2009 was a rough stretch for many Santa Cruz home sellers and buyers, but new reports hint at possible stabilization in the housing market that may prove beneficial for everyone. As 2009 rolled to a close and 2010 opened into a new year, economic and real estate reports poured out good news, but bad news wasn’t far behind. For each positive note, there is always that unavoidable “but”:
• Mortgage rates are holding steady below 5%, thanks to government intervention. Thanks to the low rates, more people are buying and refinancing. However, the downside is that banks are more reluctant to refinance or loan. This leaves many, who want to buy a Santa Cruz home, with the inability to do so. Ironic that, in a buyer’s market, it’s the banks with all the selling power.
The other “but” is that the Federal Reserve program providing the low mortgage rates is set to expire in March. Rates could very well double shortly after, which is highly likely to drop the number of interested buyers. A drop in buyer numbers will only further shift the supply/demand ratio.
• As of December 10, 2009, the number of foreclosures in a month had dropped 16%, nationwide. The home buyer tax credit expansion, foreclosure prevention programs and loan modification programs have helped, as well as state mandated financing programs. As great as that is, there were still over 300,000 foreclosures in November, 2009, which is 18% higher than November, 2008.
• Home prices are “firming,” showing improvement over five consecutive months. Although the rise is considered mild, fewer homeowners are underwater, where they owe more mortgage than their house is worth. Because housing prices are improving, home sellers are more confident in the listing prices they’ve set.
However, many – who are currently unemployed - have ARM mortgages that will be resetting shortly. While they can afford their current mortgages, many won’t be able to afford a higher one. This could bring another round of foreclosures and another drop in housing prices.
What does all this mean for Santa Cruz home buyers and sellers? As Ben Franklin put it, “nothing in this world is certain, except death and taxes.” However, there is also the famous “nothing ventured, nothing gained.” 2010 could be rocky, but, if you’re careful and do your research, you’ll find smooth sailing ahead.
If you’re trying to buy or sell a home, I can help. Call me at 831.662.6522 or email me at firstname.lastname@example.org for more information.
Federal Reserve program providing the low mortgage rates
number of foreclosures in a month
Fewer homeowners are underwater