,000 house for $60,000 less.  Could you do a little clean up and repair for that and be able to put the colors, carpets, tiles, etc you want and still probably have a "deal".  So look for the deals when you are house shopping and line up those carpenters!!

Now #6 is a little hard to remember all the figures, so I'm pasting their words here.

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Jumbos are coming back

6 of 6

I'll be honest, I've not dealt with any jumbo loans, so my opinion is not that great.  You know in Amarillo, TX, those type of deals are rare so the main thing I got out of this is that they are lowering the amount of a loan that is now considered jumbo, so what was jumbo before will stay jumbo and what wasn't may become jumbo, and that sort of goes along with my tummy.  It wasn't so jumbo 10 years ago, but as time goes on it's getting there. 

 

Well, that covers the trends article and my opinions.  But the bottom line to me is, this is the time to buy.  Rates are low, down payments for FHA are only 3.5 and Conventional 5% if you have a 620 FICO score, rentals are hard to find (I know because I' m a realtor who has a connection with a relocation firm and I help people find rentals.  If you are moving out of an apt on Aug. 1, you must give notice by June 30.  So June 25-30 were prime times to give that notice, and the apts were usually re-booked within 24 hours of the notice being given.  So people I am helping now are looking for move in afer Sept. 1, and its July 22 today.  It takes about as long to get into a rental as to close on your own house loan, maybe longer)  With house prices lower than they were 5 years ago, rates down, lenders ready to lend, carpenters ready to pound nails and lay tile, it seems like a given - buy a house!!