The Real Estate Bottom Is Here And May Have Just Passed

Remember that scene in the movie Forrest Gump where Forrest decided to run across the country?  He motivated a lot of people and some joined him in his race. Then one day, out of the blue, he decided to stop.  He stopped running and went home.  People around him were left in a daze asking themselves, "now what?"

That's exactly how many people feel now that the election is over.  Man, there was so much energy and momentum for both candidates.  From the yard signs, to the Facebook and blog comments, there was so much energy nationwide that built up to election night.  Now that the election is over, many people are wondering, "now what?" especially when it comes to real estate.

As a real estate professional, my job is to be an experienced voice, and to give you the information you need to make a sound decision.  Like you, we are also on pins and needles, staying current on all things real estate so that we can help you prepare for what's coming ahead.  Congress knows what's up.  It's clear that Americans want cooperation and results when it comes to creating a solution to the national debt.

When it comes to real estate, you can expect mortgages to be completely redefined.  If Congress changes the rules, then don't plan on flexibility, plan on more rigid standards for qualifying.  In January, Congress will get back together and figure it out.  They will likely set guidelines for exactly what is a 'quality' mortgage.  And if you don't qualify for a 'quality' mortgage, then you will pay more for a non-quality mortgage, in the tune of higher rates and increased closing costs. (Hint: there is a potential cost to waiting until next spring as most changes take effect April 1.)

Mortgage Rates Forward

If you are waiting for prices to go down, while interest rates are going up, then you might be waiting for the wrong thing.  Don't just focus on the short term price, but adjust your antenna and look at the long term cost. Take a look at the chart below.

Payment Based on Rates

If you look at a $400,000 mortgage, the payment at an interest rate of 3.5% is $1796 per month.  If interest rates increase just one percentage point, that same mortgage payment increases to $2027 per year.  So, waiting for prices to get lower while interest rates creep up can mean an extra $231 per month in your housing costs or $2772 per year.

Foreclosure numbers dwindle in metro areas across the country.

Foreclosure Numbers

Banks wised up and realized that it makes sense to do a short sale versus a foreclosure.  So those below market opportunities are becoming fewer.  If it's not sold to an investor on the courthouse steps, then it's likely in the hands of a qualified short sale specialist.

According to the experts, the bottom is here, nationally that is, and it may have passed.

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