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A brief summary of the Sacramento Real Estate market from a Broker’s perspective:
This year’s market has been a bit of a roller coaster ride. My office was slammed from March to June primarily because of the Federal tax credit. Once the tax credit went away business slowed down. Most of the buyers have been either first time home buyers or investors. We are expecting some movement from people who have been sitting on the sidelines waiting for rates to bottom out or for prices to bottom out because a couple things are going to start happening over the next few months. First with the Feds new strategy we expect interest rates to slowly start climbing, and second we think house prices are close to bottoming out (they may still go down a little more but we don’t think we will see the significant declines that we have the past few years).
There are three primary types of homes for sale right now:
We are primarily seeing foreclosures, short sales, and investor flips selling right now. It is rare for a home owner with equity to be selling. Here is how each of these types of sales work:
Foreclosure: The bank owns the home because they foreclosed on the property. The home has been vacant for a very long time. Buyers submit an offer to the bank and 7-10 days later they get an answer. After that the transaction works very similar to a standard transaction other than the bank will not pay for repairs, and the bank will not know anything about the property. Because of this we rely very heavily on the home inspection to get an idea of anything that could be wrong with the property.
Short sale: The home owner is trying to sell the property for less than they owe the bank. In general the home owner will list the property and get an offer. Once they have an offer they will submit it to the bank for approval. There are a lot of variables in this process but depending on who the lender is it can take anywhere from 4 months to 1 year to get the bank to approve, or not approve the buyers offer. If the bank approves the offer they may counter on the price and ask for a higher price (a lot of times agents list these homes low just to get an offer so they can get the process started with the bank). This is a long and stressful process that is generally not something a first time home buyer will want to go through.
Investor flips: Investors are buying houses at foreclosure auctions. They pay all cash for the home, and they fix the home up. Usually they paint, replace the carpet and appliances, and add a few bells and whistles. The homes look nice when they are done. When a buyer makes an offer they usually get an answer in 24 hours, and when they request repairs usually the repairs get made. This can be a good type of home for a first time home buyer because the process is smoother than the others and the homes are move in ready.
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Random thoughts as the 2009 Real Estate Market comes to an end…
As 2009 is coming to an end we have experienced many changes in the market. The beginning of the year my clients had plenty of bank owned foreclosures to choose from. We would put an offer in less than asking price and in a few days we were in escrow. These homes were perfect for the first time home buyer who wanted to close escrow in 30 days and take advantage of the $8000 tax credit.
By late spring or early summer the foreclosure market had dried up. Lenders were foreclosing on homeowners at a much slower pace because of new government regulations and because by flooding the market with to many foreclosures the housing prices were dropping. Foreclosures now seem to be coming on the market drop by drop instead of in a flood. Home prices appear to be flattening out or at least dropping at a much slower pace.
First time homebuyers flooded the market this year because of the low price of homes combined with the $8000 tax credit. The credit was set to expire at the end of November but congress extended it to April 2010, and also opened up a $6500 tax credit for existing homeowners.
Investors also have come back into the market. The investors are buying houses at auction, buying in large pools of homes from HUD and other entities, as well as competing directly with first time home buyers and offering cash.
As the year ends the market appears to be one primarily made up of first time home buyers and investors competing to purchase short sales (homes the lender allows the owner to sell for less that they owe on it). There is a significant supply of short sale homes on the market and if you have the time and patience you can get a good price on one of these homes. It usually takes 2-3 months for a lender to approve an offer on a short sale. Almost every listing I have received the past 6 months was from homeowners who were upside down and wanted me to short sale their home. I am happy to say that we have had a great deal of success selling these homes.
I guess the bottom line as the year comes to an end is that there are a lot of opportunities in the market for first time home buyers, investors, or anyone who is willing to take the time to see what options are available to them.
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