Charleston mortgage report, rates at record lows, June 25, 2010
So why is the media reporting that "nobody" is buying a home if rates are so attractive. With the end of the home buyer tax credit, everyone seems to be blaming the lack of the $8k tax credit as the reason for sales declines (Charleston home sales actually increased last month) but how many first time home buyers are there anyway.
Somehow, we seem to forget that millions and millions of people actually already own their homes. And some people are still buying and selling their homes in Charleston despite what you may hear or read.
But with rates so favorable, should you buy or should you refi.
Some people can't refi because their home won't appraise for what it needs to in order to do so. As I see it, the biggest problem with the multiple government programs aimed at helping the financially distressed home owners who need loan modifications is the fact that the banks have to appraise the home in order to lend money. But due to price declines many homes won't appraise so all sorts of creative attempts to modify loans are failing.
And I've suggested that since the banks have already loaned X for a home that was worth Y and is now worth Z, what's the difference anyway. If the homeowner can make the payments and is not taking any equity out, the bank should be happy to make a loan to an otherwise financially qualified borrower who will continue to make their payments regardless of what the home is worth. Less people will walk away, less will have to do short sales, less will be foreclosed.
But anyway, back to the Charleston real estate market. Sales activity in the Charleston area has been very strong this spring. And thankfully, it continues to look pretty good going forward based on what I am hearing and seeing. Boeing employees are moving here with the new assembly plant under construction and other companies are making plans to open aircraft related facilities. Other businesses are opening here and many people are just plain tired of the cold winters in the North and are looking to relocate to Charleston.
And with Charleston home prices down and mortgage rates at record lows, that improves affordability. And by the way, there is still a lot of inventory on the market so it is still very much a buyers market. Until that inventory is absorbed, don't expect any home price appreciation. A realistic expectation would be another year or two at best. And prices have been fairly stable for the last year. We can probably look back at the 4th quarter of 2008 and early 2009 as the bottom.
And while a couple of years without the prospect of home price appreciation doesn't sound that good, don't forget our prices didn't skyrocket and haven't crashed. We have been much more fortunate than many other locations around the country.
Rates for conventional 30 year fixed or FHA loans at 4.75 percent or lower, 5 year conventional ARM's at under 4 percent and jumbo rates for luxury Charleston real estate under 6 percent are incredibly attractive.