Has The Real Estate Market Truly Bounced Back?
It wasn’t so long ago that we were seeing housing prices plummet in the wake of the so-called “Great Recession” that hit many communities, including the Santa Clarita Valley, pretty hard. Years of rapid price hikes, spurred on in part by the frenzy of easy-to-get sub prime mortgage loans suddenly came screeching to a halt as Mortgage-Backed Securities began to falter due in part to a gradual (Then sudden) slowdown in the real estate market coupled with major bank failures. The “domino effect” that ensued gave way to layoffs, credit crunches, and government bailouts the like we haven’t seen since the Great Depression of the 1930’s.
However, as many issues change, so does the market. Many people lost their homes, but an equal number of people avoided foreclosure through avenues available to them by way of the Federal Making Home Affordable program as well as Keep Your Home California. The Walker Team also used proven strategies that have prevented many foreclosures in the past few years.
The Road to Real Estate Recovery
During those rough times, mortgage lenders strengthened their resolve to continue to offer qualified buyers programs that allowed them to get into a home with low down payments and low interest rates that have been in part backed by stimulus from the Federal Reserve. The glut of foreclosures and short sales have slowly given way to a turnaround in the market, where home sales are once again at near record-breaking levels.
But are we truly in a real estate recovery? If so, what indicators tell us so?
One indicator of a true recovery is that real estate prices on average have risen 12 percent in the past year. That means that if you purchased a home for $300,000 this time last year, its fair market value could have increased to as much as $336,000. In other words, the rise in equity value in your home equals the annual salary of many full time workers.
Another indicator is that the economy itself is improving; especially in the Santa Clarita Valley, where the average unemployment rate is below seven percent (compared to the average rate of over nine percent in the rest of Los Angeles County). The State of California has also had the honor of having the fastest growing economy in the first quarter of 2013.
The only variable at the moment is the rise in interest rates. We’ve seen them jump from an historic low in the bottom of the 3 percent range, to (as of this writing) just above 4 percent. We’ve also spoken about this rise as a result of a selloff of Mortgage-Backed Securities (MBS) which was triggered by announcements from the Federal Reserve that it may end the $85 billion dollar monthly stimulus that guarantees the value of many of these securities. This announcement was due in large part to the Fed realizing the stimulus may no longer be needed in light of positive economic predictions.
As they say, you never know when the market hits bottom until you begin to bounce back up. If you’re on the fence about buying a home, the time to act is now. Your opportunity to purchase a home at what are still considered great interest rates will give you power to begin to build your own equity and provide you with a long term investment in a great area to raise your family. Contact the Walker Team today for a free, no obligation consultation.
Elgin & Pilar Walker
Keller Williams VIP Properties
25124 Springfield Court Suite 100
Valencia CA 91355
Office: (661) 290-3781
Mobile: (661) 347-6248