I track Raleigh real estate data and news about home inventory levels because it helps my clients stay competitive in a market where 20% of real estate transactions are some sort of distressed sale. But, there’s more to look at than just what’s listed for sale and what’s recently closed.
Distressed mortgage loans represent homes that are likely coming to market. According to data from LPS, 13.7% of all loans that were past due in January of 2010, had not made a payment in 24 months. These looming distressed sales will be your future competition and comparable sales.
Many sellers in Raleigh are waiting for better days to sell, but that may be a mistake. Better days are coming, but not before home prices endure the doldrums that many economists predict.
Banks are struggling
A recent report in the Triangle Business Journal highlights some of the challenges Charlotte based Bank of America faces .
The closer one examines the mortgage woes of BofA, the uglier it gets.
Of BofA’s 1.4 million mortgages at least 60 days delinquent, 86 percent were originated by Countrywide Financial Corp. No wonder BofA executives have said the credit quality of Countrywide’s loan portfolio turned out to be worse than expected.
The latest Home Data Index™ released by Clear Capital shows that home prices have dipped 0.7% below prior lows experienced in March 2009. This is the official Double Dip in national home prices we have been hearing about in the news.
The Case for Selling
If you are considering a move in this down market, the news is not as bad as you might think. Zillow.com economist Stan Humphries makes The Case for Selling in a Falling Housing Market and shows that there’s no real advantage to waiting. Put aside your fears of losing money on lower prices and consider the actual costs involved.
If you run some numbers, you find that selling in a falling market is not always a bad idea. Especially if you’re thinking of trading in your current home for a smaller home or one in a less expensive neighborhood.
…Trouble is, most of us wildly overestimate the benefits of waiting. We convince ourselves that avoiding a potential future loss is the same as saving money. We underestimate the risks that we’ll face by waiting another year. And we totally ignore the real, measurable costs of staying in a home that’s too big or too small or poorly located.
Don’t get hung up falling prices. Mortgage rates are very low right now and home prices have dropped about 25% since the market peaked in Raleigh in 2007. If you are considering a move, then look at the overall cost of your move and not just home prices. Is commuting an issue? How about schools? What about association fees?