Why 2013 will be a good year to purchase a house
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By Scott Sheldon  January 4, 2013 12:00 am

As we round up the fiscal year 2012 and move into 2013, the next 12 months is showing compelling reasons why would-be home buyers are going to be buying more homes. In the beginning of 2012, the consensus was the real estate market was low, even flat in some parts. In the summer of 2012, purchase business began to grow significantly, and as we end the year, home buying opportunities are scarce, creating intense demand in conjunction with other compelling factors.
Home purchase facts

• Low home supply creating multiple offers, houses selling for “over-asking” because of intense competition.

• Cash investors have advantage in multiple offers scenarios.

• Reo/foreclosure properties (bank owned properties) are available in limited quantities.

• Short sales (banks agreeing to short original dollars lent) are more abundant, taking average four to six months to close.

• National unemployment rate continues to fall monthly since November 2012, showing a stronger labor/wage market.

• Inflation remains virtually nonexistent.

• Federal Reserve Bank has no reason to tighten (raise short-term rates), in fact they are committed to purchasing more than $1 trillion in mortgage-backed securities through 2013 promoting a stronger housing sector.

Would-be buyers’ motivation
If you are a first-time home buyer, have good credit, a stable job and a down payment, buying a house means there’s a good chance your mortgage payment will be less than or equal to your rent payment.

Did we mention rents are on the rise? They are. On the end of the spectrum, we have homeowners who’ve lost their homes in short sales or foreclosures who haven’t moved and who still need a place to live. Those people are creating demand for rental properties, driving the prices of rents up. Buying a house also means a tremendous tax advantage for deducting mortgage interest and property taxes. If you are already a homeowner, as prices continue to rise, rates are still favorable. If you don’t purchase a house now, you could end up being priced out of the market for that second home or vacation property in your desired location. As the job market continues to strengthen, prices will continue to rise. If you plan on purchasing income property, you can, in most cases put 20 percent down and cash flow your investment after expenses.

Consider the return on your dollars. If you can achieve an annualized 5 percent return on your money, secured by real estate, how does that compare to the yields at your financial institution?

Signs of an appreciating real estate market
• Days On Market (DOM)- looking at single family residences less days on the market translates to a stronger/rising market

• List Price Vs. Sold Price- if there’s a 10% spread in price up or down, combined with less days on the market, translates to a stable market

• Highest & Best Offers- is an indicator of too many offers on any one house (by process of elimination-listing agent asks all buyers’ agents to submit a second offer for their highest and best offer for final consideration).

Scott Sheldon is a local mortgage lender, with over six years of experience helping people purchase and refinance primary residences, second homes and investment properties. Visit him at www.sonomacountymortgages.com.” Read more at www.sonomacountymortgages.com.

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