As we prepare to head into the summer months, there are three housing market trends that should be noted. While experts are quick to admit that it is hard to make predictions at this time, data from the spring months has provided information in terms of what consumers might expect.
Slight Increase In Interest Rates
A modest rise in interest rates is expected. With rates reaching an all-time low recently, it seems that an increase is inevitable. This is not necessarily a bad thing, as a rate increase would be one sign of an improving economy. An increase would, however, be a bad thing for those who are waiting for rates to drop even further prior to purchasing a home. Though house prices may continue to drop, simple math will tell you that a lower interest rate is better in the long term than a low home price.
Easier and More Affordable Refinancing
The price and ease or refinancing in the coming month may make it easier for the nearly 11 million people who are behind on their mortgage to reclaim solid ownership of their home. This break will include refinancing of FHA loans. Mounting pressure on the government to support homeowners will continue to make a different in the refinancing market segment.
Credit Conditions and Down Payments
Tight credit conditions are expected to remain in place. However, indicators point towards credit restrictions not becoming even more difficult to contend with. As always, those with an excellent credit score and the ability to prove a stable financial history will be able to purchase without problem. However, those with less than perfect credit should be prepared to offer a substantial down payment. One exception would be those who qualify for an FHA loan. FHA loans require only a 3.5% down payment.
Market Conditions in Southern California Improving
Housing market conditions in Southern California are not quite as gloomy as nationwide conditions. The sale of homes priced at $500,000 or more jumped by 36% from February to mid-April. This caused median home sale prices to reach a six month high. For homes in all prices, the sales percentage has climbed three consecutive months. Compared to last March, the sale of new homes was up by 9%, with sales of existing homes being the highest it has been since March of 2010. San Diego experienced a total increase of 5.70% in sales volume of homes in all price ranges.
Foreclosures and short sales did account for nearly half of the homes sold thus far this spring. However, percentages for both types of sales were down from previous months. Foreclosure sales percentages dropped from 32.1% to 31.1%. Short sale percentages dropped from 20.4% to 18.9%. General foreclosure rates are still high, yet are much lower than the peak rates that were reached during the past few years.
Darin Redding is a certified home inspector with Housecall Property Inspections, a San Diego based home inspection company. He can be reached at 619-663-8740 or on the web at http://www.sandiegohomeinspect.com