DON’T BELIEVE EVERYTHING YOU READ IN THE PAPER… Wow, the newspapers would have you believe we are headed for a major recession if you judge by their headlines. Of course, if you actually read the articles, this is hardly the case. One of the many articles about foreclosures nearing a high was directed towards property in Georgia and Nevada, but there were huge headlines in Orange County papers that inferred it was local. The most recent article about foreclosure (OC Register) touted that there were more foreclosures in June than in the worse months of the 90’s down turn. There is just one small problem with the article. It doesn’t mention ratios of houses to foreclosures. In other words, Orange County has added approximately 40,000 houses since that 1990 number. If you look at the percentage of foreclosures to houses, we are nowhere near the 90’s. This doom and gloom is a useless exercise. The market is what the market is. It can absolutely be dealt with and is far from a recessionary market.
IF WE ELIMINATED THE FORECLOSURES OF SUB-PRIME MORTGAGES, WE WOULD HAVE A SUB-PAR FORECLOSURE MARKET, AND INVENTORY WOULD BE AT UNDER 6 MONTHS… which is technically the cutoff between a seller and buyer market. Let’s face it. Most of the foreclosures are happening on loans that should not have been made in the first place. The Inland Empire, Santa Ana, Anaheim and lots of Los Angeles county cities will be the hardest hit. As of the beginning of June only 0.13 percent of SoCal Multiple Listing Service’s listings were real estate owned (owned by banks). That’s less the ½ of 1 percent.
HAVING SAID ALL THAT, YOU MUST BE REALISTIC ABOUT WHERE THE MARKET IS… The Kiplinger California Letter concentrated heavily on real estate in its July 18th letter. “With housing slumping well into 2008, California’s economy will feel the chill.” However, everything is relative. Job growth will still post a 1% gain next year after a 1.4% growth in 2007. There are job losses in finance and building, but growth in other industries that will bring blue chip buyers to the real estate market. These industries include commercial construction, high tech, tourism, agriculture, architecture, manufacturing and trade.
IF YOU NEED TO SELL YOUR HOME, NOW MAY BE THE TIME… The market is continuing to adjust and prices are soft. There is more competition for the buyer. Investors who got caught on the high side are still trying to flip those properties and rather than lose scads of money they may price them aggressively. If you think waiting to sell until prices start rising is smart, you may want to think again. Right now, an appraisal can absorb the one or two short sale or foreclosure comparable and still rely most heavily on “normal” comparables. However, if you wait 6 months or a year, the majority of the comparables, particularly $850,000 and below, might be from foreclosures and short pays. (A short pay is when a home sells for less than is owed on it.) If you don’t like what your home will sell for now, you definitely won’t like it later. Expect it to take most of 2008 to absorb these properties.
WHAT WERE THE EXACT NUMBERS… The total number of sales was 2,641 and that number includes 1,668 resale, 663 condos and 310 new homes. The sales volume was down 30% from a year ago for the same month (June). The reason the median price is holding firm is because there are more homes selling over $600,000 than under and it is skewing the figures. The lower end price ranges have been the hardest hit. There were 1,393 homes sold over $600,000. Notices of Default have almost leveled off at 1,108 which are only 8.5% higher than the previous month. Actual foreclosures numbered 311 which are up 12.7% from the previous month. (Figures are May and June)
THIS MARKET IS WHERE REAL ESTATE EXPERTISE TRULY SHINES… Gone are the days when you could stick a sign in the yard and wait to write the offer. This market is all about price. Price matters over condition and location. Remember, sellers have a lot of competition. As a professional Realtor, it is my job to help you navigate through this bumpy market. If you are thinking of buying, clearly you have noticed that prices aren’t going to tumble. What you want to watch are interest rates. A home would have to have a major price reduction to make up even a ½ percentage in interest rates. Don’t wait too long. It is a must to have proven marketing tools to sell a home today. Advertising, internet exposure, target marketing with letters, and face to face contact are what get it done today. Also, my job is to think outside the box of convention, so that when I represent your real estate interests, I get the job done for you. Remembering that we must work within the confines of this market, there are still many factors that separate me from the pack.
