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2008: A Great Year to Invest in Real Estate in California and Washington
We'll tell you Where and Why
2008 Is A Great Year To Invest In Real Estate In California And Washington.

Some prospective home owners are still wondering if they should avoid buying a home at all costs. In fact, the market has not looked this promising since 2005. A predicted forecast of lower price and sales compared to the previous year, foreclosures, and even lower mortgage rates should appeal to the first-time homebuyer. Truth be told, it is now a buyer’s market.

According to DQNews.com in December 2007, reports show that nationally, “…sales have declined the last 26 months.” Even so, the website informs that since October of 2007, sales are up two percent in the Los Angeles, San Bernardino, Riverside, San Diego and Orange counties, with an 11.5 percent increase of sales attributed to just newly built homes alone. Homes that were priced at $470,000 from November of 2006 were available as of November 2007 for $414,000–11.9 percent off the original price point.  

Even the National Association of REALTORS® (NAR) has reported that Washington would soon experience this trend. Within “the next few months, existing home-sales are expected to hold steady as indicated by pending sales activity, then rise later in the year and continue to improve in 2009.” The Pending Home Sales Index (PHSI), noted as the leading gauge of “pending sales for existing homes,” indicated that for homes sold in November 2007, the index fell to 87.6 percent–an impressive turn from the 89.9 percent listed the previous month. NAR chief economist Lawrence Yun summarizes that, “Although there could be some minor slippage in the first quarter, existing-home sales should hold in a narrow range before trending up.” This trend does not just apply solely to Washington; nationwide the PHSI reports that during 2007:

The South showed a 2.3 percent increase, bringing the index to 100.7, but is 19.8 percent below 2006

A 2.1 percent index slip was evidenced in the West, bringing the index to 86.6-18.5 percent lower than November 2006

The Midwest fell 4.1 percent in November to 82.1 percent-18.6 percent compared to 2006

The Northeast’s index dropped 13 percent in November to 70.1 and is currently about 19 percent below November 2006

 

Based on these numbers, any consumer who was nervous about buying into the market shouldn’t be. Albeit that the statistics show that sales are slow and gradual, they are not unusual. Yun forecasts that, “A meaningful recovery in existing-home sales could occur as early as this spring, or it may be further delayed toward late 2008.” This also means that mortgage interest rates are at an all time low - another reason why it may be a good idea for first-time homebuyers to consider buying a home this year. “The 30 - year fixed-rate mortgage is expected to rise slowly to the 6.3 percent range by the end of this year,” cites NAR. However, it is also noted that if the Fed fund rates were also cut, then this would mean that there would be lower, short-term interest rates.

What does this all mean to the first-time homebuyer? Consider first how the mortgage situation affects housing in California. DQNews.com reports that,

“Foreclosure activity is at record levels, financing with adjustable-rate mortgages and with multiple mortgages have dropped sharply. Down payment sizes and flipping rates are stable, non-owner occupied buying activity had edged higher.”

To the first-time buyer, foreclosures may prove to be beneficial since it means that they can now buy a home at an affordable rate. And to cement the deal, BrokerAgentNews.com mentions that first-time homeowners will not have to worry about sub-prime or zero down loans; it’s all real financing from here on out.

If you’re still not convinced as to whether you should consider investing in real estate, here are the top five reasons why now is the perfect time to do so:

Low mortgage rates and real financing will be available. This is especially advantageous for the first-time buyer. According to ABR and contributor to BrokerAgentNews.com Paul Pastore, “FHA financing, first-time homeowner bond program” and “fixed rates” are back in the game. Your real estate agent will help you get
together with a lender who will then figure out what’s the best loan for you.

It doesn’t hurt to look at foreclosed homes. In fact, some first-time and investment property consumers may find it favorable. HouseHunt notes that typically, you can get some great deals on such houses in exchange for a quick sale, lower prices, smaller down payments, special loan assistance, reduced
closing costs, etc.However, keep in mind that someone who could not afford to make mortgage payments probably could not afford to make the necessary ongoing repairs and maintenance every house needs.

There is no competitive bidding (except for distressed/foreclosure properties). Pastore notes that back in 2005, “buyers [would] bid the properties up substantially from the listing price,” while others would authorize their agents to “outbid other offers by thousands of dollars.” In our current real estate market,
there’s littlereason for you to participate in the sport of competitive bidding.

You know what they say about location. No longer do you have to live in the outskirts of a city or metro area. Now that there are more homes available due to new construction and foreclosures, buyers can easily find a home near shopping centers, metropolitan districts, schools, etc.

With location comes selection. Pastore again points out that there are plenty of homes and investment properties to choose from, with many being located near big city and/or community amenities. “There is a great selection of attached homes, condos and townhouses,” Pastore explains. “There are lots of options
in this market.”
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