I am reposting with permission some thought from one of my loan officers…. These are from the CEO of Sterling Savings bank.
Foreclosures: RealtyTrac data indicates that sales of homes
in foreclosure or bank owned accounted for 31% of all US
residential sales (vs. 36% in Q1 and 24% for 2010).
Bank owned homes are now being sought after due to fact borrowers feel that they are the best priced and they won’t have to deal with a short sale. It wasn’t too long ago a bank marketing a REO didn’t want the consumer to know that it was a bank owned property.
Housing Affordability: Analysis indicates it takes only about
16% or so of the average person’s income to make payments
on a 30Y mortgage for the average priced home. The last time
the ratio was this good was back in the 1960’s.
Very healthy for our long range economy. People are buying within their means. When you combine this fact with the move towards 10 and 15 year mortgages people are much more conservative in acquiring debt. It also makes our job easier J.
I played golf with a top agent out of Portland this week. His theory is the lack of new construction is slowing down overall sales. Here is his reasoning:
1) Borrowers who own a home like to trade up to new homes. ( Same thought as a car owner)
2) It isn’t as exciting for a borrower to sell their current 10 year old 2000 sq ft home to purchase another 10 year old home with 2500 sq ft. This borrower really wants to trade up to a new 2500 sq ft home.
3) There is a lack of quality inventory for move up buyers due to the shortage of new construction in areas they want to live in. ( Maybe this is why the 1st time and investment buyers are such a large part of the market.
4) People are willing to pay more for new construction.
Sterling Savings Bank – Home Loan Division
Direct: 208-375-1080, Cell: 208-794-3371, Fax: 888-650-7277