This past year was an interesting time for real estate in Northern Virginia. We went from a flurry of foreclosure properties to a very limited inventory. As home prices fell and many found themselves underwater, it became difficult if not impossible to sell their homes. A large majority of the homes in Prince William County were found to be short sales. A short sale occurs when the seller’s lender, due to some sort of hardship, allows him to sell for less than the full amount owed. Buyers hurried to compete on these homes, only to wait for up to 6 months to find out whether the lenders would approve the sale. These buyers were encouraged by the federal tax credit giving a break of $8000 to any purchaser who had not owned a home in the past 3 years.
2010 is now here! There is still very little inventory. The tax credit was expanded to include many current homeowners as well as first time buyers, yet it expires on April 30th. There has been little success in loan modifications. Most owners that qualify to modify, find that in three to six months they are right back where they started. The federal government had been buying up some of these “toxic” assets, or defaulting loans but that is also set to expire soon. This should certainly have an adverse impact on interest rates. Although prices are extremely good right now, what will a 7 or 8% home loan rate mean? We are not talking about in a couple of years. We are talking about in the next 4 or 5 months!
Anyone on the fence should beware! If this doesn’t give you an incentive to get your DREAM HOME now, I don’t know what to say. Why wait for that investment property?
It is true, short selling will continue well into 2010. Foreclosures will continue to come on the market as well. Question is: Will anyone be able to afford them?
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