This is shaping to be a most exciting year in real estate. The local market is finishing an 18-month correction in real estate prices and conditions. The following are some of the most relevant topics shaping the Carlsbad real estate market.
You need to know: Renovation loans
Homes that require remodeling or fixing before occupancy are some of today's best deals. As more buyers competed for fewer homes during the heated market of years past, fixers were easily sold for top value. In today's market, buyers have more choices and gravitate toward homes that are move-in ready. The decade-old fixer in original condition will be priced below what it costs to repair and still not sell. Renovation loans are for those who have found a diamond in the rough, but lack cash on-hand to make the changes or are unable to secure conventional financing due to the home's condition. For example, a property in Carlsbad that would appraise for $550,000 if in normal condition, is currently offered for $350,000. The property has been discounted because it is in severe disrepair and has a compromised foundation. The average buyer would not be able to secure conventional financing on a property with these problems. The buyer also would require $350,000 to purchase the property and $80,000 to improve the property. Enter renovation financing. A renovation loan gives the buyer the money for the house and the total cost of repairs into one fixed-rate loan. Before obtaining the loan, the buyer is required to submit a bid from a licensed contractor and have the work complete within a set timeframe. The buyer can now acquire a home at a below market price of $430,000, including updating, and have the home designed to their tastes and standards. An investment buyer with excellent credit can borrow up to 90 percent of the home's appraised value and can finance up to six payments of the loan, which is perfect for the fix and flip project. For specific details on renovation financing, call area expert Danny Fitzpatrick of Wells Fargo at
(866) 435-7360.
Mortgage rates drop
As of December, mortgage rates have moved downward from a high of 6.7 percent in July to 6 percent, giving the conforming buyer about $50,000 dollars more purchasing power. This is powerful because many property values have moved downward since the start of the year. For example, a three bedroom, 1,600-square-foot property in the Shadowridge area of Vista sold for around $480,000 between January and April. Many of those same three bedrooms are now at $400,000 to $425,000. This means a buyer can purchase a home for about $2,170 a month; near equal to current rental rates of around $2,000 a month. This raises the question of why the average, capable buyer would rent for $2,000 a month when they could purchase a home for almost the same amount of money, have the mortgage and property tax deduction, avoid future rent hikes and capitalize on future appreciation.
Current market conditions
Those selling property in the current market should expect increased buyer activity over the coming months, especially compared to the slower winter months. Many buyers are reluctant to purchase during the holidays and have been waiting for the New Year to begin their home search. In 2006, there were 187 home sales recorded in the MLS for Carlsbad during the months of November and December. During a 60-day period in February and March of 2007, Carlsbad had 307 sales, which is a 63 percent increase. Also, the rate drop to a new low 6 percent will push many buyers who are on the fence to consider purchasing a home.
You need to know: Renovation loans
Homes that require remodeling or fixing before occupancy are some of today's best deals. As more buyers competed for fewer homes during the heated market of years past, fixers were easily sold for top value. In today's market, buyers have more choices and gravitate toward homes that are move-in ready. The decade-old fixer in original condition will be priced below what it costs to repair and still not sell. Renovation loans are for those who have found a diamond in the rough, but lack cash on-hand to make the changes or are unable to secure conventional financing due to the home's condition. For example, a property in Carlsbad that would appraise for $550,000 if in normal condition, is currently offered for $350,000. The property has been discounted because it is in severe disrepair and has a compromised foundation. The average buyer would not be able to secure conventional financing on a property with these problems. The buyer also would require $350,000 to purchase the property and $80,000 to improve the property. Enter renovation financing. A renovation loan gives the buyer the money for the house and the total cost of repairs into one fixed-rate loan. Before obtaining the loan, the buyer is required to submit a bid from a licensed contractor and have the work complete within a set timeframe. The buyer can now acquire a home at a below market price of $430,000, including updating, and have the home designed to their tastes and standards. An investment buyer with excellent credit can borrow up to 90 percent of the home's appraised value and can finance up to six payments of the loan, which is perfect for the fix and flip project. For specific details on renovation financing, call area expert Danny Fitzpatrick of Wells Fargo at
(866) 435-7360.
Mortgage rates drop
As of December, mortgage rates have moved downward from a high of 6.7 percent in July to 6 percent, giving the conforming buyer about $50,000 dollars more purchasing power. This is powerful because many property values have moved downward since the start of the year. For example, a three bedroom, 1,600-square-foot property in the Shadowridge area of Vista sold for around $480,000 between January and April. Many of those same three bedrooms are now at $400,000 to $425,000. This means a buyer can purchase a home for about $2,170 a month; near equal to current rental rates of around $2,000 a month. This raises the question of why the average, capable buyer would rent for $2,000 a month when they could purchase a home for almost the same amount of money, have the mortgage and property tax deduction, avoid future rent hikes and capitalize on future appreciation.
Current market conditions
Those selling property in the current market should expect increased buyer activity over the coming months, especially compared to the slower winter months. Many buyers are reluctant to purchase during the holidays and have been waiting for the New Year to begin their home search. In 2006, there were 187 home sales recorded in the MLS for Carlsbad during the months of November and December. During a 60-day period in February and March of 2007, Carlsbad had 307 sales, which is a 63 percent increase. Also, the rate drop to a new low 6 percent will push many buyers who are on the fence to consider purchasing a home.