Editor’s note: The following is a collection of real estate professionals’ views on an industry-related topic.
QUESTION: What has the credit crisis meant for buyers and sellers in your market area?
Tom Avent
Broker-associate
Guarantee Real Estate
Fresno, Calif.
This credit crisis has definitely slowed down the buyer activity. During the boom years of 2002-06, when the mentality was that "real estate always goes up in value," 100 percent financing was common, and buyers were told by many lenders that they could always refinance out of their ARM or their exotic loan terms later. Now, most of those loans from the boom years appear to be ending up in foreclosure, values have decreased, and the owners are finding it difficult or impossible to refinance. In 2007, lenders started tightening the guidelines and now buyers must qualify the "old-fashioned" way, with good credit and verifiable income and a down payment.
The downturn in values has, however, created buyer opportunities in 2008 for first-time buyers who were priced out of the past market, and other creditworthy buyers and investors interested in long-term home ownership. I see the lending guideline changes as a positive for the long term in our market and for the real estate industry as a whole.
For sellers, this credit crisis has eroded the values of real estate to a point where all of their gains over the boom years have evaporated. To be a traditional seller in this market is difficult because of the competition with bank-owned properties. The comparable sales needed that are used by appraisers are mostly the sales of bank-owned REO properties. In the Fresno area, like most other cities in California, this has been rapidly driving down values as this inventory increases. Sellers trying to complete a "short sale" are finding that it is nearly impossible to get anyone interested, whether they be the agents or buyers, because of the uncertain process of negotiation and closing a short sale. Short sales have pathetic success rates in today’s market.
Chris Griffith
Realtor
Keller Williams Elite Realty Inc.
Bonita Springs, Fla.
Investors once drove our market heavily. The investors were hit hard and are the source of many of our short sales and foreclosures. Our standard buyers are still buying real estate and getting mortgages. Buyers are just taking their time because time is now on their side. Plus, with the increased amount of inventory from which to choose, they are able to purchase the most desirable properties at the best possible value.
Sally Morris
Realtor
RE/MAX Action Realty
Greenwood S.C.
Greenwood, S.C., has experienced a bit of a slowdown but not as serious as other areas of the country. I think ours is more because people are wary of buying real estate right now so it is a Catch 22 — the inventory is low, the buyers are afraid to buy, and sellers are afraid to sell. The rise in gas prices has also caused price increases in a lot of other things, so it is just a time of indecision, I think. Most of my business is selling on Lake Greenwood, and those buyers are often coming in with cash or are doing an equity line of credit or other alternative financing and not affected by the mortgage shakeup. Even the lake business has slowed down and the prices have not risen very much over last year. But that is not a mortgage problem — it is more about not knowing what is going to happen tomorrow. I know that people will always have to have a place to live so they will buy, build, rent, live with others or be homeless. We will ride this through and come out on the other side of it.
Celeste "Sally" Cheeseman
Realtor-associate
Century 21 Liberty Homes
Mililani, Hawaii
For buyers, it has brought in more VA/FHA loans and money-down conventional loans — therefore more serious buyers. With sellers it has meant fewer offers and sometimes contracts fall out because what we thought were qualified buyers were not. (Loan officers’ fault.)
Needless to say, only in a couple of neighborhoods has the market shown a "slightly declining market." Overall, our stats show that single-family homes on Oahu have gone down $500 dollars since a year ago and condo/town houses have gone up $10,000 over last year.
Serious buyers and sellers are being more realistic in prices to get offers.
Phyllis Harb
Realtor
Dickson Podley Realtors
La Canada, Calif.
The credit crisis has impacted the way Los Angeles buyers perceive housing. Only two years ago, potential home buyers felt the primary benefit to owning a home was financial. Home buyers have now reverted to believing that buying a home is more about "nesting" and security and less about financial gain. Today’s home buyer wants to be in control of where they live, today and in the future (no rent increases, no notices to vacate).
Affordability for home buyers has greatly increased. Many buyers who were priced out of the Los Angeles housing market two years ago have now purchased a home due to declining prices.
Home sellers have learned that if they are "testing" the market that they are wasting everyone’s time. Well-priced homes continue to sell, and some in multiple-offer situations and others still sell at or over asking price.
Information compiled by Lai Saetern, Inman News.
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