Chico Real Estate: Temperatures Rising
August 13th, 2008categories: Chico CA Real Estate News
by Mike Wiegert
Chico Real Estate: Temperatures Rising, And That’s Not All
A recent forecast by the National Association of Realtors projects significant gains in future months as early as the fourth quarter of 2008 into the first quarter of 2009. This newfound optimism is spurred by an encouraging movement by buyers to avail themselves of provisions of newly passed housing stimulus legislation, the Housing Act of 2008. I’ve been talking about this new legislation for weeks and again recommend anyone seeking advice and counseling, particularly in matters pertaining to foreclosure to visit the Housing and Urban Development website.
The Pending Homes Sales Index, used by Realtors and Economists to predict the forward movement of the market rose 5.3 percent in June over May. In recent months homes sales have been rising and falling within a modest level. Lawrence Yun, NAR chief economist explains, “The vacillation of data from one month to the next indicates a housing market in transition. The rise in pending home sales was broadbased with all four regions showing gains. This is welcome news because a rise in contract activity is necessary for and overall housing recovery.
With a tax credit now available to first-time home buyers, increases in home sales could be sustained with the momentum carrying into 2009.” The profound element of this statement is that we are seeing recovery in all four national regions. Heretofore, market recovery appeared to be segregated to certain geographic areas. It may be a bit premature, but it appears despite all our economic woes, oil prices are finally dropping, the dollar finally rising and the real estate market as a whole is showing signs of regaining some of it’s former esteem.
Regionally, PHSI figures appear as follows: In the West the index rose 4.6 percent, understandable given the continuation of an active foreclosure market caused by the abundance of subprime lending two and three years ago. In the South the index leaped a whopping 9.3 percent, the largest gain of all four regions. The Northwest rose a soft 3.4 percent. Lagging behind at last was the Midwest with a meager 1.3 percent. But again, all regions are moving in the same upward direction.
Want to hear something really earth shattering? Our neighbor to the south, Sacramento/Roseville is reporting a flurry of new sales in June and July where buyers appear to be unwilling to wait any longer and are taking advantage of the glut of affordable housing. Other areas similarly experiencing strong increases in sales activity are Las Vegas, NV and Ft. Meyers, FL. NAR President Richard F. Gaylord applauds the newly passed legislation and predicts long term benefits as a result. ”
Provisions to stem foreclosures are helpful, but a greater lift to the economy should come from higher mortgage limits, enhancements to the FHA loan program and the first-time home buyer tax credit. These are excellent tools that will help buyers get into the market to take advantage of the unprecedented drop in home prices in many areas, as well as a wide selection of inventory, to make an investment in their future,” Gaylord said. Additionally comments by Lawrence Yun jibe with Gaylord: “Buyers entering the hardest-hit markets, in some cases with multiple-bid offers, may have put a floor on prices,” he said. “In addition, rising commodity prices and higher construction costs have resulted in a very unusual market today with existing-home prices being less than replacement building costs in some areas. Home prices are projected to increase 3 to 6 percent in 2009.”
Now may be the time for the prudent investor to pay close attention to the transitioning real estate market.
It certainly sounds self-serving for a Realtor to suggest an early jumping on the band wagon, but with historically low interest rates expected to stay below 6.5 percent well into 2009, present market conditions appear to be one of the great periods of opportunity that we only get to see a few times in a lifetime.
