Carlsbad continues to experience a low supply of for-sale homes amidst ever-falling mortgage rates and rising demand for housing. Carlsbad's residential resale inventory level shrunk to an average of two months in 2012. A change from a normal market of 6-8 months of sellable homes and a new challenge for today's homebuyer.
Buyers are having to search longer, sometimes 6-plus months, to find their homes. They often face multiple offers from competing bidders. Some shoppers have given up and decided to rent in order to secure a home before school starts. Almost all of the buyers want to avoid buying something less-than-perfect for their home purchase. They are buying for the long term and want a home they will be happy with over the next 10 to 20 years.
The supply of homes looks to shrink further.
In the past 12-18 months, homebuyers have benefited from ample supply of for-sale homes at low prices from short-sales. A short-sale is a "pre" foreclosure. It's when a homeowner owes more than the property is worth and needs to sell, but does not have the available funds needed to make up the difference.
Lower mortgage rates and government refinance programs, such as HARP 2.0, are helping underwater homeowners keep their homes and avoid foreclosure. 33 percent fewer short-sale homes have been listed in Carlsbad in the past 90 days. This is an important trend, as short-sales in Carlsbad make up roughly 41 percent of the available homes for sale. Fewer homes means even fewer choices for today's homebuyer.
Should the trend of low inventory persist, Carlsbad should see higher average sales prices in the near future. Currently, the average Carlsbad home (2,559 sq.ft home, three-bedroom, three bath, $270 per square foot) is selling for $667,000 in about 45 days. This is slightly improved from 2011 and a result from historically low rates of 3.6 percent for a conforming 30-year fixed mortgage.
Today's numbers point to a change on the horizon.
David Wessel, economist and columnist for the Wall Street Journal, penned a July 11 article titled 'Housing Passes a Milestone' and declared, "The housing market has turned-at last."
The article cited a 10 percent increase in existing home sales and a 26 percent increase in number of single-family homes built in May 2012 versus the same period the year prior. But rapid change in home prices is not expected and homeowners should remain patient. Fewer homes for sale will give homeowners greater power to get closer to their asking price. Home sellers are securing an average of 97 percent of their asking price, a gap can shrink to closer to 98-99 percent with continued low inventory. As our local market transitions to the fall, homeowners should understand that there will be fewer buyers in the market.
As in any market, a home should be priced competitively given the most recent sales and demand. But if the property doesn't sell within the first week, or even the first month, homeowners should remain patient and firm in their pricing.
Although fewer short-sales have been listed in the past 90 days, the short-sale process remains the preferred method for both lenders and owners to get out from crushing home debt. Lenders consider the short-sale process an effective solution to minimize the costs associated with foreclosure and have made great efforts to reduce the time it takes to complete a short-sale. As of now, this is the last year of the 'tax-free' short-sale. The Mortgage Forgiveness Debt Relief Act of 2007 ensures that homeowners that short-sell their primary residence do not pay taxes on the amount forgiven. It is set to expire in 2012.
Although the extension of the tax forgiveness act is sure to be an action point of the upcoming election, homeowners that are in financial hardship and owe more on their property than it's worth should talk with an experienced broker about their options with a short sale. Lund can be reached at [email protected]
Condo market is booming in Carlsbad
Condos and townhomes are often second-choice when buyers house hunt.
But as supply remains restricted in Carlsbad's single family home market, buyers are rethinking an 'attached' property.
With the average 1,400 sq.ft Carlsbad condo selling for around $338,000, home buyers can keep their total payments (with HOA fees) close to $2,000 a month.
A condominium can help a homeowner control the unknown costs of owning a home. A surprise roof repair can cost several thousand dollars. Owners of an attached home will avoid the larger cost of full replacement, as they share the costs with the other owners and amortize the costs through the condominium's HOA fee.
The monthly maintenance of a security gate, private pool or spa can be $200 or more a month with regular service and increased electricity costs. Again, this cost is borne by all the owners in the community.
Recently, the attached home market has become just as competitive as the single family home market. Investors are finding the attached homes as great investments, yielding strong returns in today's low-yield environment.
Attached neighborhoods, such as Tanglewood in Carlsbad's 92008, have seen three-bedroom townhomes sell for as low as $250,000. That same property will rent for $1,850 a month, giving cash investors a estimated 10 percent monthly return on the investor's 25 percent down payment.
This is pitting first-time buyers against investors in a fight for a shrinking number of attached homes.
Currently, the Carlsbad attached market has roughly 2.1 months of inventory with the average time to sell an estimated 48 days.
Many of the lower price condos being purchased by cash investors within the first few days that properties have been listed for sale.
There are several new construction projects slated for development in the City of Carlsbad to help aliviate the need for more housing. But new construction takes years to build. There is a growing need today for less expensive housing.
?Tyson Lund
Buyers are having to search longer, sometimes 6-plus months, to find their homes. They often face multiple offers from competing bidders. Some shoppers have given up and decided to rent in order to secure a home before school starts. Almost all of the buyers want to avoid buying something less-than-perfect for their home purchase. They are buying for the long term and want a home they will be happy with over the next 10 to 20 years.
The supply of homes looks to shrink further.
In the past 12-18 months, homebuyers have benefited from ample supply of for-sale homes at low prices from short-sales. A short-sale is a "pre" foreclosure. It's when a homeowner owes more than the property is worth and needs to sell, but does not have the available funds needed to make up the difference.
Lower mortgage rates and government refinance programs, such as HARP 2.0, are helping underwater homeowners keep their homes and avoid foreclosure. 33 percent fewer short-sale homes have been listed in Carlsbad in the past 90 days. This is an important trend, as short-sales in Carlsbad make up roughly 41 percent of the available homes for sale. Fewer homes means even fewer choices for today's homebuyer.
Should the trend of low inventory persist, Carlsbad should see higher average sales prices in the near future. Currently, the average Carlsbad home (2,559 sq.ft home, three-bedroom, three bath, $270 per square foot) is selling for $667,000 in about 45 days. This is slightly improved from 2011 and a result from historically low rates of 3.6 percent for a conforming 30-year fixed mortgage.
Today's numbers point to a change on the horizon.
David Wessel, economist and columnist for the Wall Street Journal, penned a July 11 article titled 'Housing Passes a Milestone' and declared, "The housing market has turned-at last."
The article cited a 10 percent increase in existing home sales and a 26 percent increase in number of single-family homes built in May 2012 versus the same period the year prior. But rapid change in home prices is not expected and homeowners should remain patient. Fewer homes for sale will give homeowners greater power to get closer to their asking price. Home sellers are securing an average of 97 percent of their asking price, a gap can shrink to closer to 98-99 percent with continued low inventory. As our local market transitions to the fall, homeowners should understand that there will be fewer buyers in the market.
As in any market, a home should be priced competitively given the most recent sales and demand. But if the property doesn't sell within the first week, or even the first month, homeowners should remain patient and firm in their pricing.
Although fewer short-sales have been listed in the past 90 days, the short-sale process remains the preferred method for both lenders and owners to get out from crushing home debt. Lenders consider the short-sale process an effective solution to minimize the costs associated with foreclosure and have made great efforts to reduce the time it takes to complete a short-sale. As of now, this is the last year of the 'tax-free' short-sale. The Mortgage Forgiveness Debt Relief Act of 2007 ensures that homeowners that short-sell their primary residence do not pay taxes on the amount forgiven. It is set to expire in 2012.
Although the extension of the tax forgiveness act is sure to be an action point of the upcoming election, homeowners that are in financial hardship and owe more on their property than it's worth should talk with an experienced broker about their options with a short sale. Lund can be reached at [email protected]
Condo market is booming in Carlsbad
Condos and townhomes are often second-choice when buyers house hunt.
But as supply remains restricted in Carlsbad's single family home market, buyers are rethinking an 'attached' property.
With the average 1,400 sq.ft Carlsbad condo selling for around $338,000, home buyers can keep their total payments (with HOA fees) close to $2,000 a month.
A condominium can help a homeowner control the unknown costs of owning a home. A surprise roof repair can cost several thousand dollars. Owners of an attached home will avoid the larger cost of full replacement, as they share the costs with the other owners and amortize the costs through the condominium's HOA fee.
The monthly maintenance of a security gate, private pool or spa can be $200 or more a month with regular service and increased electricity costs. Again, this cost is borne by all the owners in the community.
Recently, the attached home market has become just as competitive as the single family home market. Investors are finding the attached homes as great investments, yielding strong returns in today's low-yield environment.
Attached neighborhoods, such as Tanglewood in Carlsbad's 92008, have seen three-bedroom townhomes sell for as low as $250,000. That same property will rent for $1,850 a month, giving cash investors a estimated 10 percent monthly return on the investor's 25 percent down payment.
This is pitting first-time buyers against investors in a fight for a shrinking number of attached homes.
Currently, the Carlsbad attached market has roughly 2.1 months of inventory with the average time to sell an estimated 48 days.
Many of the lower price condos being purchased by cash investors within the first few days that properties have been listed for sale.
There are several new construction projects slated for development in the City of Carlsbad to help aliviate the need for more housing. But new construction takes years to build. There is a growing need today for less expensive housing.
?Tyson Lund