A bitter cold sweeps into our local market, as the slower selling winter months arrive in Carlsbad. October, November and December are notorious for being the slowest months of the year when it comes to selling property.
Last year, Carlsbad experienced a 15 percent decline in the number of detached homes sold when comparing October through December to June through August. As the number of buyers dwindle, those homes for sale stay on the market longer. Currently, the average is around 81 days on the market, up from 60 days earlier this year. As sellers languish on the market longer, the pressure to reduce their selling price, in order to attract a buyer, will become stronger.
A new price in a changing market
There is a confidence problem in the overall real estate market that stems from the result of aggressive home buying from buyers that squeaked by on interest-only or adjustable-rate mortgages. Throughout the last year and a half, buyers changed their attitudes from “I'll pay the sticker price” to “What's that property really worth?” Not wanting to buy at the top of the market, buyers are taking their time to question a property's value. Buyers now take advantage of the Internet and a variety of online valuation tools, property lists and past-sale comparatives. If you are currently selling your home and have had 10 to 15 qualified buyers view it, and not make an offer, consider a price reduction. Also, watch and take note of homes that would be your direct competition. If the property sells first, find out the reasons why. It will lead you to insight on how to sell your home next.
Interest rates
As this article is written a month prior to publishing, it is difficult to accurately report on current interest rates because they are currently fluxing between 5.75 and 7 percent. As of mid-September, the good news spread that the average mortgage rate tumbled downward from 7 to 6 percent for a 30-year fixed-rate loan. Even though most lenders are requiring strict documentation for borrowers with less than perfect FICO scores, there are a number of lenders willing to take on borrowers in most situations.
Foreclosures set new values
The great deals in Carlsbad are from motivated sellers. This time last year, builders held some of the best deals in the city as projects like Castlemar in La Costa Greens and Stoneridge in La Costa Ridge sold their last remaining homes at below-market prices with full upgrade packages. This year, foreclosures are the new “good deals.” In some cases, foreclosures may just cause the price reduction you have been waiting for in your favorite neighborhood. Buyers rejoice.
Shorts sales get approved
A “short-sale” occurs when a borrower owes more than the property's market value. For example, a home in Carlsbad that the owner paid $520,000 for two years ago is worth $500,000 in today's market. With selling costs of 6 percent of the sale price, the homeowner could be out as much as $50,000. If the homeowner is forced to sell and does not have $50,000 to bring in at the close of escrow, the property is in a short-sale scenario. The bank would have to agree to forgive the $50,000 difference. Until recently, banks were reluctant to take a loss and agree to a short-sale. Those interested in a short-sale scenario should know that the banks will consider it if you can prove that the offer is fair given the current market conditions and recent closed comparatives. If the bank decides the offering price will net them less than the cost of taking the property back via foreclosure and selling it, the short-sale will not be successful. There are tax ramifications and penalties that may occur from performing a short sale, so consult a professional.
Last year, Carlsbad experienced a 15 percent decline in the number of detached homes sold when comparing October through December to June through August. As the number of buyers dwindle, those homes for sale stay on the market longer. Currently, the average is around 81 days on the market, up from 60 days earlier this year. As sellers languish on the market longer, the pressure to reduce their selling price, in order to attract a buyer, will become stronger.
A new price in a changing market
There is a confidence problem in the overall real estate market that stems from the result of aggressive home buying from buyers that squeaked by on interest-only or adjustable-rate mortgages. Throughout the last year and a half, buyers changed their attitudes from “I'll pay the sticker price” to “What's that property really worth?” Not wanting to buy at the top of the market, buyers are taking their time to question a property's value. Buyers now take advantage of the Internet and a variety of online valuation tools, property lists and past-sale comparatives. If you are currently selling your home and have had 10 to 15 qualified buyers view it, and not make an offer, consider a price reduction. Also, watch and take note of homes that would be your direct competition. If the property sells first, find out the reasons why. It will lead you to insight on how to sell your home next.
Interest rates
As this article is written a month prior to publishing, it is difficult to accurately report on current interest rates because they are currently fluxing between 5.75 and 7 percent. As of mid-September, the good news spread that the average mortgage rate tumbled downward from 7 to 6 percent for a 30-year fixed-rate loan. Even though most lenders are requiring strict documentation for borrowers with less than perfect FICO scores, there are a number of lenders willing to take on borrowers in most situations.
Foreclosures set new values
The great deals in Carlsbad are from motivated sellers. This time last year, builders held some of the best deals in the city as projects like Castlemar in La Costa Greens and Stoneridge in La Costa Ridge sold their last remaining homes at below-market prices with full upgrade packages. This year, foreclosures are the new “good deals.” In some cases, foreclosures may just cause the price reduction you have been waiting for in your favorite neighborhood. Buyers rejoice.
Shorts sales get approved
A “short-sale” occurs when a borrower owes more than the property's market value. For example, a home in Carlsbad that the owner paid $520,000 for two years ago is worth $500,000 in today's market. With selling costs of 6 percent of the sale price, the homeowner could be out as much as $50,000. If the homeowner is forced to sell and does not have $50,000 to bring in at the close of escrow, the property is in a short-sale scenario. The bank would have to agree to forgive the $50,000 difference. Until recently, banks were reluctant to take a loss and agree to a short-sale. Those interested in a short-sale scenario should know that the banks will consider it if you can prove that the offer is fair given the current market conditions and recent closed comparatives. If the bank decides the offering price will net them less than the cost of taking the property back via foreclosure and selling it, the short-sale will not be successful. There are tax ramifications and penalties that may occur from performing a short sale, so consult a professional.