Steve Doyle’s Blog

That is the question, right? When you are bombarded by headlines that scream at you … “Historic Low Mortgage Rates” …”All Time Affordability Ratios” … “Pricing is Climbing from Recessionary Lows“…”Tax Credits for Home Buyers”… doesn’t that make you want to run out and buy a home?

Well, it should! But, in many places, like San Diego, buyers are sitting on the sidelines. They are waiting for something, someone or some reason to get into the home buying mode. What could be keeping them from taking advantage of what is, without a doubt, some of the best conditions for buying a new home in the last 10, maybe 15 years? Let’s explore the possibilities.

Mortgage rates are at historic lows. 4.56% for a conforming, fixed rate, 30 year loan, with 0.7 points for an origination fee. This is from the posted Freddie Mac Primary Mortgage Rate Survey, as of July 22, 2010. 15 year loans and adjustable loans have even lower rates!

Pricing continues to climb, evidencing that the pricing pendulum swung too far from the norm and we are seeing a recovery in home pricing. The S&P/Case-Shiller index shows San Diego pricing up 1.1% from April to May of 2010 and up 12.4% from May ‘09 to May ‘10.

Even with the increase in pricing, the fall in mortgage rates has increased Affordability Ratios for home buyers. Daniel Kelley is the lead real estate analyst and portfolio manager of the Fidelity Select Construction and Housing Portfolio, he believes these are some of the best affordability ratios we have seen in the last 30 years!

Add to this wonderful mix of consumer news, that the State of California is still offering up to $10,000 of State Tax Credit for buying a new home. So far, through July 20, 2010, new home purchasers have only requested $66 million of the $100 million tax credit allocation in the form of a tax credit request or the reservation of a tax credit. At the current rate, the $100 million tax credit allocation for new homes should last through the month of August!

Do you need more facts to help you get into a buying mode? How about a 21.9% drop in the inventory of unsold homes? That’s correct, 21.9% decrease from April to May of 2010. Buyers are snapping up the available inventory. Add to that fact, that the relative increase in rental rates and the tremendous increase in affordability ratios has now pushed the rent vs own debate into the ownership category. For many people, it is more financially beneficial to own a home instead of renting one. This will continue to push up the demand for home sales.

So what is holding back people from buying a home? Maybe it’s jobs? It helps to have a job if you want to buy a home. And, for most people, it is not just having a job, but having a job they are confident in and expect to have for the foreseeable future. 90% of San Diego’s employable people have a job. So the big question is … are they comfortable with their job? The answer to that question is very personal and subject to each individual’s level of confidence and comfort.

Maybe it’s down payment. While it is true that most mortgages today would like to see a 10% or even 20% down payment (and that can be a big number for a lot of people), there are still loan programs that offer lower down payment requirements, like FHA and VA loans. And, there are other loan programs available with smaller down payment requirements.

Maybe it’s your credit score, or other financial or buying challenges. There are programs and services available to help potential home buyers clean up their credit scores, deal with other financial challenges or learn how to become a home buyer. We are happy to help. Just stop by one of our new home communities and talk with our professional sales counselors. The home buying should be a positive experience and one you truly enjoy.