Monday, July 30, 2012

Number of California Homes Going Into Foreclosure is at a Five-Year Low

California Foreclosures Dropping
Californians can finally breathe a sigh of relief in regards to home foreclosures.  After years of closely monitoring the cloudy foreclosure reports, we can finally get out and enjoy the relaxing sunshine our state is known for.  Reports like this one have been making news headlines across the nations: California home foreclosures hit five-year low.

Not only is that great news for Californians in general, it's the best of news for all of the renters who have have hunkered down to weather out the storm.  It's time to fold up the umbrella, get your walking shoes on, and start looking for real estate.

Five Years of Real Estate Instability Equaled Time to Save

The foreclosure market was good for many home buyers, especially first timers. The five years of escalating foreclosures allowed buyers extra time to accrue sizeable down payments as the median prices of homes continued to drop. For many, this made houses more affordable again.  Take a look at this young couple in Sonoma County.  Ten years ago they may have been enticed to jump on the "Zero Down" Mortgage Train and become a foreclosure statistic.  Instead, Crandon and Angela Kopriva had the money for a substantial down payment and were able to buy a moderately priced home they could afford.

High Foreclosure Rates = Lower Median Home Prices and Higher Rents

The median home prices across the state declined from 2010 to 2011, but then started to rise again which is a sign the things are looking up.  It also lights a fire for those home buyers who are ready and don't want to miss out on the bottomed out prices before things start to inflate again.  Many foreclosed homes needed expensive renovations, which didn't make them so affordable after all.  But as the overall price of real estate has come down, move-in ready homes are once again in reach.

For renters, buying a home can mean saving money.  High foreclosure rates translate to a flooded rental market and increased rents.  What's the basic principle of Economics? Supply and demand, of course.  High demand for rentals have driven rental markets up.  For many, the rent they are paying for an apartment space is equal to - or more expensive than - a monthly mortgage payment would be.

Interest Rates Are at an All Time Low

If there is one thing we all learned from the recent housing crisis it's that fixed interest rates are the only interest rates home buyers should be shopping for.  As far as fixed interest rates go, there has never been a better time for home financing than right now. With a shaky employment market, buyers need to know that their monthly mortgage payments are steady so they can base their budgets and emergency savings plans accordingly.

New Home Construction is Back!

While foreclosure rates are experiencing a five-year low, new home construction is at a four-year high according to a recent report from CNNMoney. In case home buyers needed another sign that the storm clouds have dissipated, new home construction trends are another step in the right direction.  New home construction projects are gaining a lot of buzz these days which is bringing interested home buyers back out of the woodwork.

The sun is finally shining in the real estate world again.  We hope this five year period has created a more educated and savvy population of home buyers who will be empowered to avoid the mistakes of the past and build a new American dream that will last.