ZILLOW’S first-quarter home value report found that home values posted their biggest monthly gain since 2006 last month, rising 0.5% nationwide.
The data show that 19 of the 30 largest markets have already hit bottom or will soon, and Zillow predicts the national index will hit bottom in late 2012 or early 2013. I believe I mentioned that before that we would see prices bottoming out in 12-13’. But remember this does not means prices will start to go up, now a days buyers are really smart, lenders are really strict with prices and evaluations and Real Estate Appraisers are super conservative. I believe after this bottoming out, we will see the market prices level off for a couple of years before it starts to show real signs of appreciation. An Economist would love to see longer term of leveling of Property Values that will show longevity in a recovery.
Also for homeowners, before you start to jump for joy. We still have a lot of distressed properties that need to be transacted before we can say we have hit bottom and we are headed for a positively appreciating market. That might be the challenge of our live time. Also, what should be done about all the foreclosures, non – performing loans, potentials Short Sales and distressed homeowners? Every week I read about different programs or help options that are being thrown under the bus, for example: programs that will allow homeowners to rent back properties instead of letting the property go into foreclosure, a recent article I read said that the government is requesting the banks to start to lower mortgage balances for distress homes? Now, my own opinion since the beginning of all this mess was that the best programs will come last, so if I were right the best program by far would be a mortgage balance reduction program. That’s if our government is man enough to fight the banks for it and actually win.
Therefore, for homebuyers I believe you should start to prepare to make a decision if home buying is still a dream of yours?
Local rents are very strong indicators of real-estate values. Home prices in most communities that have best weathered the downturn tend toward the low-rent end. That is, they have lower price-to-rent multiples, and house hunters will often find it cheaper to buy properties than to rent them.
Look at a typical “rent vs. buy” calculator available on many real estate or personal-finance websites. Most calculators figure that if prices are more than 15 times annual rents, then a market favors renters; under 15 times, buyers.
Beware the outliers. Extremely low price-to-rent multiples can be warning flags for seriously depressed markets that are glutted with unsold properties. Trulia, another real-estate information site, regularly publishes a rent-to-buy analysis of large metropolitan areas, and the most “affordable” markets are a Where’s where of the real-estate bust: Las Vegas (prices 6 times rents), Phoenix (7) and Miami (8). At the opposite end, Trulia’s survey says the “least affordable” market is New York City (39), where home values are down just 9.1% from their peak.
It’s the oldest joke in real estate, but with a new punch line:
Q: What are the three most important things to consider when buying a house?
A: Jobs. Jobs. Jobs.
Clearly, the No. 1 factor in determining whether a community has passed through the worst of the housing debacle is its current state of employment. There has always been a connection between the local jobs picture and the local real-estate market, but it’s even greater today.
For example, a lot of our nurses bought close to their hospitals or work places, but they also bought far in far away places where a lot of them lost money in.
Healthier communities have fewer foreclosed properties pulling down values of other homes.
Just as jobs fuel the local housing engine, foreclosures put on the brakes. Even in good times, one foreclosed property in a neighborhood can bring down the values of every other house around it. And, in bad times, abandoned, foreclosed houses can swamp entire metropolitan areas.
In 2010, the worst year so far, about 2.23% of all the homes received a foreclosure filing, according to RealtyTrac, an Irvine, Calif., firm that monitors foreclosed properties. In Las Vegas, the poster child of the Sun Belt’s real-estate bust, the foreclosure rate was 12%, more than 80% of homes are worth less than their mortgages and values are down more than 50% from their peak.
Please be aware of how much more foreclosure or short sales are in the areas of interest, maybe it’s not time to pull the trigger yet.
I suspect the market to get much better next year by force due to it being an election year. Short sales and foreclosures will be on the rise due to the “Debt Forgiveness Act of 2007” expiring year-end. This will force a lot of underwater homeowners to consider letting their property go if they don’t see themselves long term with their current mortgage balance.
Good luck and be informed and be smart about your next investments.
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Please call Ken Go of 1st Innovative Finance Group at (562)697-7028 or write to [email protected] for your inquiries.