Low Mortgage Rates for Smart Loan Shoppers
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Low Mortgage Rates for Smart Loan Shoppers |
Understanding the Home Micro MarketBy Jonathan HaeberCMR Columnist It's been a very contentious year for real estate. Reminiscent of the 12-year feud between Republicans and Democrats, the "bubbleheads" and "housing heads" of 2006 have said everything from "it's the end of the world" to "real estate is still hot." In many ways, both groups have been right. In order to understand today's home and mortgage market, we must look at it on the micro-scale. Some subsets of real estate are still incredibly strong, with rapid gains in home appreciation. Other markets are doing poorly. Mortgage Rates and More Affect the MarketAs more and more people are being priced out of obtaining a new home loan, the strength in the market resides in two places: top-tier homes and low-price homes. Why? Those who have the money to buy often don't have to worry about earning enough to make the mortgage payment. Those who are priced out but still want to buy are willing to forego an extra bedroom or two-car garage in order to purchase at a lower price.According to statistics from the real estate journal, DataQuick, the median price is going down in many counties, but upon closer inspection, condominiums are the cause. Condos have a lower median price, so the market may look sour, but sales are still strong in certain home niches with lower, more manageable home prices. The use of interest only mortgages, and the more risky reverse mortgage, has dropped. At the same time mortgage rates are still going down. Many factors are at work, and the current market is probably among the most conflicted proverbial pea soups in real estate history. Homes and Loans: Two Sides of the CoinCarol Lloyd, columnist for the San Francisco Chronicle says it best: "Some people are holding leaking real estate cups (with fast-draining equity or houses they can't sell) while other cups still overflow with boom-time profits." Her example du jour is the incredibly strong sales in Tiburon and Belvedere, just North of San Francisco, where the median home price hovers in the 2-5 million range."The prime markets are doing very, very well" says David Kirchhoff, a real estate agent in Marin. "The buyers aren't as affected by interest rates, since they often buy with cash. And they aren't as affected by the economy." Source San Fransisco Chronicle: A Look at Micro Markets in Bay Area Housing About the Author Jonathan Haeber is a marketing writer for Discovery Channel Stores. He recently purchased his first home and took a self-taught crash course in home mortgages. © 2007 CMR. All rights reserved. |