Mortgage Rates and the Real Estate Market in South Lake Tahoe

There are many South Lake Tahoe home buyers taking advantage of the currently low mortgage interest rates and the homebuyer tax credit that expires on April 30th. According to an article written by Carolyn Said on SFGATE.com, the currently low mortgage rates will soon be on the rise.

After the credit crunch in 2008 when investors stopped buying mortgage-backed securities the Federal Reserve stepped in to ensure that money would keep flowing to home purchasers. The Fed began buying securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae in January 2009 and had planned to conclude the program at the end of the year. The program that has pumped more than $125 trillion into the mortgage market has been extended to March 31.

Experts agree that the expiration of the Fed’s program will cause interest rates to climb, but the amount of the rate increase is still in question.

According to Guy Cecala, publisher of Inside Mortgage Finance said “There is no question that interest rates have been kept artificially low by the Fed’s buying. My opinion is that rates will go up a full percentage initally.” That means that the current 30-year fixed rate mortgages that are around 5% will go up to 6%.

Keith Gumbinger, vice president of HSH Associates, which compiles mortgage data, thinks that rates will slowly rise to 5.75% when the Fed withdraws.

Julian Hebron, branch manager at RPM Mortgage’s San Fransisco office thinks that rates will bump up to about 5.5% with volatility all summer long.

I am optimistic that the Fed’s will see that if they stop buying mortgage backed securities it will decrease the housing affordability index percentage and make it harder for many home buyers to purchase homes. I would be surprised if the program is not extended again.

The low interest rates and the home buyers tax credit has been great for the South Lake Tahoe real estate market. The numer of homes sold in 2009 was up 22% from 2008 showing that home buyers are out there taking advantage of the current market conditions. For those home buyers that are on the fence about purchasing a home in South Lake Tahoe, now may be the best time before interest rates increase and the tax credit expires!

Make sure to see my current list of foreclosures in South Lake Tahoe that are listed on the South Lake Tahoe mls.

Has California’s Housing Market Hit the Bottom?

Has California’s housing market hit the bottom? According to an article in the Wall Street journal by Jim Carlton, “California’s inventory of unsold, previously owned homes shrank to a five-year low in December, in another sign that the state may be coming out of its worst housing slump in decades.”

The supply of unsold single-family homes dropped to 3.8 months from 5.6 months a year ago and 16.6 months in January 2008, when inventories were at a peak, according to estimates by the California Association of Realtors. The inventory levels are now at their lowest levels since 2005, resulting in frenzied sales with multiple offers in some cities.

The current inventory rate is running well under California’s historical average since the 1980s of about an eight month supply of existing homes on the market. That’s partly because a once huge supply of foreclosures in the state has dwindled. In November, foreclosed properties accounted for 40% of all single family sales, new and used, in California, compared with 58% in January, according to the most recent estimates by Zillow.com a market tracker.

The current inventory of houses for sale in South Lake Tahoe is also down to its lowest level in January since 2007. There are currently 389 active listings on the South Lake Tahoe mls, 83 of the listings are in escrow and 306 of the listings are available. In January 2009 there were 403 active listings and only 36 were in escrow leaving 367 available homes. In January 2008 there were 399 active listings on the South Lake Tahoe mls and only 33 were in escrow leaving 366 available homes. In 2007 there were fewer active homes on the market (368), but still only 37 were in escrow making the inventory of available homes 331, more than the current inventory of 306.

Jim Carlton also points out that prices are also stabilizing. “Although most home prices remain well below their pre-bust highs of three years ago, California’s overall housing markets has shown stabilizing since early last year. The median price of an existing, single family home rose 8.4% from a year ago to $306,820, marking the second consecutive year-over-month jump, according to estimates by the state Realtors‘ association.

The median price of single family homes in South Lake Tahoe was much different than state of California’s median price. The median price of homes in South Lake Tahoe fell 22% in 2009 from 2008. The median sales price dropped from $407,000 to $318,000.  This drop in the median sales price of single family homes can be interpreted in many ways. I do not think that the 22% decrease from 2008 means that property values fell 22%.  There were 137 foreclosures in South Lake Tahoe that sold in 2009, almost double the amount of foreclosures that sold in 2008 (69 sold foreclosures in South Lake Tahoe were sold in 2008). Most of the foreclosures sold in South Lake Tahoe were in need of some kind of work or repairs. Although the increase in foreclosure sales did help bring down the median sales price in South Lake Tahoe, property values did also decline. The amount that property values declined is debatable.

Weather California’s housing market has hit the bottom or not, property values and interest rates are enticingly low. Adding the first time home buyer incentives and the existing home owner incentives from the government there may not be a better time to buy real estate in South Lake Tahoe!

New South Lake Tahoe MLS Listing 680 Seneca

Brent and Jill Johnson have just listed a very cozy chalet style house for sale on the South Lake Tahoe mls located at 680 Seneca Drive.

Come and see this warm and cozy Tahoe chalet with Forest Service lots both in front and behind. Located on a large 11,000 square foot fenced lot, this home would make a wonderful vacation getaway or a primary residence. Some of this special homes features include two fireplaces, formal dining room, laundry room, and a library/ study. The walk through room to the Master could be used as a third bedroom.

 Click Here for the Virtual Tour!

• 3 Bedrooms, 2 Baths, and a 1 Car Garage
• 1766 Square Foot Lot
• Quiet County Neighborhood Just Minutes From Town
• National Forest Service Lots in Front and Behind
• 10,646 Square Foot Lot
• Much More!

 

For more information regarding Brent and Jills new listing at 680 Seneca, please call us at (530) 416-2625. If you have any questions regarding any listings on the South Lake Tahoe mls contact us today!