MyVegasRealEstateBlog

Rates are low, prices are low, but is it the right time for YOU? Ask yourself some questions…

“What can I comfortably afford?”

This is a far better question than “what’s the maximum I can borrow?” Don’t focus on your lender’s limits, but rather focus on your own. Don’t become a slave to your monthly payments.

“What will lenders consider when I apply for a loan?”

Typically, there are 3 main criteria: the ratio between income and expenses, your credit score, and your ability to pay the down payment and closing costs. And remember this: the first time buyer $8,000 tax credit only comes into effect after you have purchased the home.

“If I’m not ready to buy a home now, what should I do to prepare myself?”

It’s never to soon to begin saving for a down payment, and it’s not as hard as you may think. FHA loans require only a 3.5% down payment, and conventional loans can be as low as 10%.

“So which comes first…looking for a home or getting the loan?”

Always put the horse before the cart. Get pre-qualified first. That’s the golden rule. A professional realtor should have no problem finding you the right home at the right price, but without the loan pre-approval, who knows what the right price is? There’s nothing worse than falling in love with your dream home only to find it’s beyond your reach. Conversely, you might miss opportunities by under estimating what you can actually afford to buy.

As of last Friday, there were just over 17,000 homes (single family, condos and townhomes) for sale in Las Vegas and Henderson.

Sounds a lot, doesn’t it? Well, not when you take into account that we are currently seeing about 900 homes going into escrow…per week!!! If this sales volume continues, we have an inventory level of about 5 months.

So who’s buying? Last year there was a survey published, showing more or less 67 million US residents were actively searching real estate.

1st. time buyers make up a significant chunk of Vegas home purchases. Not surprising when you consider that prices are low, FHA rates are running around 5%, and 1st time buyers (if you’ve not owned a home in the last 3 years, you’re a 1st time buyer) are eligible for a tax credit of $8,000.

Parents make up another sizeable portion of the home buying public. Rather than waste money on fancy cars or lavish graduation parties, a lot of kids are being “gifted” down payments to buy a home.

And finally, let’s not forget about investors. Donald Trump said recently “be bold and buy real estate now!”. Looks like a lot of folks are taking his advice.

As single family homes become more and more affordable, we are seeing the inevitable rush of investors into that limited segment of the market. As inventory levels shrink, forcing prices to stabilize and then rise,  we’re going to see many more frustrated buyers wasting their time with “multiple offer” bank owned homes.

So where will the smart money go? One answer could be multiplex homes. Some years back, these were seen as great investments, and maybe their time has come again.

Consider this: There are plenty of multiplex listings, with 4 units of 2 bedrooms each, listed in the low $100,000s. Qualified buyers can still get finance with 30% down, and even with some renovation work, in certain circumstances it’s possible to generate $500-$600 per unit in monthly rental income!

With very little competition from other buyers in the market, it’s not unheard of to get offers accepted at 20% below asking price.

Conclusion? Running with the herd is not necessarily the best strategy for savvy investors!

More good news. It’s refreshing to see the media have got bored of constantly reporting doom and gloom. Here’s what Eyewitness News had to say this week about the local housing market:

There is some light at the end of the tunnel for the Las Vegas housing market. Instead of seeing more homes go up for sale, valley residents are deciding to invest.

As time goes on, for sale signs may be harder to come by because more and more people are realizing it truly is a buyer’s market. They’re pushing their fears aside and are finally ready to take advantage of it.

For months all you saw was house after house with foreclosure signs out front. But now, after months of bad news, empty homes are finding new owners at a fast rate.

Applied Analysis says during the first week of April, there were more than 10,000 Las Vegas homes in contracted status, just waiting to be closed on. That’s double the number from the same time in 2008.

Debbie Vocum-Runyan with Fidelity National Title says they’ve seen an increase in their closings and inventory is also down, which is a good sign of a shift in the housing market. “We are definitely in a buyers market. We are not in a seller’s market yet, by any means, but when your inventory starts to go down, you are getting closer to a seller’s market,” she said.

I was somewhat surprised today when I did some research on the MLS and discovered how quickly homes are selling.

Ignoring short sales (the ones which take ages to get a response from the bank!), the average time it’s now taking to sell homes under $250,000 in Henderson, is down to just 2 months.

Good news for sellers, but it shows that buyers looking for a great deal can no longer dilly-dally. This “buyer’s market” can’t and won’t last forever. At some time in the future we’ll be at that magic tipping point, and as history has shown, when the Vegas / Henderson housing market turns, it turns fast, so don’t get caught napping!

So you’ve gone through all the pain and frustration of getting a loan to buy your new home, and now you want to celebrate, right? Well, before you go crazy buying furniture and flat screen TVs, you may want to think twice. If you destroy your credit score or debt-to-income ratio anytime between preliminary loan approval and closing, you won’t be able to get your loan underwritten.

Here’s a very simple list of the DON’Ts:

1) DON’T buy or lease a car. Large leases or purchases can greatly impact your debt-to-income ratios.

2) DON’T move assets from one bank to another. These show up as new accounts and create havoc with your loan process.

3) DON’T change jobs. Underwriters will insist on a probation period before income from a new job can be considered.

4) DON’T go crazy with credit cards. Increasing your debt can disqualify you from getting the loan to buy your home.

5) DON’T run a credit report on yourself. This will show up as an inquiry and will reduce your score.

6) DON’T attempt to consolidate your bills without speaking to your lender first.

7) DON’T pack or ship documents which may be needed to complete your loan process. Duplicate tax returns, W-2s, etc can take weeks to get hold of.

If you’ve already committed one or more of these 7 deadly sins…don’t panic…contact your loan consultant!

I’m sure we’ve all heard that location is probably THE single most important factor to consider, when buying a home.

Yet how many of us ignore this fundamental principal? The answer is more than you think! As a Realtor who has been in this business for many years, you’d be amazed at how many times I have this conversation with clients:

Me: “So, what area of town are you looking in?”

Client: “Uuuh, dunno!”

Me: “Well, at least give me a compass point…do you want north, south, west or east?”

Client: “Uuuh, somewhere not too far from schools, dining, shopping.”

Me: “That covers about 99% of all Vegas/Henderson communities…can we narrow it down?”

This dialogue can often go back and forth for ages!

So here’s the problem. For those of us who have lived here a while, we pretty much have clear-set ideas about where we like to live, but there are literally thousands of people moving to Vegas for the first time, who are absolutely clueless. When I moved here from England with my family a couple of years back, I also faced this problem, so perhaps I’m in a fairly unique position to offer some simple advice:

·         Buy yourself a map and mark on it your place of work.

·         Look to see where the nearest highways are (I15, 215 beltway etc.)

·         Check out if there are any major urban communities or master plans nearby (Summerlin, Mountains Edge, Green Valley etc)

·         If you have kids, check the school zoning by visiting the Clark County School District website www.CCSD.net

·         Pick out a couple of subdivisions and spend a day or two driving the neighborhoods.

·         Don’t be afraid of asking local residents and store owners what they think of the area.

·         Visit the neighborhood at different times of the day and evening, and be aware of traffic congestion, street lighting, dogs barking, and any other factors which may enhance or destroy your quality of life.

·         Make sure the prices of homes in a given area are within your comfort zone.

·         Take into account that some areas charge Master Plan fees, SIDS or LIDS.

·         Make sure you work with an experienced Realtor who has good local knowledge and knows his or her way around town.

And finally, remember this when buying a home. Changing flooring, upgrading kitchens, sprucing up the yard, or repainting, can easily be done. It’s just a question of time and money. But once you’ve selected a location, that’s it…you can’t pick up your home and move it to another neighborhood, so choose wisely!

Rates on 30-year mortgages dropped sharply again this week, falling to the lowest level in seven months.

On Thursday, Freddie Mac’s nationwide survey found that 30-year, fixed-rate mortgages had declined to 5.78 percent from 5.93 percent the previous week.

It was the fifth consecutive weekly decline and dropped the 30-year mortgage rate to the lowest level since the week of Feb. 14, when it stood at 5.72 percent.

Freddie Mac says the big drop in mortgage rates is fueling a boom in refinancing, with mortgage applications up 58 percent since mid-August.

Rates have continued to fall following the U.S. government’s takeover of troubled mortgage giants Fannie Mae and Freddie Mac on Sept. 7. The government has pledged as much as $100 billion per company to shore up their capital, a move that assured a continuing flow of funds into the nation’s housing market.

So what does that mean for buyers and sellers of real estate? Well, for buyers, lower rates means that as more and more potential homeowners are able to afford a home purchase again, the availability of well-priced homes will shrink at a faster pace, putting pressure on a possible price hike. Clearly the temporary buyers’ market won’t be around for ever.

And for sellers? Great news! The decline in mortgage rates widens the market, eases tension, increases confidence, and gives a substantial boost to the spending power of savvy buyers looking to buy a home while prices are still affordable.