Hal's Mortgage Blog

The #1 reason given by potential homebuyers – they feel home prices have bottomed out. Could it be the market is poised for a slow and gradual recovery? Other reasons close behind were abundance of bargain priced foreclosures and fear of rising interest rates.

Who will these likely buyers be? First Time Home Buyers says the National Association of Realtors. Nearly 60% of all home purchases currently are FTHBs, under 34 years of age and living in the South or West.

Part of the increased activity is a result of the $8,000 Tax Credit. Now that it has been extended to purchases signed by April 30, 2010, Realtors here in Middle Tennessee are seeing good homes in the lower price range harder to find.

“Next year will clearly be better than this year,” says Mike Larson, Real Estate Analyst with Weiss Research. He predicts that the worst is over with a flat market leading up to 2012.

What should you do if you’re a buyer? Don’t sit on the sidelines too long. It’s still a buyer’s market but that advantage may be gradually shifting. If you’re ready to buy and it makes sense financially, don’t get caught looking in the rearview mirror.

You’re in luck. Foreclosures are dominating our market in Middle Tennessee. Be careful though, there are rules of common sense that need to be observed.

1. Get pre-approved by a lender. You might be surprised by what’s on your credit report. Now’s the time to fix it, not during the transaction. Make sure you’re not looking at property that’s over your head with regard to affordability.
2. Align yourself with a good Realtor. One who knows the local market and has experience in foreclosures. You can interview several before making a decision but once you pick a Realtor I recommend working exclusively with them. Once they’re on your “team” they’ll work hard to find what you’re looking for.
3. If a property needs work, and many do, wouldn't it be nice to know what the repair costs are going to be before you end up purchasing? More than one buyer has ended up with what we used to call “a pig in a poke”, or shall we say an unexpected surprise. That’s where your third team member comes in - a rehab contractor or if you prefer a Home Inspection Service.
4. Don’t get caught in a bidding frenzy. Some properties receive multiple offers while HUD foreclosures are a sealed bid auction. Once more, your Realtor is worth their weight in gold in guiding you on what to offer.

Be patient. Make a plan and stick to it.

Happy House Hunting

The hottest segment of the housing market right now is the First Time Home Buyer. Encouraged by lower home prices, low interest rates and aggressive federal actions, such as the Tax Credit, buyers are seeing this as their opportunity to become homeowners.

For the past eight months pending sales (homes under contract) have been rising. The Pending Home Sales Index issued by the National Association of Realtors is higher that it has been since December 2006.

There is a chance of slow down after the Tax Credit expires, and it appears that will happen in June of 2010, but experts think that may be brief. The outlook for the long term seems to be favorable.

I’ve personally been through several down cycles over the years and the old timers always used to say, “Don’t worry, whenever the market slows down, there is always a pent up demand. Keep your eye on the pent up demand”.

I don’t expect a new boom in home sales. The economy is still making buyers cautious, but I do see signs for optimism especially among those qualified First Time Home Buyers.