ARE WE THERE YET?

With many regions in California still in a downward tailspin, many are wondering - where’s the bottom?

Just a few years ago those in the real estate, banking and the lending profession were proud of the fact that 70 percent of all families in this country own their homes. However, in order to get there, lenders, real estate agents and consumers dipped into a "too easy" bucket where the value of ownership sunk to the same level of the cost of getting in the door - zero down, and in some cases, almost zero out of pocket...

We are now paying the price of too much credit being offered to poor or borderline borrowers, overeager investors betting on dreams of continued double-digit appreciation, and impassioned move-ups wanting more housing than they could realistically afford.

Now we are seeing a new phenomena, homeowners who can afford to make their payments yet choose to walk away from their homes. Their argument usually sounds like this - "It’s cheaper to rent than make my mortgage payment and the I owe more on my home than it’s worth. In fact, it may take years before it appreciates to the same value as when I purchased it."

A decade of cheap money and incredibly flexible loan programs offered by many lenders, sparked overbuilding by lenders, a flip-and-run mindset for speculators, and unrealistic expectations for first-time home buyers blinded by the low payments of a short-term loan. While the equity gained by rising home prices can cover many ill-conceived loan mistakes, a flat or sinking market only compounds problems for lenders and owners. Thus the rationale to "walk away" from a perceived bad deal...

Now, let me point out, values are not in the tank everywhere. But, in most cases, homes certainly are not rising quickly in value and they are taking longer to sell. Multiple listing service figures that show a drop in new listings must be filtered with the number of would-be sellers not wanting to compete in a slow or flat market. A few bright spots in the Bay Area are San Francisco, and Hillsborough, on the peninsula.

All real estate is regional. Blips and dips in one neighborhood can resemble a flat line just a few blocks away. But a return to a national "feel good" housing atmosphere likely is years away, not months. So, where is the bottom? My crystal ball is a little murky, but I do see signs of a recovery. Price decline has meant more affordability and great values.

We are seeing this in the number of sales we have experienced since February of this year. We have more than doubled the number of closed units, year-to-date, and our inventory is holding steady. So, though I believe we are a few years away from the illusive "normal market," we are in what I would call an "active" buyer’s market.

If you are a first time buyer, or are in a position to purchase a "second or vacation home," this is a great time to find that bargain. Just call on one of our real estate professionals. They are there to listen first, then help you with your real estate needs.

Was I Right. Or, Was I Wrong? Read On...

If any of you noticed (you probably didn’t), I haven’t blogged in awhile. Why, you ask? Because I had a lot going on, what with an anniversary celebration in Yosemite with my sweetheart, Pat, and a family vacation to Twain Harte.

The second reason is that I was waiting for the market to settle out - to see if I could get a handle on the direction we are heading. My crystal ball, like many others, doesn’t always work like I would hope it would. My prediction at the end of last year was that we would see the market start bottoming out by July 2008. What did I mean by this prediction? I meant that the foreclosure mess would start diminishing (less properties being foreclosed), prices starting to hold steady, and some regular sale activity in the market (not just bank owned properties and short sales).

Well, I was wrong! Actually, there will be a steady batch of new bank owned properties coming on the market - for at least the next 6 to 7 months (and some predict even longer). Prices are continuing their downward trend, though not as dramatically. Short sales are happening, but they are still a pain, with lots of lenders still not being that helpful and last minutes disappointments still occurring as sales fall apart because of lack of lender participation.
The only bit of good news is that we are selling about twice as many properties (each month) than we did a year ago. The inventory is holding steady, and there are good deals to be had for those who are taking advantage of lower price and good interest rates.

My latest prediction (take it for what it’s worth), is that we won’t see a market with home appreciation and regular sellers not under duress marketing and selling their homes until mid or late 2009. So again, if you are not a "serious seller" who needs to sell, it is not a good time to "test" the market.

I wish all of you the very best summer, and if you have real estate needs, our company has the very best to offer because in my opinion, we have the most well trained, caring sales associates. Call on one of them, you’ll be glad you did.

Last, but not least, congratulations to our Benicia Sales office and sales associates, under the leadership of the manager, Vita Mangosing, which has been the number one real estate sales office in Solano County for the last three years in terms of number of units sold and dollar volume closed. Great job - Keep it up!