June 30th Current Market
June 30th, 2010Current Market Update:
Sales are down from May as expected due to the end of the Federal Tax Credit
Short Sales are closing quicker and represented about 28% of May closes
The step-up market is very slow due to the lack of equity flow
Loans requirements are increasing
Some Historical Points:
Old Values
40% households owned homes 1940s
69.4% owned in 2004
Average length of a loan 1940s 3-5 years, today up to 40 years
Americans moved every 8 years (Californians 5 years) by 1980s
Homeowners refinanced to meet a need (college, remodeling etc)
A home was considered a long-term investment, a place to live and set down roots (even if for just 8 years)
The concept “Trapped Equity” did not exist.
New Values
Refinance as soon as equity built up, cash out
The home is the major investment and a ticket to retirement
Don’t worry about when a home is paid off
Put as little as possible down, freeing up equity (Trapped Equity)
New/Old Values
Save for a down payment
Buy where you want to live, pay the mortgage down.
Used fixed rate financing so know housing expense so can save for college/retirement
Mortgages were paid off in 3-5 years in the 1940s, but now that time has been stretched out to 40 years. Today, the concept of a mortgage burning is an anachronism. We moved far away from the idea of the home as something saved for when financially ready, knowing it take time to build up value to viewing the home as an ATM machine. The adjustment to a reality-based view of home ownership will temper the excesses of the 2002-2006 period and homes will appreciate in value over time. Meanwhile, homes will be purchased for the location, floor plan, schools and the concept of sinking your roots where you want to live. Simple isn’t it?
(front side, or address side)
Santa Rosa Sales by Area 2010 from $100,000-$1,500,000 through June30
Area Price February Price June #Sales
NW $313,747 $264,315 311
NE $475,880 $329,094 207
SW $272,432 $247,380 194
SE $389,903 $290,740 168
The average price for a home sold in Santa Rosa through June 2010 was $282,882