There are no two ways about it, the homebuying market in Southern California is on a roller coaster ride that has people so confused they are not sure which way to turn.
On one hand, foreclosures continue to escalate which increases the supply of available homes but at the same time depresses prices. On the other hand, the plummeting purchase price tags are reportedly going to keep dropping making the thought of reduced home values a reality, and prompting some researchers to conclude that some people may be better off renting that buying right now.
What’s the reality?
“It is definitely a buyer’s market right now; there are lot of good deals out there and interest rates are still low,” said Linda Roth Burrell, a realtor with ReMax Marquee Partners in Beverly Hills.
In addition, Roth Burrell said financing through the Federal Housing Administration has increased and home prices have also dropped tremendously in some areas.
The California Housing Finance Agency is also working with real estate professionals to help potential home buyers afford homes, and in some cases (depending on income, credit score and job tenure), with no money down.
According to Roth Burrell, buyers in this market today should be prepared to put down at least three percent and have a higher credit score–in the 700 range–in order to obtain a loan and a good rate.
If you qualify for FHA loans, you may be able to buy with a 650 FICO score.
Banks are also taking a closer look at potential buyers, so the more money you have to put down, the more buying opportunity you will have, noted Roth Burrell.
Potential buyers can expect six percent to be a low interest rate. And don’t worry too much about the projected continued drop in housing prices, added Roth Burrell, who guestimates that the price people will pay for a home may drop another 10 percent.
“You’re still buying in a good market, even if it drops another 10 percent,” said the long-time realtor, who has been in the business for enough years to be confident that prices will increase again. Consequently, when they go back up, those who buy today, will begin to build equity once more.