HOUSING REPORT FOR SAN ANTONIO FROM 12/1/2008 TO 12/31/2008

548 3 bedroom homes were SOLD during the month of December between the price range of $80,000 and $499,999.  Within this price range, 119 3 bedroom homes SOLD between $120,000 and $139,999.   The figures below $80,000 and above $499,999 are not included to show the greatest number of sales within certain price ranges and also to indicate what is selling and in what price range.

In the 4+ bedroom market, 366 homes SOLD between these same price ranges of $80,000 and $499,999.  The greatest number selling within this range was 63 homes between $200,000 and $249,999.  Again, the price ranges above and below $80,000 and $499,999 were not included as well as those below $200,000 and above $249,999.

This gives one an idea of what is hot and what is not, so to speak.  The ACTIVE picture will be addressed in the next blog.

Sabor/Skye 

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  Seller Buy-Down In Lieu Of A Price Reduction

 When interest rates increase, fewer buyers can afford the payments associated with home purchases and fewer buyers can qualify and budget for the higher payments.  When you factor in increased home values, buyers become priced out of the market.  This is what causes the local real estate market to change from a “seller’s market” to a “buyer’s market”.  Simply stated, buyers have interest rate, payment and budgeting objections that they do not have when interest rates are low.  The solution to this problem is often to use buydowns to lower the buyer’s effective interest rate and mortgage payment and  help them qualify. 

A real estate agent or loan officer who has an excellent knowledge of how to use buydowns will be able to answer many of these buyer-related objections and help consummate the sale.  When a home buyer says, “I’d love to buy that house, but the payment or interest rate is too high”, you should be able to say, “What payment or interest rate would you like?  I’ll try to get you there.”  Showing the buyer lower priced homes with fewer amenities is rarely a sufficient answer.  An understanding of how buydowns lower the interest rate and the mortgage payment can help all involved.  So here are the basics:

 Lenders do not care what the interest rate is or how many discount points are charged to the borrower.  They care what the combination of interest rate and discount points equals or yields.  The total of the two is referred to as the yield. 

On a 30-year fixed-rate mortgage, which is the standard loan most borrowers seek on home purchases, each discount point paid has a value of .25% interest.  (A discount point  is 1% of the loan amount, or $l,000 on a $100,000 mortgage loan.)  Since each discount point paid to the lender in cash has a value of .25% interest, 4 points paid lowers the interest rate 1% over the 30 year term. 

 The buyer should be aware that when he makes an offer to buy, he is allowed to ask the seller for an amount which is considered to be a seller concession.  This amount will depend on the type of loan the buyer is obtaining.  It only takes 4 discount points to lower the interest rate one full percent on a 30-year fixed-rate loan.  Six discount points would lower the rate 1.5%.  With an interest rate of 6% and the seller paying 6 discount points the buyer would actually get 4.5% fixed for 30 years.  It is a whole lot easier for the buyer to pay 4.5% interest than 6% and the payments are substantially lower and easier to qualify for. The seller could offer these lower rates instead of lowering their price by up to 6%.  The seller would be getting full price and the buyer would receive lower interest rates.

 The most common form of buydowns employed by lenders nationwide are called interest rate buydowns.  These buydowns come in the two primary categories, permanent or temporary.  A permanent interest rate buydown would lower the buyers interest to a fixed amount for the entire loan period.  A common permanent interest rate buydown would be a 1% interest reduction for 30 years.  The lender would require the seller to pay them an amount equal to approximately 4-5% (4-5 points) of the loan amount in cash at closing.  In return, the lender would give the buyer an interest rate 1% below the market rate for 30 years.  A temporary interest rate buydown could be for 36 months and would be as follows:

                         3-2-1 TEMPORARY INTEREST RATE BUYDOWN (over 36 mo.)

      Note        7%/ $100,000 Loan     7%/ $100,000 Loan     Mo. Savings     Annual

     Year        Without Buydown       With 3-2-1 Buydown                            Savings

        1                    $666                      $477 at 4%              $189            $2,269

        2                    $666                      $537 at 5%              $129            $1,548

        3                    $666                      $600 at 6%              $  66            $  792

   4% after Yr 3         $666                      $666 at 7%                   0            $4,609        

Gross buydown amount required to be paid by seller at closing = $4,609 which is equal to 4.61 points.                                                                                                                                    

Note:  The above payments are for principal and interest only and have been rounded off for simplicity.                                                            

 Source: Elias/Skye

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What's in Store for 2008?

Where we've been and where we're going

The recent housing cycle in Texas peaked in 2006, but the falloff has not been as rapid or as deep as in other states. Total sales volume declined, and homebuilders face an excess of unsold new homes. Nevertheless, home prices continued to climb and the months' inventory of unsold homes remained within the general guidelines of a "good" market.

The outlook for 2008 is for further reduction in sales volume and construction activity, with slower, but still positive, price gains. Barring any unforeseen calamities, the overall housing market in Texas should be much stronger than most other areas of the country.

Four major conditions will influence the Texas housing market for the rest of the decade:

1. General economic conditions: A major risk to the real estate market in 2008 is the prospect of a general economic recession. So far, employment and income trends in Texas favorably support housing demand.
2. Uncertainty in the capital and mortgage market: The period of "easy credit, easy terms" that fueled the recent housing cycle is over, but mortgage credit for qualified buyers (those with documentable jobs and income and savings for a down payment) is available and at historically attractive interest rates. The banks, investment funds and other capital market institutions are reeling over the lasting effects and default rates. Foreclosures will remain historically high throughout the year and may not decline until well into 2009.
3. Demographic trends: Texas continues to lead the nation in numerical population growth and in-migration. Growth over the next several decades will help keep the state's housing market moving forward despite short-term disruptions.
4. Housing affordability: The median home price in Texas is about two-thirds of the national median home price, which makes Texas the most affordable high growth state in the United States. The price of housing will be one of the strongest magnets for population and business growth in the state during the next 25 to 30 years.

San Antonio on a state level is duplicating what Texas is doing on a national level in regard to population growth, in-migration and housing affordability. San Antonio experienced an appreciation rate of approximately 7.48% from November 2006 through November 2007.

Total reported sales in 2007 declined a little more than 5%. Sales volume in 2008 is projected to fall another 5% as buyers (a) must meet stricter mortgage underwriting criteria, (b) marginal, sub-prime buyers are excluded from the market, and (c) the psychological impact of a national housing decline influences many to "wait and see".

The general trend toward a buyer's market is evidenced by the increase in inventory of unsold homes. Buyers should find bargains in 2008 especially in unsold new homes as builders move to reduce inventories. The statewide average and median home prices in 2008 is expected to grow slower than the long-term rate of increase but significantly better than the overall national experience. Predictions range from 2% to 3.5% increase in the average priced home in Texas. This increase will be constrained by sales of excess new-home inventory at lower prices and the number of foreclosed homes that will enter the market. Both conditions will influence not only the specific homes sold but also the surrounding neighborhoods.

The longer-term outlook, however, is most favorable. Population growth, affordable housing, available and affordable labor, and an attractive business climate will fuel future market increases and expansion.

Source: Texas REALTOR/First American CoreLogic/Skye

Mary and Joe Skye are real estate consultants devoted to serving those who desire to buy or sell a home.  They share a common goal of serving buyers and sellers above and beyond expectations.  It is this keen desire to serve and develop relationships that motivates them to constantly be aware of any opportunity to better serve their customers. 

Mary and Joe in striving to do the extraordinary differentiate themselves from the ordinary with the result being that approximately 85-90% of their business is referral and repeat business.  It is with this in mind that Mary and Joe offer their real estate expertise to all buyers and sellers who need real estate assistance.  In today's challenging marketplace you need someone with a proven record - you need the SKYE TEAM.  Let their 40+ years of combined experience in the real estate industry work for YOU!  

Come on and enjoy this great South Texas adventure in Real Estate.  Feel free to add your comments and suggestions.  Check out Mary and Joe's website at:  www.TxHomeSearch.com.

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