Mortgage Interest Rates Hit All Time Lows…A Great Time to Buy a Home

Interest rates at all time lowWith Lake Geneva, Wi, area mortgage interest rates hitting all-time  lows at the beginning of 2012, coupled with rock bottom home prices, the next 6-9 months may be the best opportunity for home buyers that we’ve ever seen.  Although accurate forecasting is difficult in a volatile national and world market, the Fed is buying mortgage bonds; when bond buying is strong, interest rates remain low.  The average 30 yr fixed mortgage interest rate is now at 3.938%, the average 15 year fixed mortgage interest rate is as low as 3.488%, with the average jumbo  30 yr rate coming in at 4.367%.  A 5 yr ARM is at 3.179%. Many analysts feel that with the EuroZone still in economic uncertainty and in an effort to keep the housing market moving forward, mortgage interest rates are likely to remain low for the short term at least.

Another positive economic indicator is that the Consumer Price Index this week has shown that inflation has not occurred at the consumer level, and even dropped slightly at the wholesale level.  More optimistic statistics have reported spending and manufacturing up, housing starts up, and unemployment claims down this week to the lowest since April of 2008.

Housing recessions have historically shown a pattern of taking three to five years to find their bottom; this recession shows some of that pattern, in that it has been skimming the bottom for the last two years.  Even though prices continue to decline to new lows, housing affordability has risen dramatically because of these declining prices coupled with the lowest interest rates we’ve seen in many years.  The timing is right for the beginning of a slow recovery of housing prices and sales in 2012 once consumers realize that this may be one of the best buying windows we’ve ever seen. Along with the excellent affordability factor comes a fat inventory of desirable homes, waiting to be trimmed.   Although some buyers I work with are still waiting for the certainty of a bottom before purchasing, I’m mindful of the old adage that points out that you’ll know it was the bottom by looking in the rear view mirror; by the time you can verify the bottom, prices will be on the way back up and many opportunities will have been missed.

So, what are you waiting for?  If you’re ready to buy, and have a good credit rating, find a good realtor and start your home search.  Buying a home has some similarities with buying stocks: buy at the bottom and sell at the top.  Now is the time to get started on the first half of that equation.

Reproduced with the permission of Mortgage-X.com

 

Establishing the Market Value of Your Home

Price your home to sell quicklyWith real estate prices bouncing around like a rubber ball every week, it’s difficult to know how to price your home to sell quickly.  Recent statistics on home price trends reveal that while 76 percent of sellers believe that their homes are worth more than the asking price recommended by a real estate agent, 68 percent of home buyers believe that homes they view are overpriced.  And, even though national median home prices have continued to decline another 4-7 percent over the last year, and many agents and financial analysts believe they will continue to decline over the next year,  the gap between what sellers expect to sell for and what real estate agents recommend has continued to widen.  With all the varying opinions, what is the best way to establish the market value of your home?


First of all, try to detach emotionally and think with your head, not your heart.  Study the past sales of homes in your area that have sold within the last 6-12 months.  If you aren’t confident collecting this information on the computer yourself, work with a good real estate agent who is experienced (and has the software programs) to do a Comparable Market Analysis (CMA) for you.  Some homes will be similar, and some won’t, but it will give you a good idea of your local market.  If there have not been sales of comparable homes in your area, search for sales of homes like yours in other similar areas within a moderate radius.  You can also include currently listed homes for sale in the analysis, but pay attention to the ‘days on market’ and remember that they’re not sold, and pricing that’s too high may be the reason.
Look critically at your home with buyer’s eyes.  How does the physical condition of your home compare with those that have sold?  Talk with your agent about what’s important to a buyer in today’s market;  some of today’s desirable trends are granite and stainless steel kitchens, open concept floor plans, first floor master suites, walk-out finished lower levels, wood and stone floors, and vaulted ceilings.  The importance of those, however, can frequently disappear with a compelling asking price.
When settling on an asking price, leave some room for negotiation, but not too much; buyers will not even look if they think you’re positioned unrealistically high.  I’ve worked with sellers who knew that their asking price was too high, but rationalized by saying “Just bring me an offer” or “I’ll look at any offer”.  My experience with that situation, however, has been that usually buyers will be reluctant to ‘insult’ a seller with a low ball offer and will often consider the gap too wide and intimidating to even deal with, resulting in the buyers by-passing  a home that’s perceived as over-priced.
Try to avoid the common error of “just trying a higher price to see what happens” because you have time.  If the market is appreciating, you might get away with it, but most markets are still declining, and you will have to follow them down. More time on market also means more taxes, maintenance, utilities, and other expenses that will eat up profit. Studies have shown that the first two weeks on the market are the most critical to your success in selling.  As a new listing, both buyers and real estate agents who have been actively following the market looking for homes to show will target your home right away; if you are perceived as positioned too high, however, you will lose this large initial group of serious buyers right off the bat.  Thanks to the internet, buyers these days are very savvy and know how to do price comparisons and evaluations of properties themselves.  In this dismal, competitive market with an overabundance of terrific homes available, you must be perceived as not just reasonably priced, but as a great value.
If you really want a spot-on assessment of the property market value of your home, have an independent, certified, experienced appraiser perform an appraisal.  Most buyers will be using financing to purchase, so it will have to appraise anyway.  An appraisal of an average 2500-3000 square foot home on a standard lot will run around $350-$450, with deviations that require extra time and comparisons increasing the price.  Appraisers will utilize sales of similar homes in the area, as realtors do in a CMA, but they employ more tools for comparison adjustments to make the results more specific and accurate.  Selling a home is a big transaction, and spending a few hundred dollars up front may net your more profit, or at least help you sell more quickly.
Lastly, if you’re selling in order to buy another home, remember that you never profit on both ends.  In an ‘up’ market you can get a good price for your home, but you will pay more for anything else that you buy.  In a ‘down’ market, you may even lose money on the sale of your home if you price it competitively, but you will probably save that money on the next home that you buy.