So much happened in 2008 it’s hard to keep track. So here is my re-cap of 2008.
1. Interest rates drop but so do loan options: Interest rates at the begining of 2008 were above 6% and now we’re generally at or under 5% – that’s great news and it saves you money. At the height of the market there were literally thousands of loan programs and now there are fewer options. Most loans are 30 year fixed but you can still get FHA loans which have a down payment requirement of 3.5%. There are also new tax credit programs for first time buyers which increased activity in that sector and will continue to do so in 2009.
2. Inventory started at 12 months in January 2008 and stayed at 10 months most of the year and then shot up in November and December to 15 and 14 respectively.
3. Micro Markets re-emerge: I have been tracking inventories all year and most close-in areas have remained very low which is still to the advantage of the seller.
4. Financial markets have huge downward adjustment: Many people lost money in the stock market and their retirement plans. This further slowed the housing market as people had more trouble borrowing money and consumer spending dropped.
5. Foreclosures increase: We saw some short sales and VERY few REOs at the beginning of the year but now just in Multnomah County there are almost 800 homes that have been foreclosed and are owned by banks. These properties are generally in bad shape – some of them not financable and they sell at a discount. This creates lower market average and median prices.
All told 2008 was a rough year due to all the volatility – My hope for 2009 is that things will get more even keeled and people’s expectations will be in line with the market. This is going to be a year of wonderful opportunity.
Next week I will have info on current loan programs whether buying your first home or moving into your dream home.