The average mortgage rate on a 30 year loan has increased 5% and is now hovering around 5.3% this week. While this could be a threat to the now recovering real estate market there are great purchasing opportunities and there is still time to purchase a home at historically low interest rates.
With the national economy starting to recover the Feds discounted rates for banks are starting to rise as predicted in January 2010.
The following are highlights and my market observations from today’s market trends:
• From the peak of the Real Estate market in early 2006, real estate prices in general have declined nearly 50% and in some markets more than 50%. Real Estate remains a neighborhood business and prices can fluctuate greatly between communities and there are many variables that do affect prices positively as well as negatively.
• January and February Central Florida Sales Reported, 1,820 and 1,847 units sold – I would like to make a comment with respect to looking at reported sales numbers, which in reality is like looking into the rear-view mirror.
• Central Florida February reported new contracts written were at nearly a four-year high with approximately 4,000 new contracts written, which will result in higher reported sales numbers in the months ahead.
• Since the beginning of 2010, we have seen an increase in consumer confidence and a great deal more optimism than we experienced in 2008 and 2009. Buyers are returning to the market.
• 2010 will be viewed as the market transition period with prices stabilizing and sales increasing.
• Overall listing inventories have dropped from a high of over 26,000 listings in February 2007 to 16,000 in February 2010.
• We are sensing that mortgage financing will become more competitive and new mortgage products will be introduced this year, which will help to improve sales.
• In February, all cash sales peaked out at 54% of all closed transactions. This is partially due to some real estate products being difficult to finance and partially due to some consumers becoming more frugal and not wanting to take on new debt.
• Distress Sales will remain active through 2010 and beyond as many homeowners elect to step away from their properties that are presently worth substantially less than their outstanding mortgage debt. This trend will be further supported by The Treasuries new initiative taking effect on April 15th that will require all mortgage lenders who have received TARP funding to more aggressively facilitate short sales for homeowners who are in financial trouble but do not qualify for The Administrations mortgage modification program. Under these new guidelines lenders will be required to preset short sale acceptable pricing before a home is listed for sale and will be required to accept an offer above the stated price. Buyers who submit an offer to purchase a short sale should also receive a response within two weeks as opposed to many months. This will greatly assist in removing distressed properties from the market.
• Central Florida’s $1 million-plus home inventory appears to be more stable than it was in 2009 with the high-end home inventory being reduced from very high numbers in 2009, which is a true reflection that sellers are adjusting to the new market norm and adjusting their sale prices accordingly.