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Potential home buyers may soon outsmart themselves

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POSTED August 10, 2012 12:20 a.m.

Back in February 2008 when I bought my house I spent two weeks in the “upfront process.”

It took me about a week to find the house I wanted. I got my offer accepted in two days, the loan approved in three days and the bank offered to close escrow in five days which was way too fast for me. Instead, they agreed to a closing date 20 days after I signed the necessary paperwork.

Today, it would be next to impossible to repeat any of that especially now that the overall market is starting to show steady - although slight - upward pressure on prices as inventories dwindle.

That means it will take you much longer to find a house.

But loan requirements have stiffened as well. My credit score is even higher than it was in 2008 while my income is almost the same. Yet several lenders I asked said it could easily take 30 to 45 days to get a loan approved. That combined with changing market pressures would make it tough just to land a home.

That is important for potential buyers to know. They’re the ones who have been sitting on the fence waiting for prices and/or loan rates to drop to the point they hit the proverbial bottom.

They are on the verge of outsmarting themselves.

Short of the banks making interest free loans, further rate drops - should they occur - are going to be insignificant when it comes to monthly payments.

As for prices dropping further, good luck with that unless you are in the market for homes that once sold for $700,000 plus.

Median prices in Manteca have been gently rolling up and down going between $164,000 and $168,000 over the course of the past 18 months.

There are no longer wild drops in prices.

The lower end of the market in Manteca - the most affordable which means the pool of potential buyers is greater - have seen a double digit rebound in value based on asales analysis conducted by the San Joaquin County Assessor.

No one is expecting an overnight return to the 2006 high plateau that prices reached. There are more than a few housing economists, though, that are expecting double digit gains in housing values over the next three or so years to recoup a chunk of the lost value.

The reason for that is two-fold. Demand for housing continues to grow and most homes that have been sold through foreclosure are selling at pries lower than their replacement costs.

Selling price versus replacement cost is what will see a good chunk of the lost value restored relatively quickly.

That means housing prices will rise.

And given the longer loan approval process and other factors if you’re thinking of buying you might want to do a little bit less thinking and take proactive steps now.

It won’t be long before you look back and realize these were the good old days when it comes to affordable housing opportunities.

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