With Foreclosures Rising, It's a Good Time to Buy

If you're looking to purchase a home in the Agoura Hills area, realtors say you're in a buyer's market. An increasing number of homes are available due to  foreclosures, and prices and interest rates are at historic lows.

Homes are now being offered at prices not seen since since 2003-2004, said Raz Reichfeld, a Pinnacle Estate Properties real estate agent, whose territory includes Agoura Hills, Calabasas and the West San Fernando Valley. Interest rates are at their lowest levels since the 1950's: around 4.25 percent on a conventional 30-year-fixed loan up to a loan balance of $417,000.

At the peak of the 2005-2006 real estate "bubble," when banks were making loans easy for everyone, houses were selling for as much as $400 per square-foot. Since then, Agoura Hills has taken a 30- to 35-percent hit, Reichfeld said, to about $260 per square-foot.

Based on those numbers,  a 1,965-square-foot, three-bedroom, two-bath house that was once priced at $780,000 is now selling for about $510,000.

While it is a good time to purchase a home, one out of four homeowners in California is still paying a mortgage that is higher than the appraised value of their house.

"Right now, the stats are showing 75 pre-foreclosures, 22 bank-owned homes and 101 at auction in Agoura Hills," said Reichfeld. "There is definitely a problem."

Homeowners taking the hardest hit, Reichfeld said, are those who took out adjustable rate mortgages loans that are now maturing.

"We've got people who were making interest-only payments for five to seven years, depending on their particular loan, who were counting on their properties to appreciate," he said. "Unfortunately, that didn't happen. Now, their mortgage rates have gone up, payments are significantly higher, and they're finding themselves in trouble."

Homeowners who put additional equity into their homes in the form of repairs and upgrades during the boom can also no longer afford their homes, he said.

"Regardless of mortgage status, we are in a time when unemployment is on the rise," said Reichfeld. "Homeowners find themselves negotiating with the banks for either loan modifications or short sales. Both options can be lengthy."

Leslie Appleton-Young, chief economist for the California Association of Realtors, said she is seeing more parents investing in real estate for their children and investors paying for properties in cash. But, she said, California's economic recovery has a long way to go. 

"For now, I see a steady stream of foreclosures in the months ahead," Appleton-Young said. "Since home equity or value has dropped so significantly, homeowners cannot refinance their loans and take advantage of the current low rates."

If you are able to buy, Reichfeld has some advice: Don't haggle with the price. First, get pre-approved by a direct lender, preferably by the bank that holds title to the property. Second, make your first offer your best and highest offer as you might not get a second chance to bid, he said.

"The best investment you can make right now is in a house," Reichfeld said. "Take advantage of the current climate, if you can."