Thursday, July 10, 2008

Summertime... and We are Busy!

Hello everyone,
I haven't written much in terms of analysis of the local housing market lately. We have been pretty busy with some listings, and even more buyers than usual. As we have always maintained, it's always a great housing market, just not for everyone at the same time.

Right now investor buyers are coming out and picking off the weak ones. The bank-owned properties (REOs, foreclosures) are leading the market, with the banks taking the financial hits Big Time. Between the Wall Street Journal and CNBC there is plenty of cautionary words out there for housing, and the periphery of our immediate market area is in a world of hurt. If you are in Palmdale/Lancaster or the Inland Empire, you know what I'm talking about. Locally it is a rare neighborhood that has not been touched by at least one foreclosure sale, and signs of property deterioration like unwatered lawns, or lots of RVs parked on the street, can be a sign of problems to come.

For the regular seller, this housing environment can be challenging. Between the fallen home prices now on the market, and the closed sales of home foreclosures used by appraisers as comparable sales data, this can be pretty tough row to hoe for your average seller who is moving up, moving down, or moving out. Shrinking equity positions sometimes introduce a sense of panic in sellers, who for some months try to hold the line on their list prices, only to have to bend to larger market forces later on with home price reductions much more severe than many had thought possible.

Unfortunately, this is an old lesson that is being re-learned. Home prices go up. Home prices go down. The only constant is change itself.

For home sellers, 'following the market down' has never been a winning selling strategy in a weak market. If you have to sell, take the hit and then try to make it up on your subsequent purchase. If you have to sell and then won't be buying for a while, again, take the hit and price at the very lowest end of the market, and go on with life afterwards. We all know (even us Realtors) that you don't want to 'give your home away'. But the market reality is that in this housing market, you probably won't be happy with the price you do eventually get. However, if you want to sell you have to just bite the bullet and move on.

Buyers.

You are my friends in this market environment.

Buyers have lots of choices, and if serious about buying, can come out with some terrific deals. However, buyers must understand that no one is going to give them a house. Getting a loan is harder than it has been in six or seven years, and the underwriting guidelines for approving a loan are tough. Liars loans are gone, as are the no doc loans that brought out the liar in far too many people. The lenders just don't want to give you a pile of money anymore on your say-so that you can pay it back. Yes, it's a different environment. The slick schemes just aren't available.

But as long as the buyer has some down payment and good credit, there are deals to be made!

Have to run out for an appointment, so that's it for now. This Fannie and Freddie situation will have to be watched. If the government further federalizes the housing industry with a bailout of these quasi-governmental guarantors, we could be in for lots of negative ramifications including an immediate addition of more than $5 Trillion Dollars in federal debt in one fell swoop. Both political parties will be responsible for this, as there is plenty of blame for them both on this matter. We will be watching closely.

Give me a call if you want to buy, sell, or lease residential property, and let's get started.

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