About 6 or 7 years ago I bought my first home. It was a beautiful home and I was lucky to have found it. I was newly moved to Ohio and Charlotte was just over a year old. The house was two stories, had a gorgeous back yard with mature trees, and a laundry room UPSTAIRS.
I sure wish I had that now.
But just a year into my new house, I had to put it on the market to move and thus began the scary world of real estate.
Luckily for me, my dad is a broker/real estate agent and not only did he help me buy my first home, but he sold it too. And whether by luck or by fortune, the first woman to walk into my home on an open house was the very person that purchased it. Now as much as I want to say the housing market was “bad” back then,clearly over the past few years it has taken a dip as the economy has struggled to stabilize. Once we moved states, we were able to skate in and purchase a second home very similar in style and an excellent price. Lately I have been warily watching the foreclosures and rentals increase in our neighborhood and I wont lie that its gotten me nervous.
Eventually I would like to move to Florida and being stuck in this state, in this neighborhood, although nice, is not my dream.
With all this housing jumble, I turned to the person I know the best, Keith Furrow, to answer some real estate questions about housing and what is really going on in the market.
(the beautiful Pensacola Beach, Gulf Breeze, and Pensacola Real Estate area)
How do you feel the economy is affecting the housing market?
Real Estate by it’s nature is Hyperlocal, which means that areas just a few miles apart can be drastically different. Some areas are still declining while other areas are improving. Locally in the Gulf Breeze and Navarre, Florida markets we have seen every month this year a slight increase in price each month. In the last year we have seen the supply of homes go from 11.3 month supply to 8.3 months supply. Once we drop under six months supply we change from a buyers market to a seller’s market. We currently have 1000 less homes on the market in Pensacola, Florida than from a year ago. I think the people are cautiously optimistic. But if the Congress, Senate and the President don’t do something about the deficit than we may see people go back to sitting on the side lines.
How has the housing market changed over the past few years?
In 2002 through 2006 most of our area had experienced a major increase in values and a shortage of homes. Starting in late 2006 into 2007 we saw a major shift from a seller’s market to a buyer’s market. In some areas we saw values drop by 30 to 50% or more as the supply of of homes available far out paced the demand. Once many markets in the Northeast and other parts of the country weakened the supply of homes in Florida which were to be their second homes and retirement homes continued to grow. The value of these homes dropped dramatically. Now into 2011 we have locally seen supplies stabilize and the demand increase. With the drop in pricing and the 50 year low in interest rates we now see the affordability index of homes have reached a level not seen in a generation. Homes are more affordable now.
Do you feel we are in a better place right now where housing is concerned?
Yes, much better that 4 years ago, and improving everyday.
Do you recommend people rent over buying?
As quoted in the Wallstreet journal “If you don’t own a home, buy one. If you own one home, buy another one. And if you own two homes, buy a third and lend your relatives the money to buy one.” – John Paulson
Rents are on the increase and will continue to rise because of the demand and shortage of good rentals being available. Many people can not qualify right now because of their credit rating being negatively effected by having had a foreclosure or a short sale.
What is the biggest hurdle for new home buyers currently?
Confidence in the future and confidence of having a job. But you have to live somewhere, and since rates are so low and prices are down, it’s time to lock in a low payment now. We should remember that the landlord is going to raise prices as soon as she can, as she should since it is her rental property and it is an investment for her family.
Are you finding the market is doing OK in your area?
Some areas are still declining while other areas are improving. Locally in the Gulf Breeze and Navarre markets we have seen that in every month this year an increase in pricing a little more each month. Since the beginning of the year we have seen the supply of homes go from 11.3 month supply to 8.3 months supply. Once we drop under six months supply we change from a buyers market to a seller’s market. We currently have 1000 less homes on the market in Pensacola, Florida than from a year ago.
Are loan approvals harder to get?
We still have zero down USDA and VA programs available and also FHA loans which require a min. 3.5 down payment. I think that lenders are taking long look at many borrowers but for the most part a 640 credit score is all that is needed, In some case we are seeing families with credit scores down to 600 obtaining loans. Each situation and each borrower is different and it best to consult a local mortgage specialist.
What percentage do most people have to put down on a home?
We have zero down USDA and VA programs available and also FHA loans which require a min. 3.5 down payment. The more you put down the better you will feel and the more stable and low risk your purchase will be.
What can you tell us about mortgage insurance?
VA has a fee to guarantee their loans and FHA has an upfront fee and a fee added each month on the balance owed on the loan. Any loan with less than 20% down requires Mortgage insurance to help offset the risk involved with issuing a loan, These fees can vary depending on the type of loan, down payment, credit worthiness and stability of the borrower. These factors are all considered to determine the risk of the loan. The the loan is shopped to various lenders who will bid for the opportunity to issue the loan which is being facilitated by particular mortgage lender.
Do you know of any current home buyer incentives (local or otherwise)
The best incentive in years is the fact that interest rates are below 4% and prices are down to 2002 or 2003 prices in most areas.
Because of this low rate a borrower can ask a lender to adjust the rate to be slightly higher rate and ask the lender to pay or offset the upfront cost to purchase a home. Most production Builders are also being aggressive, by paying the closing cost and giving incentives to entice a buyer to purchase their new homes vs an existing home. It seems that a foreclosure or a short-sale may offer a better price but you should consult Professional Realtor to review the risks and benefits and to learn the specifics of the Hyperlocal market you are interested purchasing. The price is not always the most important factor when purchasing a home. Location, condition, availability of being able to close now before rates rise and the combination and in the understanding of these factors one should consult a Real estate broker and an attorney before purchasing.
Personally I have found that home ownership has been incredibly rewarding. Although I may live here longer than I intended when purchasing, you cant always depend on a quick turn around of a sale, regardless of the housing market.I am grateful to not only have a home for my two children, but one that I can live in and enjoy no matter how long it may or may not be.
Let me ask you, do you own your own home and have you tried to sell? Have you had any luck with walk throughs?
If you don’t own your own home, is something particular stopping you?
Local to Pensacola, Navarre, or Gulf Breeze and need a realtor or broker?