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Short sales rise as does rates

Strong buyer activity may negate jump in loan cost

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Short sales rise as does rates

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POSTED June 11, 2009 2:20 a.m.
They waited for rates to drop to 4.5 percent.

Now fence sitters are facing interest rates that have jumped almost three-quarters of a percent in two weeks to 5.71 percent. They had dropped to as low as 4.81 percent.

“Same song, different verse,” observed Realtor Tom Wilson of people who said they were waiting for housing prices to drop and then waited for interest rates to drop.

Wilson doesn’t expect rising rates to severely undermine the Manteca housing recovery as some fear will happen elsewhere in the nation. His proof are clients including one that has written 15 offers, each time making offers above the listing price and has gotten aced out each time.
It is a view shared by lending agents such as Deborah Romero of Ability Mortgage.

“Even if rates hit 6 percent they are still phenomenal,” Romero said who noted that mortgage rates in the 7 to 12 percent range were commonplace in the 1980s and 1990s.
She noted if rates hit 6 percent someone buying a house for $200,000 will still be getting a major deal considering the home may have sold three years ago for $400,000 when rates were at 6 percent.

“It’s another bubble that has bust,” Romero said. “Mortgage rates this low were probably an aberration.”
Romero said she has clients who are making multiple offers but are losing out.

“Anytime you have multiple bidding that’s a good sign the market is stabilizing,” Wilson said.

Wilson credits the lure of the $8,000 tax credit for existing homes that go into escrow by Dec. 1 for first-time homebuyers defined as some who hasn’t owned a home in three years or more as strengthening the market.

The rate jump comes just as another wave of foreclosures are expected to sweep through the South County.

Experts anticipate them hitting in July and August.

Current South County Multiple Listing statistics seem to serve as a weathervane for the expected surge in foreclosures.

Listing of short sales – efforts by borrowers to avoid foreclosures – have started climbing as market inventory drops. As of Monday there are 118 active listings of short sales available in Manteca compared to 43 foreclosures.  Lathrop has 70 active short sale listings compared to 15 foreclosures. Ripon reflects the trend with six foreclosures with 28 active short sales.

Wilson said the slim inventory compared to the number of buyers has resulted in “better” foreclosures that become available being snapped up quickly.

Romero noted short sales are now dominating the market. Unfortunately, many banks aren’t making the process of buying a short sale an easy one often taking weeks to get replies back to offers and then going months before a final decision is made.

There have been 545 existing homes sold so far this year through Monday within Manteca’s city limits with 174 active listings and 218 pending sales.

A record 1,165 homes were sol d in Manteca in 2008. Based on the current sales pace, that mark will be eclipsed as sales are on target to reach 1,251 home sales.
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