Jason P. Bernabei, TriCastle Realty
DEL MAR, December 19 2011 -- Goooood Monday morning SD! Chargers win! Chargers win again!! Dare we hope for the play-offs SD? Or is this a precursor to another false bottom? Ah yes, the parallels of the Chargers and the housing climate continue to amaze.
Take for example, some of the “good news” coming from the National Association of Realtors recently. In a recent news piece, NAR cites the findings of “The Pending Home Sales Index,” that contract signings (intent to purchase homes) have surged 10.4 percent to 93.3 in October, up from September, and are 9.2 percent above October 2010 where it stood at 85.5. That sounds wonderful, right? Well, the only problem is the old adage in real estate, mortgage-lending, sales, etc.: “A deal isn’t done, until it’s done.” The aforementioned seemingly encouraging statistics are meaningless if the prospective buyers can’t get to the finishline, if the deal does not go through, if there is, in fact, no purchase.
In past weeks I discussed the difficulties associated with qualifying for a mortgage loan in this post-holocaust-like lending climate, which continues into 2012. You have a pre-qual from a local lender or broker? That’s great. But to realize the statistic I crave from NAR, the question I would pose is this: “Of the prospective borrowers who have been pre-qualed by loan officers (many of whom are simply not in touch with precisely how challenging it is to TRULY hard-qual and CLOSE a mortgage loan in December 2011), what percentage of those originated prospective buyers DO NOT get the loan?” I suspect that it is a difficult number to swallow in relation to the optimism that the NAR numbers suggest.
So that is where things stand today, right now. Mortgage rates are down, rebounding a bit last week(though the movement of rates is still a fluid situation, no question). There are a multitude of would be new home-borrowers who in years past would qualify in spades to buy, that simply can not qualify for a mortgage loan, and are forced to rent. Industry folks like myself can go dancing in the streets at the “encouraging” news delivered from NAR all we want, but the reality is not so encouraging for many of those would-have been home buyers. Throw in a consideration such as the fact that a large percentage of those intent-to-purchase contracts are on prospective short sale properties, and you might just find yourself dancing with yourself. But instead of leaving you with just thoughts of Billy Idol dancing with himself in your heads on this cold Monday morning, allow me to turn to the immortal words of the one and only Jerry Garcia in assessing the sheer realities for anyone thinking that they all but just bought a home with that pre-qual letter, with that signed contract with intent to purchase doc to boot. You “just might find yourself out there on horseback in the dark, just ridin and runnin across those desert sands.”
Ok, back to work SD. Happy Monday… :)
Give me a holler today at jasonb@tricastle.com, and check me out each and every Monday at www.tricastle.com for more, and tune in to “The Realty Insiders” on the tube this winter to see myself, and other local property rehabbers flip SD.
Jay’s Outlook: not so sunny
Jason P. Bernabei, TriCastle Realty, Carmel Valley home search
