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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.

South Lake Tahoe Short Sales

Short sale listings in South Lake Tahoe have become a big part of our real estate market and are not going away any time soon. Close to 20% of the South Tahoe Real Estate listings are currently short sale listings.

What Is A Short Sale?

A Short Sale is the term used to describe a real estate transaction in which the sale proceeds fall short of what the seller owes on the property’s loan. Instead of buying from a seller, you are purchasing the property directly from the lender. Although you are buying the property from the lender, the seller must first accept a suitable written offer from a buyer.

Once an offer has been accepted by the seller, it is sent to the lender for approval. Along with the offer, the seller and listing will submit a short sale package which includes information such as the sellers financial statements, listing information, a hardship letter, and many other various forms.

Short sales are often difficult transactions taking considerably longer than a typical transaction to complete. There is also no guarantee that the lender or lenders will agree to the terms of the purchase offer or that they will respond at all. Once the short sale package has been submitted, it may take many weeks or months for the lender to respond, if they decide to respond. If the lender approves the short sale offer, the home buying process is very similar to buying a property from a regular seller. One main difference is that the property will probably sold in “As Is Condition”. Most sellers and lenders are not willing to make repairs on a short sale property.

Why Make An Offer On A Short Sale If They Are So Difficult?

Although the short sale process can be long and difficult, it can sometimes be worth the trouble. A large percentage of the Real Estate listings in South Lake Tahoe are short sales due to the decline in property values over the last few years. Many of the short sales are priced below the market value, and some lenders are approving the sales of these properties to cut their losses. Lenders know that they could loose a lot more money if the property goes to foreclosure. Many buyers have been able to get great prices on recent Short Sales in Lake Tahoe.

Foreclosures in South Lake Tahoe

Foreclosures in Lake Tahoe have become a popular target for buyers investing in South Lake Tahoe real Estate. Foreclosure listings have become popular with buyers because they are usually priced below the current market value.

The term “Foreclosure” is actually the legal process by which the bank or lender uses to sell the property in order to satisfy the loan balance in the event of a default. In California, this process is most commonly a non-judicial foreclosure.

When a homeowner stops making mortgage payments, a Notice of Default is recorded with the County Recorder. The homeowner then has 90 days to cure the default. If the homeowner does not cure the default, a Notice of Trustees Sale is recorded. The Notice of Trustees sale states that the lender or trustee will sell the property at auction in 21 days.

The Trustee Sale Auction is held as a public auction conducted by the lenders representative. The winning bidder must pay with cash in the full amount of the bid. The lender usually bids in the amount of the balance due plus costs. If no one else bids higher than the lender, the property reverts back to the lender. Once the property reverts back to the lender it becomes an REO.

Why buy an REO?

An REO property is an investment gone bad to a lender, so REO’s represent a loss to the lender. Real Estate holding costs are expensive and will add to the lenders loss. In order to get money loosing assets off of the books, lenders will price REO’s ( foreclosure listings) to sell quickly. Most of the foreclosure listings in South Lake Tahoe are priced below the current market value. Many times the foreclosures are priced low enough to attract multiple offers.

Purchasing a foreclosure that is listed on the South Lake Tahoe MLS is similar to purchasing a property from an individual seller. Buyers can finance foreclosures just as they can finance re-sale and new homes. Buyers will also have an inspection period that ranges from 10 to 17 days to to any property inspections that may be necessary. Delinquent tax and utility liens will be cleared by the seller, and buyers are issued a clear title and title insurance.

Most foreclosures are sold in “As Is Condition” which makes a Home Inspection and a Termite Inspection very important. If problems are found in the inspections that are more costly than anticipated, the buyers can back out and the initial deposit will be refunded, less any inspection expenses. REO property owners are exempt from providing a Transfer Disclosure Statement or a Natural Hazard Disclosure. The seller is exempt from these disclosures because in most cases they have never seen the property and know little about it.

Because Bank Owned Listings in South Lake Tahoe are usually priced below the current market value, they can be a great investment opportunity. If you are interested in speaking more about foreclosures in South Lake Tahoe, please feel free to call me at (530) 416-2625!

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South Lake Tahoe Real Estate Market Update

Here are the latest statistics for the South Lake Tahoe real estate market as of February 11, 2010.

Currently there are 388 single family house listings on the South Lake Tahoe MLS. 300 of the homes are active and 88 are active pending. With 23% of our housing inventory in escrow, the market is continuing to be very active.

Short sales account for 20% of the single family home inventory in South Lake Tahoe. There are 77 short sales listed on the South Lake Tahoe MLS and 43 of them are currently in escrow. Many of the short sales that are currently in escrow have been in escrow for a long time. The median days on the market for the short sales that are in escrow is 170.

Foreclosures account for 12% of the single family home inventory on the South Lake Tahoe MLS. There are 46 foreclosures listed on the South Lake Tahoe MLS and 22 of them are in escrow.

With 43 short sales and 22 foreclosures in escrow, 65 of the houses in escrow are now distress sales. Having 74% of our current escrows being distress sales is not good news for regular sellers. For more information regarding South Lake Tahoe real estate statistics, please call Brent Johnson today!

Bank Owned Properties in South Lake Tahoe

In 2009 foreclosures accounted for 137 of the 440 single family homes sold in South Lake Tahoe. Considering that over 31% of the homes sold were foreclosures, there is no doubt that bank owned properties have changed the South Lake Tahoe Real Estate market.

Looking at the South Lake Tahoe Real Estate statistics for 2009, the foreclosures lowered the median sales price, average sales price, average price per square foot, and the days on the market of the homes sold in 2009.

The median sales price was down 22% in 2009 from what it was in 2008. The median sales price of the homes sold in 2009 was $318,000. The median sales price of the foreclosures sold in 2009 was $274,900. If we take the foreclosures out of the statistics, the median sales price goes up to $366,500.

The average sales price was lowered significantly by the foreclosures in South Lake Tahoe. The average sales price for all of the homes sold was $404,364. The average sales price for the foreclosures was $296,076. Taking the foreclosures out of the statistics brings the average sales price up to $453,826.

The average price per square foot for all of the homes sold in South Lake Tahoe in 2009 including the foreclosures was $230. The average price per square foot of the foreclosures that sold was only $190 per square foot. If you take the foreclosures out of the picture, the average sales price per square foot would have been $248.

The median days on the market for all of the homes sold in 2009 was 114 days. The median days on the market for the foreclosures was 70. The median days on the market goes up to 149 if the foreclosures are taken out of the equation.

Just taking the foreclosures out of the statistics changes the prices dramatically, but if you consider that regular sellers also needed to lower their sales prices to compete with the foreclosures, the effect becomes even greater.

Foreclosure sales occured in almost every area in South Lake Tahoe. Here is a list of how many single family home foreclosure sales there were in each area on the South Lake Tahoe MLS in 2009.

Al Tahoe had 8 foreclosure sales
Bijou 1 had 18 foreclosure sales
Bijou 2 had 3 foreclosure sales
Black Bart had 3 foreclosure sales
Christmas Valley 1 had 2 foreclosure sales
Christmas Valley 2 had 3 foreclosure sales
Echo View Estates had 1 foreclosure sale
Country Club Estates had 5 foreclosure sales
Gardner Mountain had 4 foreclosure sales
Hevenly Valley had 5 foreclosure sales
Highland Woods had 5 foreclosure sales
Meyers had 7 foreclosure sales
Montgomery Estates had 11 foreclosure sales
North Upper Truckee 1 had 5 foreclosure sales
North Upper Truckee 2 had 3 foreclosure sales
Poineer Trail area had 5 foreclosure sales
Sierra Tract had 13 foreclosure sales
Sky Meadows had 1 foreclosure sale
Stateline had 2 foreclosure sales
Tahoe Island Drive had 5 foreclosure sales
Tahoe Island Park had 7 foreclosure sales
Tahoe Keys had 5 foreclosure sales
Tahoe Paradise had 10 foreclosure sales
The Y Area had 6 foreclosure sales

Here is what the foreclosures in South Lake Tahoe sold for by price range.

Under $100,000= 1 sold foreclosures
$100,000 to $139,999= 3 sold foreclosures
$140,000 to $159,999= 6 sold foreclosures
$160,000 to $179,999= 6 sold foreclosures
$180,000 to $199,999= 10 sold foreclosures
$200,000 to $249,999= 27 sold foreclosures
$250,000 to $299,999= 36 sold foreclosures
$300,000 to $349,999= 20 sold foreclosures
$350,000 to $399,999= 9 sold foreclosures
$400,000 to $449,999= 5 sold foreclosures
$450,000 to $499,999= 4 sold foreclosures
$500,000 to $549,999= 1 sold foreclosure
$550,000 to $599,999= 3 sold foreclosures
$600,000 to $649,999= 2 sold foreclosures
$700,000 to $749,999= 1 sold foreclosure
$750,000 to $799,999= 2 sold foreclosures
$800,000 to $849,999= 1 sold foreclosure

With the number of foreclosures for sale in South Lake Tahoe so far in 2010, the South Lake Tahoe real estate market should supply some great deals for home buyers in 2010. For more information on foreclosures in South Lake Tahoe, call South Lake Tahoe Real Estate Agent Brent Johnson today!