With interest rates at historic lows, this may be the best time to buy a house or condo — that is, if you can qualify for a mortgage.
“Particularly in today’s market, it’s important to secure funding,” says realtor Pat Vredevoogd Combs, vice president of Coldwell Banker AJS-Schmidt in Grand Rapids, Mich.
Combs, who served as president of the National Association of Realtors in 2007, points out that despite a tightened credit market, financing is available for those who qualify. It’s a fact not lost on home sellers. “Many of the homes on the market today have a requirement that before an offer is submitted, a pre-approval letter must be attached to the offer,” she says.
Some would-be house and condo buyers mistakenly think that if they wait long enough, they’ll get that home at a rock-bottom price. “The problem with trying to time the market is that you cannot time the market,” Combs cautions. “Given what many buyers hear in the national media reports, some buyers make the mistake of thinking sellers will take any offer they make. All real estate is local, and depending on the market, there are still areas that see multiple bids on specific properties as well as healthy demand.”
Meanwhile, those in search of a house are becoming more finicky about what they want — and what they are frequently demanding are energy-efficient, environmentally friendly homes, experts say. That reality is borne out in a recent NAR survey on Buyer’s Home Feature Preferences that shows that 65 percent of new homebuyers make energy efficiency a very important consideration.
“Buyers who placed a priority on energy efficiency were also more likely to value other environmentally friendly features such as proximity to parks, public transportation and the existence of sidewalks in the neighborhood,” Combs points out. “Of course, price will dictate how much priority the buyers place on this in the long run.”
The interest in eco-friendly homes has spawned a new type of real estate professional — the certified eco-broker — as well as “Green financing,” whose broader parameters make it easier to purchase homes with energy-efficient features. These can include low-e windows, good insulation, designated Energy Star kitchen appliances, dual-zone heating, bamboo or recycled flooring, low-flow toilets and showerheads, high-efficiency furnaces, demand water heaters, solar lighting and a solar electric system.
If you’re thinking about going Green on your next home purchase, you may want to consider applying for an energy-efficient mortgage or energy-improvement mortgage. Based on real or projected lower utility bills, they provide bigger mortgages to buyers who want to purchase a home that’s already energy efficient or retrofit one that isn’t. Depending on the housing market in your area, these homes sell faster and can be more expensive than homes that are not energy efficient. This is the case in Seattle, says realtor and eco-broker Wendy Furth, where eco-certified homes sold 18 percent faster and 37 percent more than noncertified homes.
Furth, who works with RE/MAX Olson & Associates in Northridge, Calif., says local market conditions could shape your options. “In areas like Southern California, most of our inventory is older properties. And with foreclosure, short sales and bank-owned properties, properties can be blighted or in poor condition with few or no appliances,” Furth says.
That can work to a buyer’s advantage because they can be purchased “for much less money and retrofitted to become a buyer’s dream, Green home,” Furth added. “We see properties with ‘Green’ retrofits at all levels of the home market. The reason is that consumers are more environmental savvy, not just because they save on their fuel and water bills, but because it is better for their family and the right thing to do.”
Shawn Powers, a realtor associate and eco-broker with RE/MAX Humboldt Realty in Eureka, Calif., concurs. “Homes with the right Green features have more broad appeal when compared to a home that is energy inefficient.” An energy-efficient home, he says, “Means savings for the buyer month after month, year after year.”
The worst recession in decades, falling home values and stricter lending standards continue to sap the U.S. real estate market. The number of households threatened with losing their homes rose 30 percent in February from last year’s levels, RealtyTrac reports. Two states that contributed to the increase were Florida and New York, where temporary bans on foreclosures ended. RealtyTrac says more than 74,000 properties were repossessed by lenders in February.
The rise in foreclosure filings came despite temporary halts to foreclosures by Fannie Mae and Freddie Mac, and major banks JPMorgan Chase, Morgan Stanley, Citigroup and Bank of America. Nearly 12 percent of all Americans with a mortgage, a record 5.4 million homeowners, were at least one month late or in foreclosure at the end of last year, according to the Mortgage Bankers Association. That’s up from 10 percent at the end of the third quarter and up from 8 percent at the end of 2007.
While the number of foreclosures continues to soar nationwide, banks have held off listing properties for sale, says Rick Sharga, RealtyTrac’s vice president for marketing. There were around 700,000 such properties nationwide at the end of last year, making up a “shadow inventory” of unsold homes that could drag the housing crisis out even longer. The Obama administration is aiming to help up to 9 million borrowers stay in their homes through refinanced mortgages or loans that are modified to lower monthly payments. On the commercial real estate front, the new Term Asset-Backed Securities Loan Facility created by the Federal Reserve and the Treasury Department is expected to generate lending for owners of shopping malls, hotels, rental properties and many other types of buildings wishing to refinance or pay for new construction.
“There’s a looming crisis in commercial real estate whereby owners of shopping malls, hotels, rental properties and many other types of buildings are unable to refinance or to pay for new construction because the (commercial) securitization market is completely shut down,” Bernanke said during an appearance before the Senate Budget Committee.
The program will start off by providing $200 billion in loans to investors with the goal of jump-starting lending to consumers and small businesses.
The Term Asset-Backed Securities Loan Facility was first announced late last year and originally was scheduled to start in February.