Tumbling prices | SierraSun.com

Tumbling prices

Real estate prices in Nevada County fell for the ninth straight month in December, plunging nearly 16 percent to a median price of $420,000.

On the bright side, recent decreases in the prime lending rate – highlighted when the Fed cut interest rates again this week – are offering hope to current homeowners looking to refinance at a lower interest rate. The lower rates also are providing incentives to new buyers hoping to lock in lower monthly costs.

“Now’s a good time to buy,” said veteran real estate broker Pam Harley, who co-owns Coldwell Banker Grass Roots Realty with her husband Larry Harley, the new president of the Nevada County Association of Realtors.

“The prices are great, the interest rates are great and there are great deals out there,” Pam Harley said. Those factors have prompted “a little more activity” at the company’s several area offices, she added.

Some buyers are responding to the lower interest rates by offering the asking price instead of bargaining on a sale, anxious to lock in lower monthly payments or take advantage of disappearing special loan programs, mortgage broker Stan Oparowski said.

“They don’t think it’s going to get any better, so they’re trying to get into the market,” said Oparowski, of Sierra Finance Corp. in Grass Valley. “Now is the time.”

Still others are waiting on the sidelines for lower prices or more interest rate cuts; the Fed is widely expected to cut rates again next week.

Statewide, the pace of sales continued a 27-month decline, showing the lowest level since 1988, when DataQuick Information Systems of San Diego began collecting information, the company reported.

Among existing homeowners, “we’ve definitely seen an increase in refinancing,” Oparowski added. “Most of them are looking to lower the interest rate.”

The local picture coincides with a continued decline in median real estate prices statewide, according to DataQuick. Statewide, median prices dropped to $402,000, down nearly 3 percent from December 2006, DataQuick reported.

In an emergency move on Tuesday, Federal Reserve Chairman Ben Bernanke cut the central bank’s discounted lending rate to banks by three-quarters of a point, to 3.5 percent, in an effort to stave off recession.

On Wednesday, the prime lending rate – the rate banks charge to their most credit-worthy customers – was 6.5 percent. The Web site Bankrate.com listed 30-year fixed-rate loans just below 5.2 percent, with national overnight averages listed at 5.3 percent late Wednesday.

Despite the lower rates, it could be “a little too early” to know what effects the declining interest rates could have on the local housing market, said Judy Barley, vice president of California Land Title of Nevada County.

“Interest rates have never been the problem, because interest rates have been reasonable the last couple of years,” Barley said. “The problem has been prices are too high, and now prices are falling, and sellers still want the gold, and … buyers keep thinking it’s going to go lower, so they wait it out.”

She is hearing reports of sales starting to pick up, however.

“I think (sellers and buyers) are coming to the middle of the road, which needs to happen,” Barley said. “Hopefully, this major cut will stimulate things.”

price ’07 price ’06

December $420,000 $499,000 -15.8 83

November 445,000 480,000 -7.3 95

October 450,000 477,500 -5.8 140

September 427,000 457,000 -6.6 122

August 417,000 472,500 -11.7 138

July 429,000 465,000 -7.7 111

June 470,000 499,500 -5.9 127

May 460,000 484,500 -5.1 136

April 475,000 501,000 -5.2 117

March 450,000 477,000 -5.7 99

February 485,000 459,000 5.7 107

– Source: DataQuick

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