"It's a great time to buy," said Joel Peterson, loan agent with Hidden River Lending in Brentwood. "And that's especially true for first-time buyers who might not have been able to buy when the market was really hot.
"Home sales have slowed," Petersen added. "But they're not plummeting."
Peterson said that housing prices are coming down and that current interest rates are the lowest in nearly a year. He said the current weekly average rate is 6.43 percent for a 30-year, fixed-rate mortgage, while the five-year adjustable rate mortgage hit 6.10 percent. A year ago, Peterson said a 30-year fixed rate was 5.74 and a five-year ARM was 5.26.
Peterson and other mortgage lenders remain bullish on the housing market's future.
"People will wake up and see that this is a great time to buy," he said. "It's definitely a buyer's market right now. The pendulum has swung the other way."
Not all real estate and mortgage lenders are quite so positive, however. The local situation pretty much mirrors a nationwide trend. Home sales are reportedly down nationally about 20 percent. Some local realtors, speaking under the condition of anonymity, say sales over the past six months have declined by more than 40 percent. The slumping market also impacts what a home is worth if it goes on the market.
The slowdown is showing up in a variety of ways. One Brentwood couple pulled their house off the market when they held four open houses and never received an offer.
"We decided to pull it off and reevaluate our situation," said Tom Jones. "We're considering a lease option. We're working with our agent. We don't want to turn it into a rental. But we would like to lease it to a prospective buyer - someone who, for whatever reasons, isn't ready to buy right now, but would a couple of years down the road. You get better tenants that way. They're more responsible."
Jones said he and his wife, Jo, are considering another option.
"If the lease idea doesn't work out, we might put it back on the market next spring," Tom said. "This time of year is traditionally slow for housing sales anyway."
The Joneses have already purchased a home in Southern California, where they plan to retire.
"But we can't afford to make two mortgage payments," Tom explained. "So we're hoping to lease this place soon."
The Joneses are not the only ones who aren't finding any buyers. Recent real estate advertisements show pictures of homes on the market accompanied by pitches like "Motivated Seller!" and "Seller will pay your mortgage for six months."
The slowdown isn't affecting only individual sellers, however. Slumping sales forced KB Home to revise its full-year forecast recently. And many new housing developers in far East County are offering incentives in the form of free upgrades. One developer is offering up to $90,000 in free upgrades. Some also are telling potential buyers outright that they will negotiate on the price of a new house.
Peterson said he knows of one developer who is offering a free, three-year lease on a new Mercedes as an incentive.
"Don't give me $90,000 in upgrades or a Mercedes," Peterson said. "Take $90,000 off the price of the house."
But it's not the same thing, says Gary Kinsey, owner of Delta Flooring in downtown Brentwood.
"There is a huge markup in upgrades," he said. "So a developer can offer $90,000 in upgrades, but it's not really costing them nearly that much. Maybe half that or less."
Kinsey said his business definitely hasn't suffered from the slow-down in home sales. Quite the contrary.
"I have people come in and tell me that they took their house off the market and decided to remodel instead," Kinsey said. "They plan on redoing the bathroom or kitchen."
Peterson said Hidden River Lending has not experienced any significant drop in business yet.
"It has hurt some people in the real estate and mortgage lending business," he said, adding, "But we prepared ourselves for the slow-down because we knew it was coming. My brothers and I are former dot-commers. We lost a lot of money. So we wanted to plan for an eventual drop off in housing sales. We learned the hard way from our own experience."
Peterson said that real estate companies and mortgage lenders that are established in the community are not being hit as hard because they have a solid reputation and clientele.
"Back five years or so ago, people started coming into the real estate and mortgage business because it was easy money," Peterson said. "They never planned for any kind of slowdown. They're the ones who are hurting the most."
Slumping housing sales hit one of Brentwood's largest employers. Precision Cabinets & Trim has conducted three layoffs since May, reducing its staff by about 25 percent. The company provides its products to both production and upscale custom home builders, as well as individuals who are remodeling.
"This is one of the largest and quickest slow-downs the housing market has seen in a long time," said company President Paul Taylor. He pointed out that the recent layoffs are the company's first in its near 10-year history. The company celebrates its 10th anniversary next month.
Home sales aren't the only commodity that is sagging, however. All three of the giant U.S. automakers have vehicles languishing on dealer lots across the country, including dealerships here in Brentwood, some of which have resorted to creative measures like squawking their bargain prices over loudspeakers to draw the public in.
Daimler-Chrysler announced this week that it intended to cut retail deliveries by 24 percent in the third quarter. Both Ford Motor Co. and General Motors Corp. announced earlier this month that they are cutting back production. Ford also plans on shutting down two of its plants and laying off thousands of blue-collar workers.
Post a Comment