February 4th, 2009, posted by Troy
We are seeing a lot of movement in the market right now with buyers taking advantage of historic low interest rates and a large inventory of property to make this one of the strongest buyer markets in recent history.
Sounds great doesn’t it! But there is a deeper story not being told. If you are looking for a good quality property with little work at a great price you just maybe @#!!%% out of luck.
The BGA Team got together early in the week to talk about what we are seeing. While prices are down at around 2004 or 2005 prices there is a worrisome trend happening.
If a property comes on the market, is priced right and is in decent to good condition, we are seeing multiple contracts, bidding wars and properties moving in just a few hours. If the property needs work or is overpriced it will sit and potentially will sell far below what it would have potentially in a market at equilibrium.
Banks, God love ‘em, have caught a clue. In the foreclosure market, their pricing strategies have taken into account the condition and location of the property. In some cases they are pricing aggressively to get a bidding war going and escalating the price much higher than it would have sold for just a couple of months ago.
Will interest rates remain at these lows? The past few weeks, we have seen them inching higher than the historic 4.9% we reached. Right now mortgage rates have been range bound for the past few weeks (between 5 percent and 5.5 percent — assuming 1 point). With refinance volume booming, the Fed should soon start yielding the results of lowering rates to historic levels. Expect a temporary pause in price declines and a reduction in the excess inventory in part stimulated through a reduction in delinquencies.
In Bankrate.com’s weekly polling of economists, a little under one-third of the panelists believe mortgage rates will rise over the next 35 to 45 days. The same percentage think rates will fall. A little more than one-third believe rates will remain relatively unchanged (plus or minus 2 basis points). (These are) still historic lows, and remember, a 1 percent difference in rate for $150K loan amount only equates to a $100 difference in payment. If it makes economical sense, lock and close now.