Eastman Real Estate Blog

If you haven’t noticed recently interest rates have dropped to their lowest point in decades.

Local lenders all around Grantham NH have rates as low as 4.375% for a 30 year fixed rate loan. If you want a 5 year adjustable then how does 3.5% sound?

When I bought my first house in New London NH I was thrilled to have an interest rate of 7.99% I thought that was the best I would ever get. Back in November I purchases home number 4. Just 9 months ago I was happy to see 4.75% I’m still happy with this rate and who would have thought that rates would continue to drop?

So many “experts” were saying how rates would jump as high as 8% by the fall of 2010. I had serious reservations about that but I too thought rates would start to head higher. This down trend is perfect timing for the housing market and is really the true stimulus, an unforced natural effect of the “market place”. So unlike government interference and programs that cost so much money.

Buyers and sellers should take notice, do some math and figure out just how much money they can save.

Let me start by saying that for me, this year has started off as my best year ever. One other agent in my office is off to her best year ever. There is no doubt that home sales in this area were moving right along. That is until the end of March when things seemingly quieted down. Now we are into mid May and more and more people I talk to are saying the same thing. Agents and mortgage brokers from Hanover to Warner are all saying “it’s quiet”.

Here’s some information that is not in the main stream media just yet. HEADLINE: Housing Starts Rise 5.8% Yes this was a national headline and for April that was great news. Even single family home starts rose 10.2%. As you read further multifamily starts declined 18.6% but the biggest number that was buried was the fact that new home building permits, which gauge future activity declined 11.5% to an annual rate not seen since October 09′.

The next big miss by major media was that mortgage applications dropped 27.1% compared to the previous week and was 24.1% lower than the same week last year. It was actually the lowest level of applications since May 1997!

Even while mortgage rates have dropped a half point or more in recent weeks, mortgage applications drop to the lowest level in thirteen years?

Where is this market going? Non of the so called experts seem to know. One head line read “Housing Prices Could Rise 12.4% By 2014″. This is based on an average of 100 analysts and market strategists. Some of these so called strategists worked for banks and one prediction from a banker was home prices will rise 37% by the end of 2014. Is this guy serious? It would be great if he was right but I’m not going out on that limb. Other analysts had more bearish thoughts, predictions of still more declines of 18%.

I’m not sure where were going on a national level but what is happening here in Eastman? As long as there is a large inventory , sellers have little pricing power. With 86 homes and 34 condos currently on the market, the property’s that will sell are the ones that have the greatest value (nicest home for least cost).

It appears to me that locally, it’s still a buyers market and price appreciation is not going to happen in 2010.

This is a very interesting article that was in U.S. News & World Report. It’s short and to the point and very positive. No one has a crystal ball, please read and post some comments. I like to read what you have to say and think.

The Future Of Home Prices

The recent word for the Federal Reserve (12/17/09) stated that short term interest rates will continue to remain low for “an extended period”.

This is interpreted by many that this means months. Well this sounds good but the reality is interest rates have been creeping up. As recently as the week of November 16th-20th interest rates were as low 4.6% for conventional, 30 year fixed rate loans.

As of this week it is hard to find a loan rate under 5%, most rates are closer to 5.25%. This is a minimum of a half point jump in a month. It doesn’t seem like much but a half point is a half point! On $150,000 loan that equals $45.87 a month, $550.44 a year and over the life of the loan the additional cost is over $16,500

So my point is if your out there waiting for home prices to drop just that little bit more because you want to buy at the bottom the rate you might get on your loan my cost you more in the long run. My feeling is from what I see in this local market is we have bottomed and home prices have stabilized. There is just to much inventory for prices to start to rise but I believe the price depreciation we have been seeing is coming to an end.

This is a great article on the First Time Home Buyer’s Tax Credit. Click on the continue reading button to get the PDF link. This is worth reading if you are planning to buy or even thinking of buying.

With interest rates as low as they are right now and home prices at their most affordable buying rather then renting is just an opportunity that shouldn’t be passed up!

Tax Credit Advice

The latest on the first time home buyers tax credit is it will be expanded to include current home owners too.

The first time buyer is still eligible for the $8000 and income levels have been increased to $125,000 for a single buyer and $225,000 for couples. A buyer has to have a binding contract signed on or before April 30th, 2010. You will then have until July 1st, 2010 to close the transaction.

Current home owners are eligible for a $6500 tax credit. The house they are selling must have been their primary for 5 consecutive years out of the past eight years. Income, contract and closing dates are the same as the first time buyer. The part I had to laugh about is the purchase price of the new home can not exceed $800,000.

My opinion is that this credit for time buyers will help them get into a home now that homes are at their most affordable pricing in decades. This is based on income to cost ratio. I know there are many people out there that have the ability to pay a mortgage most often a payment that is lower than the rent they are paying. The only things missing was a large enough down payment. This is where the credit comes in. It helps that buyer get the down payment they need.

As we wind down to the end of October some of the first time home buyers I am working with are really starting to scramble. Sure there is talk that the tax credit will be extended but for now we have to act and believe that November 30th will be the last day of eligibility.

Basically we have five weeks from today to close a transaction. Normally it takes at least six weeks for a loan to process add in the the fact that closings are already piling up at the end of the month trying to squeeze one more in is going to be more difficult each and ever day that passes.

The other issue is multiple buyers for the same property. Yes you could save up to $8000 in taxes but if there are more than one buyer for a home that will drive the price of the home up and I bet it will be more than than $8000. Another problem is the better homes will be bought first.

My advice is don’t wait any longer make a decision! The other option is to hope the government steps in an extends the credit. If that happens then we will all get some breathing room.