Wednesday May 06 2009
Housing market turning around
By: Brandon Darnell, News Messenger Reporter
Now is the best time to buy a house since the 1950s, according to some area Realtors. With home sales reaching their highest point since 2005, the housing market has turned the corner, said Bob Lagussi, a Realtor consultant and broker for Keller Williams Realty. Although Lagussi said some potential buyers are still waiting for the market to bottom out, he said the market bottomed out at the end of 2008 and the first part of 2009. “I’m seeing an improvement,” Lagussi said. “I’m seeing rising prices in Placer County and I think that’s a good thing.” According to figures released April 29 by the California Association of Realtors, home sales throughout the state for the first quarter of 2009 were up 9.7 percent from the fourth quarter of 2008, with 590,390 homes sold. That, according to the figures, is a jump of 82.7 percent from the same time last year. Statewide, the median price of homes dropped 40.1 percent from last year to $256,850. “I don’t think it’s doom and gloom,” said Gene Thorpe, Realtor and broker at Pavilion Realty in Lincoln, president-elect of the Placer County Association of Realtors and a director for the California Association of Realtors. “It’s unfortunate for the people who bought in 2005 at the peak of artificially inflated prices but the net result of the lower prices are that hundreds of thousands of people who have not been able to buy a home before can.” The low prices coupled with low interest rates not seen since the 1950s present a unique opportunity to home buyers, Thorpe said. Thorpe said that with interest rates ranging from 4.75 to 5.5 percent, buyers can have monthly payments as low as 1 percent of their homes’ values. “Statewide sales improved for the fifth straight quarter since it bottomed out in 2007,” Thorpe said. “This is almost an unheard-of increase in sales.” That increase in sales, however, does have an unfortunate side. Home inventories are so high because so many homeowners have been forced out by the market and more than 1-million homes nationwide are going into foreclosure, according to Thorpe. “It’s not that they weren’t faithful,” Thorpe said. “The sub-prime mortgages broke their backs.” Going into foreclosure is the worst-case scenario, according to Thorpe, who recommends doing a short sale. Short sales are when the seller has to move out of the house because of poor finances, a job transfer or another life-changing situation and the property’s loan is higher than the current value of the home, according to Thorpe. Foreclosures equate to a 200-point hit to credit ratings that lasts two to three years, Thorpe said, while putting a house on the market as a short sale is only a 100-point hit. “Two years ago, banks wouldn’t want to do a short sale,” said Glenn Vineyard, a Realtor at Pavilion Realty. “Now, banks are realizing they will lose a lot less money on a short sale than a foreclosure.” Vineyard advised homeowners who are getting behind in their payments and can’t stay in their homes to explore the option of a short sale with their banks and Realtors but cautioned that the process takes a long time and patience is key. Lagussi also said he recommends selling a home through a short sale rather than going into foreclosure. “Banks are starting to work with people a little better,” Lagussi said. “They realize that by doing short sales, they’re losing a lot less money.” Lagussi said the percentage of short sales over foreclosures has gone up dramatically. “Last year, 70 percent of the homes on the market were foreclosures and 25 percent were short sales, with the rest being regular sales,” Lagussi said. “Now, we’re seeing 80-percent short sales and 15-percent foreclosures.” For the bank to consider doing a short sale, according to Lagussi, homeowners need to be behind by a few months in their payments. At that point, loan modifications and short sales become viable options. “The banks won’t even talk to you unless you’re two to three months behind,” Lagussi said. Lagussi offered some advice to homeowners missing their payments. “Talk to your local Realtors about short sales or loan modifications. Don’t let your home go into foreclosure.” Brandon Darnell can be reached by e-mail at firstname.lastname@example.org.