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Housing market clearing up?

September 17, 2008 12:00:00 AM PDT
While the stock market is in the midst of a storm, the housing market is actually showing signs of clearing. Consumer specialists say that with home prices and interest rates down, buyers are starting to take advantage. It may be hard to remember the last time you heard about multiple offers on the sale of a house. However, some say we may be hearing it more often.

Prudential realtor Steve Shrager is representing the seller on a Sherman Oaks house. Although it is a very nice place in what has been a tough housing market, Steve says it is getting a lot of attention.

"I did the open house here on Sunday, I had about 100 buyers through here. The brokers are all very excited, they are back to work, I have multiple offers on this home. So I have a lot of very positive activity," said Shrager

When you look at current home prices multiple offers are beginning to make sense.

According to DataQuick, the median price of a home in Los Angeles County has dropped 31 percent from last year to $380,000. In Orange County, it is down 32 percent to $440,000. In Riverside County median prices have plunged 37 percent to just under $248,000. San Bernardino County is showing a 40-percent slide to $215,000.

However, home prices are only part of the story of this recent upsurge in home-buyer activity. Interest rates are playing a role.

The most recent data from the Mortgage Bankers Association show the 30-year fixed-rate mortgage has come down from more than 6 percent a week ago to 5.82 percent on Wednesday.

The government's bailout of some of the biggest mortgage lenders has eased the credit crunch a bit, allowing rates to come down.

Not only are buyers signing papers for new loans, lenders say homeowners looking to refinance are also benefiting from the lower rates.

"People who can refinance -- not everybody can because their property values have diminished -- but the people who can are taking advantage of it and getting in. Changing those five-year loans, those three-year loans into 30-year fixed. And that is a very healthy thing to do right now," said Dorain Williams, Metrocities Mortgage.

As a result, mortgage applications for refinancing have increased more than 88 percent in just the past week.

Meantime, new home construction is in a crisis, plunging to its lowest level in 17 years.

Experts believe home construction will continue to decline for many more months, but that could be good news for buyers as the supply of homes for sale dries up.

 

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