Bargain hunters may toss a lifeline to housing
Updated: 2008-02-26 09:16
Bidders are emerging for foreclosed homes and for so-called "short sales" at sharply reduced prices, real-estate agents said. In a short sale, the lender agrees to take a loss and avoid foreclosure costs if the borrower is unable to command a sale price that will pay the remaining mortgage balance.
Gary Kent, a real estate agent with Gary Kent Team-RE/MAX Associates in La Jolla, California, said he had his best sales month ever in January, selling foreclosure homes for banks.
Meanwhile, the average 30-year mortgage rate is around 6 percent. That's up a half percentage point from four-year lows set last month, but it's roughly a quarter point less than a year ago, based on data from Freddie Mac, the second-largest US home funding company.
The median price for an existing single-family home dropped in 2007 for the first year since the National Association of Realtors began tracking them in 1968, sliding 1.8 percent to $217,800.
By contrast, prices on average have risen 6.6 percent annually over the past 40 years, NAR said. Annual double-digit gains were the norm in some areas earlier this decade.
A new government stimulus package will likely also open the doors for more buyers in high-cost areas. It temporarily raises the size of mortgages that can be purchased by Freddie Mac and Fannie Mae, the No. 1 federally chartered home funding company, making some lenders more inclined to approve home loans.
"I think this is the best buyer's market that has existed in a decade, maybe longer," said Russell Shaw, in his 30th year with John Hall & Associates real estate in Phoenix. "There are tons of inventory, great interest rates and the prices are back in line to where houses are decently priced again."
"If people have a good track record of paying their bills, the loans are there," Shaw said.
Arizona is one of several states slammed by overbuilding and buying by investors looking to sell quickly for a big profit. This "flipping" strategy worked well when prices soared, but when prices tanked, many owners could not sell and just walked away.
SENSE OF URGENCY RETURNS
South Florida is another area overrun with speculators, leading to overbuilding, particularly in the condominium market.
"People who are desperate are selling at any price," said Susan Weitz, an agent with Buy the Beach Realty in the South Beach district of Miami Beach. "Buyers that have been waiting for really, really good buys are in the market now. I am putting in a lot of offers on short sales."
Still, Weitz thinks the market won't stabilize for another two years, "I am talking people out of selling if they don't have to sell. I am convincing them this is not the time to sell," she said.
In Boston, a sense of urgency is also returning to the market, according to John D. Murray, a broker/Realtor with Realty Executives Prestige Properties.
A buyer he represents was the winning bidder at the asker's selling price for a condo in the city's upscale Back Bay neighborhood. At least three competing bids surfaced.
Until recently, the vast majority of would-be sellers have had to slice their asking prices to lure buyers.
Still, "even if you talk to people who refinanced recently, a lot of them are finding that the banks are asking a lot more personal and critical questions. It's more daunting and troublesome" to get a loan, said Murray.
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