Winter is an excellent time for family and holiday parties, yet even better for buying a home.
Local real estate sales slow up to 30 percent during the winter months, but few take advantage of the opportunity. Fewer buyers and slower sales force motivated home sellers to lower their asking prices. With the currently low mortgage rates, those thinking of purchasing a home in the next seven to nine months should consider the winter real estate market the ideal time to buy.
Investment buying is back
Select communities in Vista and Oceanside have seen the first evidence of “breakeven” investment pricing with 20 percent of the purchase price as a down payment. Real estate investors had scant options over the past few years, as the home prices deviated greatly from the average rents. The average four bedroom home in the Shadowridge area was selling for near $525,000, and with 20 percent down ($105,000), the investor would be negative more than $700 a month. Fast-forward two years. A property on Mount Way in Shadowridge is currently a bank-owned foreclosure. It is a four bedroom home that would rent for about $2,000 a month, based on comparable rentals. The bank is selling it for $399,000. With a 6.25 percent mortgage rate on an 80 percent loan, a 20 percent down payment, property taxes of 1 percent and a small home owner association fee associated with the neighborhood, the monthly cost of the property is roughly $2,080 a month. That is a breakeven price for a qualified buyer. The bank is even offering a small bonus if the property is off their books by Dec. 31. This property needs some work on the interior, which is primarily the reason it has not yet sold. A newer trend in the local market is that the fixers, which were once a hot selling item, have lost their popularity. Turnkey houses, those needing little to no work for the buyer to move in, are preferred. Investors and contractors take notice.
Fires and the rental market
The recent San Diego fires made national headlines as more than 1,500 homes were destroyed and countless others were damaged. Property management companies scrambled to find available rentals for displaced families. According to Mike Chamberlain of Chamberlain Property Management, Carlsbad's premiere rental agency, rental rates have remained stable, as reputable companies refuse to raise rents in the face of an emergency. Evacuated families, some have been homeowners for 20 or more years, decide what is best for their situation and rent month-to-month. Last month, Chamberlain said, “Many of the fire victims that have contacted us are still in hotels and dealing with emotional distress and insurance issues. I expect that business to increase over the next few weeks, although our service area is pretty far removed from the fire areas. Currently, I see the rental market as healthy, although we are entering into the slower holiday season. I do not anticipate any dramatic changes in 2008.”
Attached homes
Attached properties have hit their pricing equilibrium. During peaks in 2004 and 2005, attached properties in Carlsbad sold for as high as $550,000. As the real estate fever subsided and the inventory of attached homes for sale swelled, attached home values retreated from their peak values throughout 2006, with the average falling to $450,000. Since the start of this year, attached property sales have remained relatively unchanged with an average of 40 condominiums and town homes selling per month in Carlsbad. With around 272 actively marketed attached homes for sale, Carlsbad has around six to seven months of inventory. When there is between six to eight months of inventory in Carlsbad, the past years have shown that prices will remain stable at that level.
Local real estate sales slow up to 30 percent during the winter months, but few take advantage of the opportunity. Fewer buyers and slower sales force motivated home sellers to lower their asking prices. With the currently low mortgage rates, those thinking of purchasing a home in the next seven to nine months should consider the winter real estate market the ideal time to buy.
Investment buying is back
Select communities in Vista and Oceanside have seen the first evidence of “breakeven” investment pricing with 20 percent of the purchase price as a down payment. Real estate investors had scant options over the past few years, as the home prices deviated greatly from the average rents. The average four bedroom home in the Shadowridge area was selling for near $525,000, and with 20 percent down ($105,000), the investor would be negative more than $700 a month. Fast-forward two years. A property on Mount Way in Shadowridge is currently a bank-owned foreclosure. It is a four bedroom home that would rent for about $2,000 a month, based on comparable rentals. The bank is selling it for $399,000. With a 6.25 percent mortgage rate on an 80 percent loan, a 20 percent down payment, property taxes of 1 percent and a small home owner association fee associated with the neighborhood, the monthly cost of the property is roughly $2,080 a month. That is a breakeven price for a qualified buyer. The bank is even offering a small bonus if the property is off their books by Dec. 31. This property needs some work on the interior, which is primarily the reason it has not yet sold. A newer trend in the local market is that the fixers, which were once a hot selling item, have lost their popularity. Turnkey houses, those needing little to no work for the buyer to move in, are preferred. Investors and contractors take notice.
Fires and the rental market
The recent San Diego fires made national headlines as more than 1,500 homes were destroyed and countless others were damaged. Property management companies scrambled to find available rentals for displaced families. According to Mike Chamberlain of Chamberlain Property Management, Carlsbad's premiere rental agency, rental rates have remained stable, as reputable companies refuse to raise rents in the face of an emergency. Evacuated families, some have been homeowners for 20 or more years, decide what is best for their situation and rent month-to-month. Last month, Chamberlain said, “Many of the fire victims that have contacted us are still in hotels and dealing with emotional distress and insurance issues. I expect that business to increase over the next few weeks, although our service area is pretty far removed from the fire areas. Currently, I see the rental market as healthy, although we are entering into the slower holiday season. I do not anticipate any dramatic changes in 2008.”
Attached homes
Attached properties have hit their pricing equilibrium. During peaks in 2004 and 2005, attached properties in Carlsbad sold for as high as $550,000. As the real estate fever subsided and the inventory of attached homes for sale swelled, attached home values retreated from their peak values throughout 2006, with the average falling to $450,000. Since the start of this year, attached property sales have remained relatively unchanged with an average of 40 condominiums and town homes selling per month in Carlsbad. With around 272 actively marketed attached homes for sale, Carlsbad has around six to seven months of inventory. When there is between six to eight months of inventory in Carlsbad, the past years have shown that prices will remain stable at that level.