The question that is still on everyone's mind that follows the housing market is, “Have we hit bottom yet?” We all want to know the answer. Current trends in the Sacramento area are showing positive signs of improvement. Median home prices for existing homes increased slightly from February to March of this year. The total number of closed escrows in the first three months of 2009 increased over 80% from the same time period in 2008. Foreclosed homes made up around 70% of the closed escrows.
Inventory for existing homes has decreased which can mean more competition and possibly an increase in prices. New-home inventory has also decreased in our area. A new state tax credit of up to 10% of purchase price or a maximum of $10,000 on new- homes will give homebuyers $3,333 off taxes each year for the next three years. First-time home buyers of existing homes will receive an $8,000 tax credit. What is driving buyers into the market to buy are these tax credits along with lower prices and interest rates.
With inventory falling, many buyers are finding themselves competing for homes. Many listings have multiple offers with investors, cash buyers and buyers purchasing properties “as is". Buyers submitting offers requesting the seller credit the buyer for closing costs and repairs are finding it harder to get their offers accepted. Still, it is a buyer's market and buyers are, and should, take full advantage of this. There are good loans. FHA insured loans make it easier for first-time home buyers to buy with as little as 3 -1/2% of purchase price for a down payment and up to 6% back for seller credited closing costs. In the market today, buyers have opportunities and incentives that allow them to buy a home that they could not have afforded to buy before.
One concern many have is that there are still a large number of foreclosures still waiting to come on the market. Banks have held off putting many of these homes on the market to prevent a surge of inventory and to help maintain home values. This is the time of year where we usually see an increase of inventory as well as an increase of buyers. Watching the housing market over the next few months will help in determining if the government bail-outs, tax incentives and buyer confidence is leading the way to recovery.