With an increasing number of homes to sell and slower sales, the real estate market has shifted back to a buyer's market. July saw fewer sales than expected and the sales pace for single family homes has moved from an average of 2.5 months of inventory in January to six months in August. Changes like this will put downward pressure on pricing and help buyers negotiate excellent deals during the winter months. Homebuyers will also have the added benefit of extremely low mortgage rates. The average 30-year fixed mortgage has moved down to 4.5 percent. A powerful departure from the 6.5 percent mortgages of 2008.
With lower prices and mortgage rates, the relative cost of housing has plummeted. Recent changes in the number of homes on the market are giving buyers a wide selection of housing options. Those local residents who are considering renewing their leases should give serious thought to homeownership.
Eric Tyson, author of Home Buying For Dummies, advocates that buyers should buy when others are scared to buy and take advantage of a negative market. Negative sentiment prevails in the current marketplace. But Tyson says to watch for several signs that signal an opportune time to buy. The author advises canny buyers to buy when the monthly cost of owning a home approximates the monthly cost of renting a similar property.
Major declines in Carlsbad real estate home prices along with record low mortgage rates have put home ownership costs back in line with rental costs. To illustrate the example, lets take Water's End, a community in south Carlsbad only a short walk from Ponto beach. During the 2005 real estate market, the four-bedroom, 2,468 sq-ft plan sold between $910,000 and $930,000 with an average mortgage rate of 6 percent. The total cost on a 30-year fixed loan with 20 percent down cost roughly $5,250 a month. That same home was being rented for roughly $2,700 a month. The difference between renting and buying the same home was dramatic.
The last sales of these floor plans in Water's End have closed between $700,000 and $740,000. With the current rates of 4.5 percent, the total cost has dropped to roughly $3,500 a month. And that plan was most recently advertised for rent on Craigslist.com for $3,400 a month. The $3,500 a month cost does not include the fact that $700 a month is going towards the principle and does not include the added benefit of deductions for mortgage interest and property taxes.
Tyson also advocates watching the changes in inventory levels and the rental market. Positive signs include when the rental market tightens as evidenced by increasing rents and a low vacancy rate, and the inventory of homes listed for sale falling from its peak as home sales pick up.
The rental market in Carlsbad has definitely tightened and rents have increased in the past 24 months. Inventory levels fell in 2009 and the first part of 2010. Average prices did move upwards slightly in the first months of 2010. But a recent influx of new construction projects has helped push more inventory onto the market and slower sales has extinguished any idea of a quick housing price rebound.
Another bit of advice from Eric Tyson for buyers is to buy during slow periods. Buying activity typically slows in Carlsbad during the winter months. Home sales in October, November and December have decreased by as much as 30 percent off spring highs. The 2010 winter real estate market should be no different. Motivated homeowners will reduce their prices during slow times to secure the fewer available buyers. And with less competition from other buyers, motivated buyers are in a stronger position to negotiate more favorable terms.
If it is your first time into the real estate market, take your time. The real estate market is designed to cause reaction. The home buying process is fun and exciting, but a common mistake is rushing to buy a home. Take the time to understand the area you're buying within, consider all of your available options and gather as much information on the process itself. This will help you form your own opinion and assure you a positive outcome.
With lower prices and mortgage rates, the relative cost of housing has plummeted. Recent changes in the number of homes on the market are giving buyers a wide selection of housing options. Those local residents who are considering renewing their leases should give serious thought to homeownership.
Eric Tyson, author of Home Buying For Dummies, advocates that buyers should buy when others are scared to buy and take advantage of a negative market. Negative sentiment prevails in the current marketplace. But Tyson says to watch for several signs that signal an opportune time to buy. The author advises canny buyers to buy when the monthly cost of owning a home approximates the monthly cost of renting a similar property.
Major declines in Carlsbad real estate home prices along with record low mortgage rates have put home ownership costs back in line with rental costs. To illustrate the example, lets take Water's End, a community in south Carlsbad only a short walk from Ponto beach. During the 2005 real estate market, the four-bedroom, 2,468 sq-ft plan sold between $910,000 and $930,000 with an average mortgage rate of 6 percent. The total cost on a 30-year fixed loan with 20 percent down cost roughly $5,250 a month. That same home was being rented for roughly $2,700 a month. The difference between renting and buying the same home was dramatic.
The last sales of these floor plans in Water's End have closed between $700,000 and $740,000. With the current rates of 4.5 percent, the total cost has dropped to roughly $3,500 a month. And that plan was most recently advertised for rent on Craigslist.com for $3,400 a month. The $3,500 a month cost does not include the fact that $700 a month is going towards the principle and does not include the added benefit of deductions for mortgage interest and property taxes.
Tyson also advocates watching the changes in inventory levels and the rental market. Positive signs include when the rental market tightens as evidenced by increasing rents and a low vacancy rate, and the inventory of homes listed for sale falling from its peak as home sales pick up.
The rental market in Carlsbad has definitely tightened and rents have increased in the past 24 months. Inventory levels fell in 2009 and the first part of 2010. Average prices did move upwards slightly in the first months of 2010. But a recent influx of new construction projects has helped push more inventory onto the market and slower sales has extinguished any idea of a quick housing price rebound.
Another bit of advice from Eric Tyson for buyers is to buy during slow periods. Buying activity typically slows in Carlsbad during the winter months. Home sales in October, November and December have decreased by as much as 30 percent off spring highs. The 2010 winter real estate market should be no different. Motivated homeowners will reduce their prices during slow times to secure the fewer available buyers. And with less competition from other buyers, motivated buyers are in a stronger position to negotiate more favorable terms.
If it is your first time into the real estate market, take your time. The real estate market is designed to cause reaction. The home buying process is fun and exciting, but a common mistake is rushing to buy a home. Take the time to understand the area you're buying within, consider all of your available options and gather as much information on the process itself. This will help you form your own opinion and assure you a positive outcome.