Local conditions affect price. National conditions affect financing. There have been a lot of changes nationally that affect the sale of real estate locally . Let’s take a look at what they are.
The National Association of Home Builders report that as of September, “291 metropolitan areas across the country now qualify as improving housing markets”. This is determined by looking at local employment, new construction permits issued and home appreciation rate. 80 percent of the designated metropolitan areas nationwide have recovered or are on the rebound.
Good Mortgage News
There is more recovery good news. RealtyTrac just released that 600,000 homeowners across the country are no longer “underwater” with their mortgages. A mortgage is considered to be underwater when the loan to value is over 125 percent.
Corelogic reports that 7.1 million homes are “underwater”, a drop from 9.6 million homes from the previous quarter. They also report that 41.5 million homes have positive equity. But a fifth of these homes had 20 percent equity or less which makes refinancing a challenge if not impossible.
The Mortgage Bankers Association (MBA) reports a decline in August of the Mortgage Credit Availability Index (MCAI), the first decline in four months.
“The slight decline in the MCAI in August reflected a reduction in the availability of certain loan features, particularly interest-only and terms exceeding 30 years,” reports MBA.
An interest only mortgage is a loan that does not have any points. Points are closing costs that are factored into the loan. Although it may seem hard to believe, 40 year mortgages became popular in an attempt to lower monthly payments enabling more folks to qualify for a loan. What the MBA report means is that lenders are pulling back to more traditional loan lengths with points added in to cover closing costs.
Tightening Credit Means Price Adjustment
Keep this in mind when it comes to real estate; Local conditions affect price. National conditions affect financing. It is frustrating to hear how well other housing markets are doing while our local market sits glutted with inventory. The best way to counter rising mortgage rates and tightening credit in a market such as ours is to adjust price downwards. There is a direct correlation between price and time. The higher the price the longer the time it takes to sell. But the farther the price is from current market value the closer to impossible it is to sell a home. There is so much inventory to choose from and so many of these properties are a distress sale of some type or another. The competition is tougher now than it has ever been. Sellers must be “aggressive” in their approach to selling.
Margaret Hitchcock is a Realtor and owner/operator of Hitchcock Realty in Morehead City along the Crystal Coast of NC. Visit her online at www.HitchcockRealty.net or call direct at (252) 269-2893. Margaret has many years of successful experience representing both buyers and sellers.