SL real estate situation creates buyer's bonanza
Local realtors say new low prime rates and interest rates have created a strong buyer's market in the real estate arena across the Storm Lake area.
There are approximately 100 houses currently listed in Storm Lake, and Century 21's Margie Robinson said people looking to buy a new home now should be able to find a house within their price range.
"If you're a buyer and are looking for property you can find something to meet your needs," Robinson said. "The lowest priced house we have listed now in Storm Lake is $19,900, and the highest is $750,000. There really is something out there that can meet the needs of anyone."
Realtors said the number of available homes is above average for the Storm Lake market, and they also said there are several reasons for the high volume of homes being bought and sold in recent months.
One cause is the decline of short-term interest rates. The Federal Reserve cut short term interest rates 0.5 percent to 2.5 percent on Oct. 2, and Federal Funds Rates have gone down 400 basis points (4.00 percent) since the beginning of 2001, sinking to levels not seen since the Kennedy Administration.
Federal Reserve Chairman Alan Greenspan has cut short-term interest rates nine times in the past year, and people looking to purchase homes in the Storm Lake area may be beneficiaries of the cuts.
Joe Aube of Real Estate Specialists in Storm Lake said the current low interest rate is fueling the marketplace for real estate around the Alta-Storm Lake area, and said local realtors are trying to help customers take full advantage of the situation.
"We've done well over the past year, and the exceptional low interest rate is probably one of the biggest reasons," Aube said. "The rates right now are great."
"I want to inform people that we do have an excellent interest rate right now," Wehde Real Estate's Mona Wehde said, "and it might not be that way in the spring. That's what we want to let people know right now."
Those in and around the real estate field have also seen the prime rate, the lowest interest rate at which banks lend to their best customers, fall significantly in recent months.
On Oct 3 the rate fell to 5.50 percent, the lowest in over a quarter-century. The prime rate was 8.25 percent at this time last year, and was 9.00 percent at the beginning of 2001.
The last time the prime rate approached the 5.50 percent figure was in March 1994, when the rate was 6.25 percent, and Robinson said she thinks citizens will begin to take advantage of the conditions in the coming months.
"It's a terrific time to buy because the prime rate's the lowest it has been in 30 years," Robinson said. "I think some people are waiting to see where it will go, but I anticipate many people will start to buy houses in the near future because of the great rates that are available now."
Due to the low interest rates and prime rates, the experts said people looking to buy a home may also be able to stretch their dollars a little further than in previous months or years.
Aube said a buyer right now may afford a $60,000 home instead of a $50,000 house, and on the higher end of the scale, a buyer of a $175,000 home can now afford a $200,000 estate with no change in payments except for taxes and insurance.
"People can stop and take a second look at what they can afford to buy and have a realtor figure out what they can afford to buy," Aube said. "People can buy a lot more house for the same dollar now. Many times when people decide to move up, there is only a small selection of homes they can afford to look at. Now, though, that selection has gone up for many people. It's a great time for them to take a look at their situation and possibly move up in terms of their homes."
Robinson also said the low rates have helped create a variety of consumer loan programs which can be tailored to meet the needs of every individual.
"There are multitudes of different loan programs available, and there is one to fit anyone's budget," Robinson said. "There are loans for people with low income, first-time home buyer loans and many others. A Realtor can sit with you and give you an idea of what loans are available, what houses you can afford and how best to proceed if you are thinking of buying a home."
Despite the wide-open market, area real estate specialists recommend people see a Realtor first to assess their financial situation before making any purchase.
"People should come in and do a buyer's qualification and see what their price range is," Wehde said. "They should do that so they can see what they can afford and what they cannot afford."
Aube agrees. "People need to see how much they can actually afford. Especially now, I would encourage people to not just drive by a home and think it is out of their range. There could be things they are missing."