Happy Valley Spring Forecast

Clouds, followed by doom and gloom...The day of reckoning is here folks. Did you really think home prices would go up 15% per year for ever?

The retail market no longer exists: I know this sounds like a bold statement, but for the near-term it is the reality of our situation in Happy Valley. Between the Buena Vista auctions, foreclosures and short-sales there just is no market for "full retail" pricing. The huge volume of distressed homes in our area far out paces the current level of demand. Even using demand numbers from the peak year, 2005, there are more active listings than can be absorbed. So, why would a qualified Buyer (very rare right now) buy your home for $700,000 when they can get a similar bank-owned home for $500,000?

Buyer's above $417,000 are rare: One of the most severe consequences of the mortgage melt-down is the extreme cost of "Jumbo" loans. In the past Jumbo loans (above $417,000) were usually priced about .25% above conforming loans, and sometimes at PAR with conforming loans. In the current market place it is between 1.5% and 2.0% higher. On a $500,000 mortgage that can equate to an extra $835 per month! Many Buyers in this range are waiting for Jumbo Loans to retrace to their historical spread. Thus, these Buyers are on the sidelines.

100% financing is gone: Most first-time home buyers utilized some sort of 100% financing product to get into their homes. Now that a minimum of 3% is required, the market for starter homes has slowed dramatically. Why is that important in Happy Valley...the "move-up" Buyers that would normally be buying into our neighborhood are having a hard time selling their homes. If they cannot sell their starter homes, they can't move up to our homes.

What does this mean for us? This year is not the year to sell your home. If you must:

1) Hire a local experienced Broker who will be brutally honest with you.
2) Price aggressively.
3) Make yourself easy to do business with.
4) Expect that you still may not sell your home this year.