My Take On The Current Real Estate And Mortgage Market
I wanted to share my perspective on our real estate market as we come to an end of this second straight dreadful year.
To make sure I got it right, I consulted with our cat Portia, the cat economist. I receive a regular newsletter from a local bank’s loan officer. It has all sorts of statistics to review but always ends with a positive, the market is coming back assumption.
Now, I like positive attitudes, am often guilty of having one but I’m not so certain things are great. Actually, I’m certain they aren’t unless you are a buyer.
Here are some of my opinions. Unless we see a commercial mortgage crash, homes in our market have probably hit a bottom. The reason we could have a commercial crash is that even commercial values have dropped seriously. Investors are requiring a bigger cap rate which has lowered the value of commercial real estate. Most commercial loans are ARMs with due dates. When those due dates come and the values are down 25% or so the equity is often gone and the ability to obtain a new loan is gone. What the banks and government will do about this problem is yet to be seen. Needless to say, it’s a BIG problem. Real big.
Issaquah isn’t your cheapest market to buy a home in. People live here for many good reasons. So investor types and bargain hunters have been more active in other markets such as South King County.
Interest rates will probably continue to rise. If you closed a loan at 4.75% in December you will probably brag about it for years to come. I would say if you are interest rate driven, drive out and buy now as rates are likely to rise. Interest rates have been going up for 3 straight weeks and will continue to rise under 3 conditions. 1- If the stock market rises, 2- If the economy recovers and there is a fear of inflation, and 3- when not if the government stops printing money to be a buyer of fixed rate instruments. (#3 is the main reason rates have been so low)
Interesting to me is the Utah market. It was hotter than heck and has crashed hard. Our grandson was working with a bank in Utah liquidating about 200 million dollars in home inventory. That liquidation is basically complete. We have two children that placed offers on homes down there. The values are about 50% down from the previous owners purchase prices. It seems they got lucky, as spending several days down there looking at real estate tells me that from high end to starter homes the inventory is being snapped up.
So what will the future be, only Potia knows and unfortunatley, she speaks Cat.
