The Reality of Real Estate in Our Market Recent headlines regarding the state of the sub-prime mortgage industry (loans for those with blemished credit, etc.) have been grim. Because many investors are choosing not to put their money in the real estate market right now, many lenders who handled sub-prime loans have closed their doors because they simply don’t have the financial backing they need. But, the reality is, this sub-prime market represents only 4 percent of all mortgages nationally. If you have credit problems, it is likely you’ll have a harder time financing a home. But, if your credit is good, and you meet debt to income ratio and other lender requirements, you can still get a mortgage at a great interest rate (6.5 percent for a 30 year fixed mortgage on Aug. 27.) Here’s more good news: Ninety-three percent of all mortgages are current in this country, and New Mexico is faring well compared to surrounding states. According to an Aug. 19, 2007, Albuquerque Journal article, foreclosures were down 30 percent in New Mexico in 2007 compared to 2006, but were up 58 percent nationwide in the first half of 2007. The national average was one out of 134 households. During the first six months of this year, one out of every 395 households in New Mexico was at some stage in foreclosure, according to Irvine, Calif.-based RealtyTrac.
According to the article, larger, more populous states are driving the high national foreclosure rate. These areas experienced sharp increases in home prices over the past few years. Foreclosure rates for Arizona are one of every 82 households, Colorado (one of every 60), Nevada (one of every 40) and California (one of every 69 households).
So what is the reality of real estate sales in Albuquerque right now? Well, Albuquerque isn’t bullet proof, but our real estate market is faring better than a majority of cities in the country. In my opinion, the financial markets will calm down and the scary headlines will fade soon enough. And, mortgage rates will likely come down even more because the Federal Reserve wants to stabilize the real estate and mortgage industry. If you are thinking of buying a more expensive home than the one you currently own, now is a good time to consider it. The marketing time for your current home may be a little longer, but chances are if you are making a substantial move up ($150K +), you may be able to negotiate a better deal on a higher end home. You may also be able to make an offer contingent on the sale of your current home and get it accepted, something that was mostly unheard of in the recent past. If you have to sell your home, but aren’t planning on buying in this market, you need be prepared for a couple of new realities:1) The days of just putting a sign in your yard and getting multiple offers on your home are over for now. Now more than ever, you need the services of a professional Realtor – one who’s knowledgeable about your area, has excellent negotiating skills and offers a full array of marketing services, including the Internet, MLS, newsletters, virtual tours, etc. 2) It will likely take longer to sell your home. The more competitively it is priced compared to your competition, the quicker it will sell. If time is an issue for you, keep this in mind from the start.3) How you live in your home is not how you show your home. With increased competition, how your home shows to prospective buyers is increasingly important. Consider the services of a professional stager to help you get your home in top shape for the market.
