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5
It's Time to Buy (or Refinance)
"Housing is more affordable than it's been in a generation. I think it is a good time to become a home owner because it's so affordable today compared to where it's been for generations," stated HUD Secretary Shaun Donovan. This is a great time to buy in our region – and here is why: 1. Our Region's Real Estate Market is healthier than the rest of the country. Take a look at how our 4 MSA's (Metropolitan Statistical Areas) compare to the 309 MSA's that HUD tracks on page 7. Based on appreciation over the past 5 years – we rock! Percent Change in House Prices in 5 Years: Cedar Rapids + 2.73 % Quad Cities + 6.35 % (Davenport, Moline, Rock Island) Dubuque + 8.51 % Iowa City + 3.68 % USA 17.5 % 2. Inventory is up, including many foreclosure properties (REOs). As shown in our Real Estate Activity Chart on page 2, the number of properties available for sale is up in most of our markets. Foreclosure properties have been especially attractive to investors, as they sell on average at a 35.1% discount from market value according to Realty Trac who tracks foreclosure sales. This is problematic to property values in the neighborhoods of foreclosure sales, as it pulls down their values. Hence we urge sellers to attempt to work out a short sale with their lenders instead, as these typically sell for 9.5% below market value, and do less damage to the seller's credit and less damage to the neighboring property values. Typically, homes sell for 94% - 97% of their list price. This varies by market, Ruhl&Ruhl REALTORS currently has 62 foreclosure properties listed for sale. They can be seen on our website at RuhlHomes.com/Foreclosures. Additionally, we are managing 59 more properties in the process of foreclosure, and have 41 foreclosure properties under contract but not yet closed. Interestingly, about 22% of Ruhl's buyers this year have paid cash, many of whom are investors. Out of town investors have identified our markets as a great investment opportunity – due to strong rental demand, stable and increasing property values and low prices of properties. 3. Interest Rates are So Low! As of this writing, July 20, here are available rates and programs: • 30-year fixed 4.5% no points rate mortgage • 15-year fixed 3.75% no points rate mortgage We advise anyone contemplating refinancing to look at this product. Borrowers can save 60% of their interest payments on a 30-year mortgage over the life of the loan. • 5/1 ARM 3.25% no points conventional • 10/1 ARM 3.5% no points conventional • VA Loan 4.5% no points • 100% financing available • $5,000 grant available for eligible veterans from the state of Iowa Rates vary daily and are impacted by credit scores. Buyers and refinancers are encouraged to seize this opportunity before rates and closing costs go up! 4. Regional Real Estate Market is Active – Don't Miss Out! At Ruhl&Ruhl sales pending in June 2011 were up 54% in sales volume and up 48% in units over June 2010. As we anticipated, sales closed in the first 6 months of 2011 were down from 2010 because most buyers wanted to close before the tax credits ended June 30, 2010. But this year is back to normal and the summer and fall sales will be much stronger than last year. 5. What is Holding Back Buyers? The big sticking point inhibiting a rebound in home prices and home sales is the availability of mortgages. Lenders currently are offering attractive terms only to extremely qualified buyers with credit scores of 640 and higher. The reason isn't the lenders – it's the government! They have swung the pendulum too far to the point of discouraging lenders to lend to qualified buyers. Hopefully, the government will revise their policies to encourage rather than discourage, offering mortgage loans. Since next year is an election year, we think there is a good chance. The president is no doubt aware that his odds of re-election improve dramatically if unemployment falls significantly. One way to reduce unemployment is to increase home sales and home construction, which in normal times provides huge numbers of jobs… and the most effective way to boost home sales and home construction is to make it easier for would be buyers to obtain mortgages. Keep checking RuhlHomes.com for more information on the housing market.
