Favorable Turn in Local Real Estate Market

There are several positive indicators in our local market:

• The number of sales increased in 2011.
• Fewer of these were foreclosures.
• Home values are stabilizing.
• Inventory of homes for sale is at a 7-year low; upward pressure on prices should follow.

In looking at the local real estate market statistics for last quarter of 2011, the thing jumps off the page: the low inventory of homes for sale. In December 2011 the months supply of inventory was the lowest we’ve seen since November 2005.  Months supply of inventory is calculated by dividing the number of homes currently for sale by the number of homes that have sold in the prior month. In December, there were 3,439 homes, condos, and PUD’s listed as active or accepting backup offers in Fresno Multiple Listing Service. In that same month there were 953 sales, which results in the calculation of 3.6 months supply of inventory.

Many economists use “months supply of inventory” as one measure for predicting if home values will appreciate. Most agree that an inventory of less than 3 months is an under-supply and could generate increased home values; also known as a seller’s market.  More than a 6 month’s supply, a buyer’s market, when home sellers may need to reduce their asking price to attract buyers.  Best of all, between 3 and 6 months is considered a balanced market. With the exception of 2 months, the Fresno MLS has been in this territory since March 2009.

“Although we anticipate the possibility of more foreclosures being put on the market this spring, right now is an excellent time to have a home on the market,” predicts Scott Leonard, President of Guarantee Real Estate.

Reasonable home prices and unbelievably low interest rates have attracted home buyers and investors to the local market.  In 2011, there were 11,231 homes, condos, and PUD’s reported sold to the Fresno MLS.  This was a 6.8% increase from the prior year.  And the last quarter’s increase of 9.5% indicates that the market was picking up steam.

Although the median residential sales price of $140,000 in the last quarter 2011 was down 2.7% from the prior year period, this is indicative of our stabilizing market and is far healthier than the double digit decreases that were seen from late ’07 thru ’09.  In the past 36 months, our market has seen a high median sales price of $157,500 in June 2010 following the Homesbuyer’s Tax Credit incentive, and a low of $130,000 in April 2011.

 

2011 also saw an increase in the number of homeowners who were approved to sell their homes as short sales.  In the 4^th Quarter of 2011, short sales were 20.8% of the total closed sales, compare to 15.4% in 2010.  With more distressed sales taking place prior to going to foreclosure, the number of REO property sales declined to 36.1% of the total sales, compared to 43.2% in the prior year.  And “traditional sales,” the term now used for owners with equity in their home, increased to 43.1% of the market, compared to 41.4% in the prior year.

If you would like to know more about home sales in your neighborhood or the value of your property, please contact me.

I am pleased that many lenders have become better organized and efficient with their short sale approval process.  This is allowing us to better help homeowners who are in financial crisis.  If you know someone who may need advice about selling their home short, please ask them to give me a call.

3 Reasons the Term “Strategic Default” is Misleading

In a recent study, the Chicago Booth/Kellogg School Financial Trust Index found that a full 36% of
Americans would consider “strategic default”—another term for walking away from your
mortgage—if they were underwater (owed more on their home than what it was worth).
Now that more than one in four American homeowners is “underwater,” I feel that it’s important
for the community to know the truth about strategic default.
The truth is the foreclosure process carries with it credit issues, current and future employment
challenges, issues with security clearance and possible debt collections.
That’s why it is vital to explain the 3 reasons why the term “strategic default” is misleading:
1. There’s nothing strategic about defaulting on purpose, especially when you have options
like short sales, mortgage modifications, and refinance (just to name a few) that may keep
you from foreclosure.
2. The waiting periods to apply for a new mortgage loan are at least five years less in a short
sale vs. a foreclosure.
3. A foreclosure will show up on your credit report every time you apply for a home loan, car
loan, new job, etc., and will affect your financial situation for many years to come.

If you are underwater and can no longer afford your mortgage payments, you need to create a
genuine strategy to avoid foreclosure, helping to provide stability for you and our community.
If you have any questions about what steps you or someone you care about should take next,
contact me today!

It’s time to take another look at short sales

As recently as a few months ago, if you would have told a real estate agent who specialized in short sales that they’d be raving about a lender’s stellar service and rapid approval times—not to mention significant cash incentives for financially strapped homeowners for pursuing a short sale—you’d have gotten some strange looks.

That’s all changed. And it’s changed faster and to a greater extent than most real estate professionals ever could have imagined.

With a glut of bank-owned properties dragging down the recovery of the real estate market, as well as the national economy, major lenders are more eager than ever before to avoid foreclosure. So they’ve sharpened their focus on short sales. Big time.

The biggest lenders in the country have staffed up to ensure rapid processing of short sale applications. They’ve ponied up with cash incentives at closing for homeowners who pursue a short sale. And they’re proactively reaching out to CDPE agents and putting them in touch with delinquent borrowers.

This is big news and the media has not really caught onto it yet. What’s important for you to know is that whatever you’ve read or heard in the past about long lag times and frustrations with short sales is probably no longer the case.

As a member of the CDPEAdvanced community, I’m tapped into major lenders and on top of major developments affecting short sales and bank-owned properties. I invite you to visit my website http://hosted.cdpe.com/142834 to learn more and feel free to call me any time at 559-355-7756 or email me at dtraymer@gmail.com if you or anyone you know is struggling with an unmanageable mortgage.

Fresno Real Estate Market Snapshot

EXISTING HOME SALES REPORT

Existing home sales were up in the Fresno area in March, signaling an upward trend as we head into spring. Existing home sales, which include recently purchased single family homes, townhomes and condominiums were up 25% compared to the previous month and 6% above the pace recorded at this time last year.

The average days on market declined for the third consecutive month and is still up 16% over the same period last year.

The average months supply of inventory in March 2011 is down 27% when compared to March 2010. This is also referred to as the absorption rate or the amount of time it would take to deplete the current inventory at the current rate. To learn more about absorption rates and inventory depletion click here.