There’s plenty of bad news out there and I think it’s important to sift through the slate of negativity in order to understand what’s really going on. If you are looking to buy or sell a home, is this the right time?
First let’s look at some of the recent facts:
- A report by Equifax and Moody’s Economy.com.shows that 4.46 percent of mortgages were at least 30 days past due at the end of the first quarter, up from 3.98 percent in the fourth quarter and up 2.9 percent from a year earlier.
- The national foreclosure rate rose to 1.39 percent, from 1.08 percent at the end of 2007 and 0.58 percent a year earlier.
- Increases in mortgage delinquencies and foreclosures, again nationally, were the largest since 2000, when the firms began collecting this type of data. Major contributors are rising unemployment, 80,000 jobs lost last month, according to the Labor Dept., and falling home prices.
- Pending home sales in February fell 1.9% nationally, although here in California they rose 2.1%, once again bringing home the point that real estate is quite area specific.
What makes this time around so interesting and much more challenging is that the Fed has shaved 3% points off bank borrowing costs, but the average fixed rate has only dropped by ½ % to 5.85%. Back in 2000, last time home sales fell year over year, interest rate cuts saved the day. In 2001 the Fed cut rates 11 times by 4.75% and average fixed rates fell to a record low of 5.21%. My guess is that the average 30 year fixed rate will have to fall more before it starts to make an impact.
Ana - some valuable points to think about. A number of economists and others insist we have been in a recession for some time. If the activity of our market now here in Southern California is any indication, we are certainly seeing some positive changes. While foreclosures and short sales are very prevalent, there seems to be more of them disappearing as byers become more aggressive, The rest of this year should be interesting to watch. I can't see how the Bush plan is really going to make a significant impact, but time will tell. Perhaps part of the positive response will be if buyers are encouraged and feel more comfortable, especially with the favorable interest rates.
Jeff
Hello Ana,
I love your positive message. Buyers need to know that they are getting a great opportunity to own the American Dream!