Market Predictions for 2008 - a Mortgage Perspective

The mortgage expert on Sacramento Real Estate Gal, Huck Ferrill, has the following to say regarding home prices in 2008. This is an extract from a larger newsletter, but worth reading. For the most part, I agree with him.

Read on:

I think 2008 will be a mixed market for the first half (including some more foreclosures), beginning price recovery in the second half. Here’s why:

Prices have already shown some stabilization, albeit at lower levels. The last half dozen appraisals I’ve seen were 5-7% HIGHER than their selling prices. One property selling in Roseville for $225,500, appraised for $275,000 last week, for example. Higher end prices, greater than $750,000, while having showed some softness, have held up pretty well, primarily because there isn’t the plethora of bank owned properties at those levels.

Credit for financing purchases and refinances has been available all along, albeit from fewer lenders, and it has been relatively inexpensive (6-7% range). Stated income loans are available to those with good credit. 100% financing to $417,000 is available to those with good credit, documentable income, but no money. Financing to $5,000,000 is available (both stated and documented income) to those with good credit and either equity or cash for a down payment. Investor financing is available to 90% (75% stated income with good credit).

FHA reform now moving through Congress will provide financing to at least $417,000 for those with less than excellent credit (or no credit in some cases) to finance the purchase of a home, with as little as 1.5% down payment.
VA financing remains available to 100% at excellent rates.

Many of the major lenders have agreed with the President to freeze rate resets for 5 years, on many of the outstanding loans, that would have caused more foreclosures. This act alone may slow the rate of foreclosure, so that bank owned inventory begins to drop.

So, in sum, the opportunity and the means to capitalize on it are in place. I suggest that if you’ve ever wanted to own rental property, buy more of it, invest in another residence, or if you know anyone wanting to buy their first home or rental property, now is a great time to start looking because these opportunities come and go, often rather suddenly and sooner than we like.