What’s REALLY Spurring The Real Estate Recovery?
Mortgage rates are still at near historic lows, but you’d be surprised to find out that they may not be having as much effect on the real estate recovery as you think.
To hear some real estate industry insiders tell it, all “you know what” broke loose in the mortgage industry in March of 2007. That’s when the other “you know what” seemed to have hit the fan with mortgage hedge fund values collapsing, triggering what we now know as “The Great Recession.” Many real estate affiliates such as lenders and title reps seemed to go belly up almost overnight, and property values began to plummet, leaving many homeowners in a distressed situation and either losing their homes to foreclosure, or having to short sell or deed their property back to the bank. Homes sat on the market, losing value with each day they didn’t sell, and the market not only stagnated, it nearly fell apart.
Fast Forward to 2013…
In most parts of the country, the real estate rebound is in full swing with property values rising in the double digit percentiles over the previous year. Here in the Santa Clarita Valley we’re seeing homes barely stay on the market before receiving multiple offers, and in some cases, closing at thousands above their asking price. So what’s changed? How did we go from “the dumps” to “happy days” once again?
Are low mortgage rates aiding the real estate recovery?
Even though mortgage rates have risen slightly this year, they’re still phenomenally low (Still hovering in the mid to upper 3% range for a 30 year fixed as of this writing). While this may be spurring some of the activity, you’d be surprised to know that 71% of all mortgage originations in 2012 were for home loan refinancing, and not for home purchases. Some experts say that even if mortgage rates still continue to rise, this may have no effect on the real estate recovery.
How is economic recovery spurring property sales?
While it may not be coming fast enough for some, the economic outlook is still remaining positive. The stock market is at an all time high, and job growth, while still slow, is remaining steady. Many homeowners who were at one time financially distressed are finding their property values are once again gaining equity. The Santa Clarita Valley is still enjoying one of the lowest unemployment rates in Los Angeles County, and the recent presentation of the Economic Development Corporation projects that the valley’s growth will continue in a positive direction.
Low property inventory creates higher demand for real estate
We’ve written about it before; real estate inventory here in the Santa Clarita Valley is at an all time low. There just isn’t enough homes for sale to satisfy all of the people looking to buy homes right now. Therefore, buyers are willing to go the extra mile to try and get into a home while mortgage rates are down and while prices are still nominal…knowing that they will still have a great mortgage payment AND will be building equity in their property. As we said at the top of this story, multiple offers are coming in, and in some cases, at prices much higher than the asking price.
Whether buying or selling a home, take advantage of this real estate recovery!
If you’re thinking of selling your home, we can tell you what it takes to get top dollar. And buyers, despite the low inventory, we network with thousands of other real estate agents in the Santa Clarita Valley, Antelope Valley, and San Fernando Valley and in many cases, we can find you a home BEFORE it hits the MLS! Give us a call at (661) 290-3781, or shoot us a message below. We’re ready for you!