Right now, bad news about the housing market is hogging national attention – ‘subprime’ has become a household term and foreclosure rates are increasing across the country. But the current housing market also offers more affordable prices and lower loans rates, so if you’ve been waiting for the right moment, then now is the time. With lending tightening its belt (no more stated income), shopping for mortgages is ever more difficult and seeking the assistance of a mortgage planner makes a big difference.
Recently I met with two local mortgage brokers: Rachel Lamoreux, whose branch of Tahoe Lending Group is located in Truckee; and Teresa O’Dette, president and owner of O’Dette Mortgage Group with offices in Truckee, Tahoe City and Incline.
Rachel started in the mortgage business in 1997, ten years later she opened her own Tahoe Lending Group branch. Teresa started at Lake Tahoe Mortgage ten years ago before starting O’Dette Mortgage Group in 2002.
Both Rachel and Teresa agreed that business is actually doing quite well. ‘Everyone is inquiring, I have so much work right now,’ Rachel said. ‘For some people it makes sense to do something right now based on their circumstances, but others we have waiting in the hopper.’ For those who wait, Rachel helps design a game plan that will put prospective homebuyers on the road to ownership.
Teresa recommended that people make a move now and get pre-qualified. Assuming success in pre-qualifying, ‘It is an excellent time to purchase a home: money is on sale, and homes are on sale,’ she said, adding that the market is good for both buyers and sellers, with people willing to sell so that they can buy somewhere else. ‘I think we will look back on (the people who purchase now) in five years and think, ‘Why didn’t I do that?’ Fortunes are made…in times like this.’
The current dip in prices is also good for locals, who haven’t been able to buy in the inflated market of recent years, Teresa said. ‘There is a point where rent will catch up with entry-level housing, and that section of the market will come alive again.’
In response to my question about what kind of clients are looking at the market these days, Rachel said she has both millionaire clients looking for a second home, as well as first-time buyers. She also handles workforce-housing loans for The Boulders, Spring Creek, Stone Ridge, and Martis Camp.
Teresa’s clientele makeup is half first-time homeowners and locals, and half second-home owners, with an average loan size of $450,000.
Both brokers are optimistic that the downturn is turning around. ‘Our quarterly volume stats trended slightly downward last year, but are starting to turn around in 2008,’ Teresa said. In the first quarter 2007 Teresa’s firm did $28 million, followed by $34 million, $22 million and $16 million. In the first quarter 2008 it did $19 million.
At Rachel’s firm the volume was down a total of 36 percent in 2007 versus 2006, which she attributes to the credit crisis that started in August 2007. ‘Our volume numbers for the first quarter 2008 are in-line with our first quarter 2007. Winter is typically slower, but we are optimistic about the summer and fall,’ she said. ‘Our market is slow, just as any other market has slowed down, but our values have not dropped nearly as significantly as other areas have, and we are starting to see things pick up right now. I think it will continue to be a slow year, and then it will pick up in 2009. We have to work through the credit crisis that we are in.’
With the different loan programs available, Teresa said a mortgage broker is key. For one, they know the local market. ‘Locals understand why a house on one side of the street is $2 million and on the other side is $200,000. One has a view, and the other doesn’t,’ she said. ‘Our service right now is in demand…but it is harder now than it has ever been for us, to find the correct answer, and the lender will do it at a price that you (the client) think is fair.’
She also believes it takes a load off the buyer. ‘If you decide to buy a house I want you to think of the color of your carpet, and the furniture, I do not want you to worry about qualifying for a loan. I want to make the mortgage process a non-event,’ Teresa said.
Navigating the realm of workforce housing loans is a daunting task for even the most seasoned. Lucky for us, Rachel has dedicated herself to learning a lot about this market. She recommends workforce housing for those locals who make between $30,000 and $55,000 a year, ‘as they get all the homeownership benefits, tax write-offs, and they can apply for down payment assistance.’ She has helped many Latino families get loans, using an interpreter to facilitate the process.
She and Teresa both emphasized that people can buy a home even without a Social Security number by using an Individual Taxpayer Identification Number (ITIN).
If you keep tabs on real estate ads, you know foreclosures are happening in the area, but according to these ladies it’s not to the extent seen elsewhere. Teresa explained there are roughly 120 homes in the Truckee/North Tahoe area that are pre-foreclosures, bank-owned or up for auction per Realtytrac.com as of April 1. ‘That is a staggering number to be sure, but when you dig a little deeper, the number represents less than half of one percent of the residential properties in the same area,’ she said. In her estimates, less than half of those in trouble are primary residences; with many being empty lots with no home on them, and others still that are speculators. Teresa does not think, ‘adjustable mortgages are the villain,’ believing there is no ‘single person, entity or loan product to blame for the current situation.’
Teresa recommended to anyone in financial trouble: speak with a mortgage professional, a real estate agent, and an attorney as soon as possible, ‘before (you) actually default, to see what options are available.’
Rachel said there is light at the end of the tunnel – appraisers have had to mark the box ‘declining market’ for the past four months. But ‘two local appraisers believe we are very close to the bottom of the market and feel between 30 to 40 days they will no longer have to mark…’declining market,’’ she said.
