LAS CRUCES REAL ESTATE UPDATE

INTEREST RATES & HOME SALES INFORMATION

INTEREST RATE INFORMATION

Interest rates NO LONGER at 40-year lows.

Mortgage rates, which started spiking a couple weeks ago, shot up again. As of 8/25/03, the 30-year fixed-rate LOCALLY IN LAS CRUCES rose to 6.40%.

Just two months ago, 30-year fixed-rate mortgages were hovering below 5.5 percent, and the week of June 11, the mortgage index dipped to a modern low of 5.28 percent. Until late July, the average rate on a 30-year fixed mortgage had not exceeded 6 percent all year. Borrowers grew accustomed to these low rates. Despite the rise, mortgage rates are still historically low. Borrowers quickly forget that rates are usually much higher. Since 1985, when Bankrate.com began its weekly mortgage survey, the 30-year fixed rate has averaged 8.40 percent. Since 1990, it has averaged 7.75 percent; in the last 10 years, 7.37 percent; and in the last five years, 7.06 percent. Viewed in that perspective, getting a fixed-rate home loan at between 6 and 6.5 percent is nothing to complain about. If you're thinking of getting a mortgage or refinancing, it's still the right time to act.

PROCRASTINATORS BEWARE

The economy appears to be in the early stages of regaining its stamina. It will likely be a slow process with a good chance of a relapse or two along the way. But, buyers waiting to get a mortgage, or homeowners who are waiting for the absolutely lowest rate before refinancing their mortgage may be making a costly mistake.

Waiting for interest rates to fall in an improving economic environment is a game you don't want to play. A lot of fence sitters have gotten stung, especially now that mortgage rates rebounded to a five-week high.

Rick Gillespie, chief marketing officer for GMAC Residential, says, "People need to make smart decisions based on their own situation. If it is smart for them, they need to proceed as opposed to waiting to see if rates will drop again."


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Even if you are not planning to buy or sell at this time you should seriously look at refinancing your mortgage. I recommend a visit to your local mortgage lender or Quicken's Refinance Center


************************************************* ALSO, WHILE WE ARE DISCUSSING RATES AND MORTGAGES, YOU NEED TO READ THIS ARTICLE With Rising Interest Rates, Should You Consider an Adjustable Rate Morgage?


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THE LAS CRUCES REAL ESTATE MARKET

First-Time on Record - All Metro Areas Showing Home Price Gains

For the first time since reporting began in 1982, home prices in the second quarter increased in all metropolitan areas for which data is available compared with the same period a year earlier, according to the latest survey by the National Association of Realtors®.

The association's second-quarter metro area home price report, covering changes in 126 metropolitan statistical areas, shows 40 areas with double-digit annual increases in median existing-home prices and no areas with price declines. This is the most exceptional home price survey the association has ever reported. Normally, even in very strong sales markets, there are areas somewhere in the country that for one reason or another have a temporary price decline. Not only is every market positive, but also a record number of metropolitan areas are experiencing double-digit price gains.

The national median existing-home price was $168,900 during the second quarter of 2003, up 7.4% from the second quarter of 2002 when the median price was $157,300. In Las Cruces the 2003 Median price was $123,500 while the 2002 Median price was $115,250 an increase of 7%).

The reason is that there are simply more buyers than sellers in the market. We have relatively lean inventories of homes available on the market in a year in which we will set a sales record. The supply-demand imbalance is the fundamental reason for the strong price gains.

We have already started to see a modest, gradual rise in mortgage interest rates and this is expected to continue into next year. With this rise in rates, it is expected that sales will slow a bit and help to bring the market closer to equilibrium between buyers and sellers. This will reduce pressure on home prices and the rate of price increases should slow, but in most areas you can expect that they will still rise a little faster than historic norms.

THE LAS CRUCES REAL ESTATE MARKET

For many years, Las Cruces has had relatively stable but active real estate market. In these last few years, as the overall economy, especially the stock market, became rocky, real estate became a stable shelter for available funds.

In Las Cruces, the real estate market has made dramatic changes. The number of homes sold increased 14% (2001) - 15% (2002) and has continued in double digits (12%) in 2003.

Even more dramatic than the increased number of homes sold, is the fact that over this time period the average price of homes sold has increased by 8% annually. After years of a steady market of (+/-) 3% increases in home sales and prices, the 8% increase in prices and 12-15% increase in number of sales is an impressive positive change in the market.

These changes combined with current low interest rates (discussed above)makes this market a great time for buyers to buy and sellers to sell.