The credit crunch that has been in the news lately is going to have an impact on Corpus Christi real estate, but if you work smart and with a smart agent, you will be ok.
Market As A Whole
I believe that our market will remain good. We will see a slow down for a couple of months as buyers, lenders, and agents work together to understand the new mortgage market. The banks are continually changing their standards and requirements which plays into each transaction. Fortunately in our market we have some great local banks and credit unions, plus some fantastic mortgage brokers on top of the situation and working to get buyers the loans they need. Overall I see fourth quarter 2008 and first quarter 2009 feeling a little slowdown, but with a increase toward the spring and summer of 2009 as buyers get more confident and begin to make decisions.
Impact on Buyers
If you are looking to buy a property right now the time is still good. Plenty of property currently remains on the market, so your choices are still good. The credit crunch will impact you in two ways:
1. Higher Down Payments – Loan to values are changing – the amount of loan a bank is willing to give you for the property based it’s value. The days of 100% financing are behind us for the most part, with the exception of VA loans. You are more likely to see 5% to 20% down payments required. FHA downpayments may increase to 3.25%.
2. Purchasing Power – With higher down payments required and slighty higher interest rates you may no longer be able to purchase as much as you once could. Additionally banks are changing their debt to worth requirments and not lending as much as they would have a year ago. I am seeing people shift from their price ranges down by as much as 10% to 15% lower. If you have plenty of cash or have good cash flow you can still find good properties.
If you are looking in the short term I suggest setting aside as much cash as possible, refraining from taking on any new debt. The house must be your number one priority. If you are looking long term take a look at your financial situation, pay off debt to free up cash flow and begin saving for your down payment and closing costs.
Impact on Sellers
Now is still a good time to sell your home. That being said you must be aware that average days on the market remain high, inventory remains high, and the supply of buyers has dwindled. Now I know that doesn’t sound like a good time to sell, but with a good approach it can be.
In order to sell your home right now you must be able to truly distinguish your house from the rest of the supply by doing two key things:
Price it Right – Now is the time to price you home realistically. If you need to move or need to sell quickly, you must price it below the competion even if its only a couple of percentage points. Buyer are looking for good prices because they know they can get them. This is not the time to try and maximize your equity and don’t let anybody convice you to go for gold. This is the time to make accurate decisions based on true values and not speculation. With less buyers in the market you need to be able to attract the as many as possible. This is even more imparative for the higher price ranges. You must also be willing to make reasonable concessions to buyers such as appliances, closing costs, furniture, etc, because they’ll just go down the street. Again being smart with these decisions makes all the difference.
Property Condition – The next thing to price is condition. Since people have to make higher down payments there is less to spend on remodeling or fixing items. Buyers are looking more at sellers to fix not only the major problems, but some of the minor cosmetic items. I like to work with my sellers to clean up small things prior to listing. The better the property condition the better is shows to a buyer and the better chance you have of getting the price you want.
Don’t despair, the Corpus Christi market will do good. The national news has even commented on our potential and we should be proud to live hear. Please let me know if I can be of any help.
Have a blessed day,
Joseph
Joseph Cortez 