The biggest news in real estate surrounds the mortgage market and its ability to create affordability and stimulate demand for housing. The hope is that a recovery in the housing market will lead the economy out of a recession.
Thirty-year fixed mortgage rates are in the low 5 percent range, and some local lenders are boasting 4 percent rates with a buy-down. These are record low levels.
Just six months ago, the average mortgage rates were around 6.5 percent. The 1.5 percent decrease is expected to stimulate the real estate market, increasing the number of sales and stemming the decline of local home values.
To make sure today's buyers can afford their homes, lenders have toughened their standards for those needing a home loan, which is much different from the NINJA (no income, no job or assets) loans prevalent from 2003 through 2005. Buyers are finding increased restrictions when qualifying for a mortgage.
A FICO score of 740 or higher is required to achieve the most desirable mortgage rates. Buyers with a FICO score lower than 680 are having difficulty obtaining financing.
Moratorium
A number of large financial institutions, such a Bank of America, Citigroup, Fannie Mae and Freddie Mac, have enacted a moratorium on any foreclosure or eviction proceedings of homeowners who are unable to make their mortgage payments.
The Jan. 9 deadline for Fannie Mae and Freddie Mac was extended until Jan. 31. Bank of America and Citigroup have not given deadlines.
The moratorium is vital in several ways. It gives the homeowners and the banks additional time to restructure the terms of their debt agreement.
The two parties will redesign the loan to a lower, more affordable rate or possibly a longer payback period. This will keep owners in their property and not force foreclosures or short-sales.
These forced sales are helping drive prices downward and setting new market values for San Diego County. The question remains of how many of the delinquent owners, even if given a better mortgage, are willing or able to afford their home.
Since a foreclosed home can take up to six months to become for sale on the open market, the evidence supporting further distress in the residential real estate market may not be seen until the latter part of this year.
The averages have it
Carlsbad has been fortunate to avoid the high number of distressed properties plaguing its neighboring cities.
Oceanside has half of its 1,100 homes for sale in some form of distress; a number that has helped push down average home prices as much as 40 percent off of 2005 peak pricing. But Carlsbad does have foreclosure homes, which have been the city's most sought-after property.
The banks have discounted Carlsbad foreclosure properties 15 to 25 percent below 2005 values. The following are examples of what buyers bid on in the past 30 days:
• The $200,000 range: Buyers are bidding on two bedroom, two bath condos around the La Costa golf course that are about 1,200 to 1,400 square feet. These condos rocketed up to the mid $400,000's during the boom.
A recent foreclosure just went under contract near the golf course that was completely remodeled and listed for $230,000. With 3 percent down, the total property cost, including property taxes, HOA fees and insurance, is $1,658.
A three bedroom twin home, which is a single level sharing only one wall, can be found in the La Costa area for around $265,000.
• The $500,000 range: This is an active area for Carlsbad as a number of quality homes in desirable neighborhoods increased in the past 60 days. Three and four bedroom homes that were once priced in the high $600,000's and $700,000's are now 15 to 20 percent less.
A four bedroom, 1,600-square-foot home with a large rear yard located in the La Costa Canyon High School boundary lines went under contact for a few days in early January with a list price of $525,000. A recent foreclosure in Bressi Ranch, a four bedroom, three bath, 2,600-square-foot home, was listed for $574,000.
It sold the first day on the market. That same home sold for $756,000 in 2005.
Thirty-year fixed mortgage rates are in the low 5 percent range, and some local lenders are boasting 4 percent rates with a buy-down. These are record low levels.
Just six months ago, the average mortgage rates were around 6.5 percent. The 1.5 percent decrease is expected to stimulate the real estate market, increasing the number of sales and stemming the decline of local home values.
To make sure today's buyers can afford their homes, lenders have toughened their standards for those needing a home loan, which is much different from the NINJA (no income, no job or assets) loans prevalent from 2003 through 2005. Buyers are finding increased restrictions when qualifying for a mortgage.
A FICO score of 740 or higher is required to achieve the most desirable mortgage rates. Buyers with a FICO score lower than 680 are having difficulty obtaining financing.
Moratorium
A number of large financial institutions, such a Bank of America, Citigroup, Fannie Mae and Freddie Mac, have enacted a moratorium on any foreclosure or eviction proceedings of homeowners who are unable to make their mortgage payments.
The Jan. 9 deadline for Fannie Mae and Freddie Mac was extended until Jan. 31. Bank of America and Citigroup have not given deadlines.
The moratorium is vital in several ways. It gives the homeowners and the banks additional time to restructure the terms of their debt agreement.
The two parties will redesign the loan to a lower, more affordable rate or possibly a longer payback period. This will keep owners in their property and not force foreclosures or short-sales.
These forced sales are helping drive prices downward and setting new market values for San Diego County. The question remains of how many of the delinquent owners, even if given a better mortgage, are willing or able to afford their home.
Since a foreclosed home can take up to six months to become for sale on the open market, the evidence supporting further distress in the residential real estate market may not be seen until the latter part of this year.
The averages have it
Carlsbad has been fortunate to avoid the high number of distressed properties plaguing its neighboring cities.
Oceanside has half of its 1,100 homes for sale in some form of distress; a number that has helped push down average home prices as much as 40 percent off of 2005 peak pricing. But Carlsbad does have foreclosure homes, which have been the city's most sought-after property.
The banks have discounted Carlsbad foreclosure properties 15 to 25 percent below 2005 values. The following are examples of what buyers bid on in the past 30 days:
• The $200,000 range: Buyers are bidding on two bedroom, two bath condos around the La Costa golf course that are about 1,200 to 1,400 square feet. These condos rocketed up to the mid $400,000's during the boom.
A recent foreclosure just went under contract near the golf course that was completely remodeled and listed for $230,000. With 3 percent down, the total property cost, including property taxes, HOA fees and insurance, is $1,658.
A three bedroom twin home, which is a single level sharing only one wall, can be found in the La Costa area for around $265,000.
• The $500,000 range: This is an active area for Carlsbad as a number of quality homes in desirable neighborhoods increased in the past 60 days. Three and four bedroom homes that were once priced in the high $600,000's and $700,000's are now 15 to 20 percent less.
A four bedroom, 1,600-square-foot home with a large rear yard located in the La Costa Canyon High School boundary lines went under contact for a few days in early January with a list price of $525,000. A recent foreclosure in Bressi Ranch, a four bedroom, three bath, 2,600-square-foot home, was listed for $574,000.
It sold the first day on the market. That same home sold for $756,000 in 2005.