National Mortgage Settlement's Affect on Pasadena Home Prices
In part 3 of Shadow Inventory and National Mortgage Settlement discussion takes us to the most important question that most Pasadena home sellers and home buyers have. Will the home prices go up or down?
The price of pretty much anything is impacted by the supply and demand. In case of Pasadena real estate, how many Pasadena homes and condos are for sale and how many home buyers are out there wanting to buy.
A rule of thumb guideline to see if you're in a home seller's market or a buyer's market is this:
Sellers Market = less than 4 months of home inventory
Buyers Market = more than 7 months of home inventory
Stable or Normal real estate market = 5 to 6 months of inventory
Pasadena months of inventory statistics:
Pasadena Single Family Homes are running 5 months of inventory as of February 2012 compared to 10.7 months of inventory as of February 2011.
Pasadena Condos and Townhomes are running at 4.3 months of inventory as of February 2012 compared to 9.9 months of inventory as of February 2011.
Those of us in the field and the serious home buyers have experienced a very low supply of available Pasadena homes pretty much across the board all price ranges and types of properties. Multiple offers are more prevalent and cash buyers are out in droves bidding out regular conventional loan buyers. However, remember that "shadow inventory" that we talked about and the fact that the National Mortgage Settlement is now providing a clear "road map" to the lenders on moving forward with the foreclosures. This could seriously change the landscape of available homes for sale over the next year or so.
The chart below provides you with a quick feel for the current inventory in the Greater Pasadena area and the potential additional inventory that banks have been sitting on. There are several strategies that lenders are reviewing right now. Some lenders are considering foreclosing and renting some of these homes out. Others are piloting programs allowing the existing homeowners to stay in their homes as rentals after foreclosure takes place. However, whatever the strategy or decision taken by a particular lender, we can be assured that quite a few homes will hit the market as Real Estate Owned (REO) properties.
What this means is prices most likely will move down a teeny bit more than they are now. Does that mean that you as a home buyer should wait? Well... it's a personal decision. You might wait for the prices to move down a bit, but then again the interest can inch up. Remember a 1% point in interest increase equates to 10% in affordability. The likelihood of the interest rates moving up 1% point is pretty high. The likelihood of prices falling 10% is not as high.
Home Buyer Recommendation: Now is the time to buy! Find the right property, take advantage of the low prices and lock in a low mortgage interest rate while it lasts.
Home Seller Recommendation: Price your home AGGRESSIVELY! You will be competing with distressed properties and sellers. Now is a perfect time to look for that move-up property.
We are truly in the eye of that perfect storm in the Pasadena Real Estate market!
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Interested in more information about Greater Pasadena Area cities, check out our City Guide below:
And, if you are interested in fun activities to do, take a look at our 365 Things To Do In Pasadena® page.
Thinking of selling your home? Interested in finding out the current market value of your single family home, condo or investment property? Then call Irina Netchaev at (626) 629-8439 to discuss what is happening in today’s Southern California Real Estate Market.