If you feel guilty that you're watching the local real estate market with hopes of continued downturn, you're not the only one.
Foreclosure and short-sale homes have driven prices down in Oceanside, Vista and San Marcos, creating attractive investment opportunities. Prices in many areas of Carlsbad also have softened, giving more buyers the opportunity to purchase. However, favorable mortgage rates, new lower prices and a changing buyer mentality are helping reverse this downward trend.
A buyers market
In our local real estate market, negotiations have favored the buyer since the winter of 2005. This buyer's market continues today. However, homes in certain price ranges are showing more activity with multiple-offer situations that are reminiscent of the seller's market of 2004. Homes in east Oceanside (the 92056 and 92057 zip codes) with three bedrooms and 1,500-plus square feet that are priced between $325,000 and $365,000 are selling within the first few days. Four bedroom homes between $375,000 and $450,000 are selling equally well. San Marcos and Vista homes within that price range also are being snatched up. Part of the increased activity comes from investors who are now competing for these homes, which can give a 3 percent to 4 percent return on their 20 percent down payment. In Carlsbad, a three to four bedroom home priced between $500,000 and $700,000 is a hot commodity. Only a few years ago, Carlsbad buyers raced to outbid each other for the larger, million dollar homes. These same homes are now having trouble selling to the newly conservative home buyer. As reported in last month's article, Carlsbad's luxury market, homes valued between $1.1 million and 1.9 million, have slowed considerably over the last year. With a jumbo mortgage costing a 1.25 percent premium (7 percent versus 5.75 percent for a conforming loan) and a recent deluge of luxury homes for sale, these exclusive properties are sitting with no potential buyers. With the comfort of guaranteed appreciation gone, buyers are showing less willingness to stretch to buy the more expensive luxury home.
FHA loans
FHA mortgages are making a strong comeback in today's marketplace. An FHA loan is a mortgage loan insured by the Federal Housing Administration that gives buyers several benefits over a non-FHA mortgage. An FHA loan has a low percent down payment requirement and that money can come as a gift from a family member, employer or charitable organization. FHA loan programs also are available to borrowers with less-than-perfect credit scores. A first-time homebuyer could purchase a three bedroom house in Oceanside for $400,000 and only be required to put $12,000 down, instead of $40,000.
Mortgage rates
The current interest rates are a boon to all involved in the real estate market. Some buyers are reporting securing a 30-year fixed loan as low as 5.35 percent, although the average is closer to 5.75 percent. Conforming loan rates have been on a downward trend, coming down from the high 6.75 percent in June of 2007 for a 30-year fixed rate loan. Low mortgage rates have been vital to our local real estate market and are expected to remain low through the summer.
Foreclosure and short-sale homes have driven prices down in Oceanside, Vista and San Marcos, creating attractive investment opportunities. Prices in many areas of Carlsbad also have softened, giving more buyers the opportunity to purchase. However, favorable mortgage rates, new lower prices and a changing buyer mentality are helping reverse this downward trend.
A buyers market
In our local real estate market, negotiations have favored the buyer since the winter of 2005. This buyer's market continues today. However, homes in certain price ranges are showing more activity with multiple-offer situations that are reminiscent of the seller's market of 2004. Homes in east Oceanside (the 92056 and 92057 zip codes) with three bedrooms and 1,500-plus square feet that are priced between $325,000 and $365,000 are selling within the first few days. Four bedroom homes between $375,000 and $450,000 are selling equally well. San Marcos and Vista homes within that price range also are being snatched up. Part of the increased activity comes from investors who are now competing for these homes, which can give a 3 percent to 4 percent return on their 20 percent down payment. In Carlsbad, a three to four bedroom home priced between $500,000 and $700,000 is a hot commodity. Only a few years ago, Carlsbad buyers raced to outbid each other for the larger, million dollar homes. These same homes are now having trouble selling to the newly conservative home buyer. As reported in last month's article, Carlsbad's luxury market, homes valued between $1.1 million and 1.9 million, have slowed considerably over the last year. With a jumbo mortgage costing a 1.25 percent premium (7 percent versus 5.75 percent for a conforming loan) and a recent deluge of luxury homes for sale, these exclusive properties are sitting with no potential buyers. With the comfort of guaranteed appreciation gone, buyers are showing less willingness to stretch to buy the more expensive luxury home.
FHA loans
FHA mortgages are making a strong comeback in today's marketplace. An FHA loan is a mortgage loan insured by the Federal Housing Administration that gives buyers several benefits over a non-FHA mortgage. An FHA loan has a low percent down payment requirement and that money can come as a gift from a family member, employer or charitable organization. FHA loan programs also are available to borrowers with less-than-perfect credit scores. A first-time homebuyer could purchase a three bedroom house in Oceanside for $400,000 and only be required to put $12,000 down, instead of $40,000.
Mortgage rates
The current interest rates are a boon to all involved in the real estate market. Some buyers are reporting securing a 30-year fixed loan as low as 5.35 percent, although the average is closer to 5.75 percent. Conforming loan rates have been on a downward trend, coming down from the high 6.75 percent in June of 2007 for a 30-year fixed rate loan. Low mortgage rates have been vital to our local real estate market and are expected to remain low through the summer.