Buyers Are Buying But Is It Happening Everywhere?

THE RECENT DATA DOES SHOW THAT BUYERS ARE BUYING! IT SEEMS AS THOUGH WE HAVE A BIFURCATED MARKETPLACE IN WHICH LOW END HOMES, (ESPECIALLY THOSE UNDER 300,000 DOLLARS) ARE SELLING WELL AND HIGH END HOMES (HOMES OVER 1MILLION) ARE SITTING. THIS ALMOST "ALL OR NOTHING" MARKETPLACE CAN BE EXPLAINED IN PART AS FOLLOWS:

1. BIG INCENTIVES FOR FIRST-TIME BUYERS!
First-time buyers accounted for half of all home sales last month!(NAR) They are typically entry level buyers looking for bargains and they are finding them since 40 to 50 percent of the transactions in Feb were distressed sales. . Distressed sales are also found to sell for approx. 20percent less than the normal market price. With a national supply of housing at 9.7 months supply, this trend could continue. Couple this incentive with the 8000 dollar tax incentive for first- time buyers and for California Residents on purchases of new homes, an up to 10000 dollar tax credit (effective Mar 09) this is a great time to buy if you are qualified.

2. LOAN RATES ARE AT HISTORIC LOWS (AND NOW JUMBO LOANS ARE COMING DOWN)!
According to Freddie Mac, for a 30 year, conventional, fixed-rate mortgage, last month's average mortgage rate was the second lowest since data collection began 1971. Rates have been high for jumbo loans and lenders have been reluctant, up until recently, to do them so many of these buyers could not afford to buy high end homes. The climate does seem to be improving for these types of loans with rates in the mid 5's.

3. WHEN PRICES COME DOWN - BUYERS RESPOND- BUT IT MUST BE A "DEAL"!
Existing- home sales in the West of the country increased 30.4 % over Feb 08
The Median price in the West of the country dropped 30.3 % from Feb 08
Sales in Los Angeles 32.4% higher than Feb 08 and the Median Price Change: Down -38%
Sales in Riverside 59.3 % higher than Feb 08 and the Median Price Change: Down -41.5 %
Sales in San Bernardino 87.1 % higher than Feb 08 and the Median Price Change: Down -47.2 %
Sales in SoCal 41.3% higher than Feb 08 and the Median Price Change: Down 38.7%
Sales in the Bay Area 26.1 % higher than Feb 08 and the Median Price Change: Down -46.20 %
In the Southland, foreclosure re-sales accounted for 56.4 % of Feb resale activity.
In the Southland, Government-insured, FHA mortgages made up about 38 %of all purchase loans in Feb compared to 6.4 percent in Feb 08.4.

4. WHEN WORD GETS AROUND MOMENTUM BUILDS.
Just as many purchased homes years ago because they heard about all the money others had made in real estate when the market was going up, it does seem apparent that more and more buyers are looking seriously at the opportunities that do exists today- Great Deals, historically low rates and an enormous selection of inventory. True Story:I know a broker in Phoenix that put in an offer on a bank owned house for 60,000 which was close to the asking but he was up against 10 other buyers. Stories like this are tempting me to go home shopping in Phoenix or areas where the "price is right".

Is this a good time to buy? Well The S&P/Case-Shiller U.S. National Home Price Index reported prices dropping 18.2% for the year. It was the greatest loss recorded in the report's 21-year history. Prices dropped in every one of the 20 cities studied.