Talking West Chester real estate with realtor Ryan Estrada
AFTER the real estate bubble burst back in 2008, uncertainty has been the only constant in the market. Whether you’re looking to buy or sell, it is a tumultuous time for real estate. Foreclosures have been all over the news, and short sale has become a trending topic.
But, if you’re not involved in finance or real estate, you might be a little bit confused about what’s been happening and what to expect from the future – we sure are. So, we thought it would be a good idea to catch up with Ryan Estrada, a realtor with Weichert Realtors right here in town, to chat about the real estate market as a whole, and what we can expect in West Chester.
What is a short sale? A short sale means that, if a person were to sell their house, they would not make enough money from selling it to pay the liens on the house. We’re seeing this a lot now, because up until 2008, people borrowing to the hilt, taking equity out on their homes and refinancing, and then the real estate bubble burst. Now their home is actually worth less than what they owe on it. We would describe this as being underwater. In a short sale you need to get all the creditors’ approval for the sale because they’re the ones losing money. Ultimately it is a real pain – you need approval from so many parties that they tend to take a long time. You could make an offer on a home but then find another place before your bid on the short sale gets accepted.
Is there a benefit to the buyer? There is a benefit. You’re able to get the property at a lower price than what it might have been worth, but it doesn’t usually equate to being a big deal because the bank has to approve the sale price – they’re the ones who are losing out. Still, if you’re not in a hurry, you have somewhere to stay for now, and you have six months to work a deal, then it might be worth it.
So then, the real deals would be in looking for a foreclosed upon property? Sure. It is a case-by-case scenario because it depends on the property and the neighborhood. You might get a good deal in a neighborhood with a lot of foreclosures, but a strong neighborhood, one without a lot of foreclosures, might not have a significant price drop on a foreclosed home.
Has the market hit bottom yet? It’s hard to say exactly, but a good gauge to figure out the market is the absorption rate. In a balanced market, a house tends to be up for sale about five to six months. Anything less than five months would be a seller’s market, because it is obviously a desirable place to live and people are snapping up house. Anything more than six months would be a buyer’s market because the market could get flooded with homes and the prices will come down. Generally, the whole country is still a buyer’s market.
Would you describe West Chester as a buyer’s market? In West Chester, just like everywhere across the counrty, we had the same run-up in appreciation until things crashed in 2008. Fortunately, homes under $300,000 are moving quickly thanks to first-time home buyers who aren’t looking to unload their current property before they look to buy. If you bought property in the 2000s, you might be almost underwater, so you’re probably holding on.
Are there areas in West Chester where we could expect to see growth in the next few years? There are some areas seeing new construction, but housing starts are lower. However, if you get farther west, out into Downingtown, there is good construction and lower prices. We’re seeing a correction in the market. We’re not seeing great growth, but it is becoming more stable.
Is it a good idea to be looking to buy in West Chester, or should I focus elsewhere? West Chester is not going to depreciate – it is a good place to live, and it is not going anywhere. It’s the county seat, a center for business and government and has great schools. If you’re looking at things long term, because it is a long-term investment, West Chester is strong.
Can a person who has not saved up a lot of money still get a mortgage? There’s ways to do that. For example, instead of trying to bring the price down on a sale, you can ask the seller to help with the closing costs. As long as you’re actually employed, and you’re not trying to scam the market, then you can get a mortgage.
Realistically, how much does someone need saved up? The most popular way to go about financing is to go FHA, which allows you to put only 3.5% down instead of the usually 20%. For a first-time home buyer who is realistic with their expectations, if they have around $15,000 we can get something done. As long as your debt to income ratios match up, then you should be able to get a home.
Are there any incentives still available to first-time buyers? Despite the fact that the First-time Homebuyer Tax Credit has dried up (which is a shame), there are still tons of incentives. Double check with your accountant, because I’m not a lawyer or accountant, but there are tax incentives.
There are a lot of young professionals in this town holding off on buying a home. What would you say to convince them to make a move now? People are often turned off because they hear that mortgage regulations are really strict right now, but the truth is that mortgage regulations are just back to normal. Interest rates are now at an all-time low. They’ve never been lower, so you’ll probably never have a chance to buy a house for a better deal. If you’re interested but not sure, you can come into Weichert and we’ll help you gauge whether you’re ready. We’ll run your numbers for you and help you figure out what your situation is and what type of home you’d be qualified for.
If you have further questions about the real estate market, Ryan is happy to supply you with answers. Feel free to give him a call or send an email. 610-436-0400, email@example.com. You can also find him on the web