Where is Price Appreciation?
Lack of inventory for sale and high demand will keep Aviano out of the real estate double dip free fall in prices. According to DSNews.com, new data just released by RealtyTrac shows that lenders repossessed 1,050,500 homes last year. A record 2.9 million properties received foreclosure filings in 2010 despite a sharp drop-off in activity during the last two months of the year due to the controversy surrounding foreclosure documentation. That drop off will just lead to a spike sometime this year.
In Aviano, the La Verna model at 3943 East Hashknife Road (Map) was sold on the steps of the courthouse Tuesday to someone for $415,001. Opening bid was $415,000 so only one person bid on this home. Listed as a short sale 4.16.10, it was under contract (AWC-I status) when it was directed to be auctioned by the trustee. There were 2 prior contracts on this home during it's time on MLS. La Verna models are in the Cottonwood Collection and have 3091 sq ft with 4 bedrooms, 3.5 baths and a 3 car garage. But the cautionary tale we can take away from this is that pricing will be flat in Aviano for some time. Distressed inventory will keep the normal momentum of rising prices (with low inventory and high demand) dampened.
And the inventory is distressed. For the 8 active listings in Aviano, 5 are short sale and 3 are normal sale. The 7 AWC-I listings: 6 short sale and 1 normal. The 9 pending listings show 8 short sale and 1 bank offered. So until the distressed inventory is a minority in the numbers mix, price appreciation will be slow at best.
Stuart Crawford with VIP mortgage sends out some interesting thought pieces. This one is worth sharing. You can visit Stuart at scrawford@vipmtginc.com or www.stuartcrawfordmortgage.com
"I have had many of you inquire about what my thoughts are on interest rates and their future direction, as well as requesting an explanation that can be used with your buyers to help you in the field.
We've all heard it and preached it a million times. "Rates are going up...buy now!" Buyers are numb to that expression by now (pun intended). So here's a quick explanation about rates and how to get through to your buyers.
Mortgage rates generally do better when the economy is worse. That is because investors take their money out of stocks and put it into 'safe' investments such as bonds and mortgage backed securities which drives rates DOWN. Also, during this recent recession, the government (and the world economy) decided that lowering interest rates in general was the best way to stimulate the economy. It obviously hasn't happened as planned, but our rates are at historical lows. Recently the sentiment is that inflation may become an issue. This would force the government (and most likely world economy) to RAISE rates - in general. Remember they do not raise mortgage rates, but when they raise the Federal Funds Rate, mortgage rates will typically move in lock-step. In fact, China was the first to raise its interest rates to fend off what they perceive as a possible inflation problem. That hurt rates on a global scale, and assisted in the rate surge we experienced in the last quarter of 2010.
So what does all that really mean for you and your buyers besides "Rates are going up! Buy Now!"?
First you need to understand how a mortgage qualification works. When a buyer qualifies for a mortgage, they are NOT qualifying for a specific sales price or loan amount. They are qualifying for a specific PAYMENT. If rates go up, then payments go up, and a buyer qualifies for less home.
Rule of Thumb: For every half of a percent that rates go up, their buying power decreases by 5-6%.
For example, if Mr. Consumer wants to buy a home at 250k and put down 20%, his loan amount would be $200k with a 30year loan repayment of $1073 at 5% interest rate. If rates crept to 5.5% then that same payment would only allow a $189k loan amount; which equals a $236k sales price. He would have to find a home at $236k instead of $250k to have the same payment. If rates jumped to 7% then he would only qualify for a $201k house!
Mortgage rates are only going UP from here based on what we have seen so far."
Thanks Stuart. We here in the "field" appreciate the insight.
Tags:aviano,desert ridge,phoenix,real estate,villages at aviano,fireside,Arizona,short sale, foreclosure,fireside at desert ridge,Toll Brothers,pulte del web,bella monte. Information and pictures supplied by MLS and deemed reliable but not guaranteed. Proud to wake up, live and work in the great State of Arizona.
In Aviano, the La Verna model at 3943 East Hashknife Road (Map) was sold on the steps of the courthouse Tuesday to someone for $415,001. Opening bid was $415,000 so only one person bid on this home. Listed as a short sale 4.16.10, it was under contract (AWC-I status) when it was directed to be auctioned by the trustee. There were 2 prior contracts on this home during it's time on MLS. La Verna models are in the Cottonwood Collection and have 3091 sq ft with 4 bedrooms, 3.5 baths and a 3 car garage. But the cautionary tale we can take away from this is that pricing will be flat in Aviano for some time. Distressed inventory will keep the normal momentum of rising prices (with low inventory and high demand) dampened. And the inventory is distressed. For the 8 active listings in Aviano, 5 are short sale and 3 are normal sale. The 7 AWC-I listings: 6 short sale and 1 normal. The 9 pending listings show 8 short sale and 1 bank offered. So until the distressed inventory is a minority in the numbers mix, price appreciation will be slow at best.
Stuart Crawford with VIP mortgage sends out some interesting thought pieces. This one is worth sharing. You can visit Stuart at scrawford@vipmtginc.com or www.stuartcrawfordmortgage.com
"I have had many of you inquire about what my thoughts are on interest rates and their future direction, as well as requesting an explanation that can be used with your buyers to help you in the field.
We've all heard it and preached it a million times. "Rates are going up...buy now!" Buyers are numb to that expression by now (pun intended). So here's a quick explanation about rates and how to get through to your buyers.
Mortgage rates generally do better when the economy is worse. That is because investors take their money out of stocks and put it into 'safe' investments such as bonds and mortgage backed securities which drives rates DOWN. Also, during this recent recession, the government (and the world economy) decided that lowering interest rates in general was the best way to stimulate the economy. It obviously hasn't happened as planned, but our rates are at historical lows. Recently the sentiment is that inflation may become an issue. This would force the government (and most likely world economy) to RAISE rates - in general. Remember they do not raise mortgage rates, but when they raise the Federal Funds Rate, mortgage rates will typically move in lock-step. In fact, China was the first to raise its interest rates to fend off what they perceive as a possible inflation problem. That hurt rates on a global scale, and assisted in the rate surge we experienced in the last quarter of 2010.
So what does all that really mean for you and your buyers besides "Rates are going up! Buy Now!"?
First you need to understand how a mortgage qualification works. When a buyer qualifies for a mortgage, they are NOT qualifying for a specific sales price or loan amount. They are qualifying for a specific PAYMENT. If rates go up, then payments go up, and a buyer qualifies for less home.
Rule of Thumb: For every half of a percent that rates go up, their buying power decreases by 5-6%.
For example, if Mr. Consumer wants to buy a home at 250k and put down 20%, his loan amount would be $200k with a 30year loan repayment of $1073 at 5% interest rate. If rates crept to 5.5% then that same payment would only allow a $189k loan amount; which equals a $236k sales price. He would have to find a home at $236k instead of $250k to have the same payment. If rates jumped to 7% then he would only qualify for a $201k house!
Mortgage rates are only going UP from here based on what we have seen so far."
Thanks Stuart. We here in the "field" appreciate the insight.
Tags:aviano,desert ridge,phoenix,real estate,villages at aviano,fireside,Arizona,short sale, foreclosure,fireside at desert ridge,Toll Brothers,pulte del web,bella monte. Information and pictures supplied by MLS and deemed reliable but not guaranteed. Proud to wake up, live and work in the great State of Arizona.
