I am not the "greenest" guy on earth. I am not a vegetarian. I am not a tree hugger (even though I went to UC Berkeley). I don't have a position on global warming. But I recently decided to buy an all electric car, the Nissan LEAF. I charge it every night and drive it judiciously the next day. The maximum range on the car is 100 miles, but flip on the a/c, depress the gas pedal, and watch, literally the range drop to 60 or 70 miles. For most people this is not the appropriate car. If your commute to work is more than 30 miles, and if you don't have access to a charger during the day, the daily commute would be a daily experience of range anxiety. But my commute to work is 3 miles, and during the day, I have access to electricity at the office, and our average trip for real estate and property management is no more than 20 miles. The cost for the "fuel" for this car should run $30 a month (I expect to travel 1,000 miles a month). No more $300 a month putting premium fuel in my SUV. So other than not feeding OPEC any more of my cash, here is what I have enjoyed so far about this car: 1) No maintenance. Since there is no engine, no oil and no gas, the only wear on the car are the tires. 2) Total silence. Once again, no engine so no sound. It is like driving in the libary except when I blast the stereo. 3) With the heavy battery in the middle of the car, there is a low center of gravity and great steering. 4) The car has instant torque (think of a really big golf cart). Hit the peddle and the wheels screech.
I no longer fear higher gas prices or a visit to my mechanic. Now, if there is a brownout, I am really up the creek.
Monday, June 20, 2011
Monday, April 11, 2011
The Bright Light at the End of the Tunnel
I was at the PWR Tech Fest on Saturday and spent 30 minutes listening to an economist talk about the house market for the next 5 years. After 5 years wallowing in the bloodbath that was the last 5 years of the housing market, I was prepared for the worst. Just the opposite...it was all good, but still sobering news. The bottom line: starting in earnest next year, we will have home appreciation, and by 2015, it may be double digit. What will cause this?
1) Home inventory has peaked. Starting the 3rd quarter of this year, fewer homes will be coming on the market.,
2) REOs and short sales have peaked. Technically they peaked in 2010, but each year from this point on, they will decrease 20% a year. Right now they comprise over 40% of the market, in 2012 it will be 30%, in 2013 22%, 2014 15%, 2015 10%...
3) The economic recovery of SoCal has already begun. It will be in full swing in 2012.
4) New home starts will rise, rates may rise (but consumers will opt for adjustables) and optimism will build.
5) By 2014 we will have equilibrium in the market and there will actually be a "seller's market".
The fundamentals are there and we have languished for over 5 years in this misery. I look forward to my agents and myself going on listing appointments with good news and sellers selling because they choose to, not because they have to.
1) Home inventory has peaked. Starting the 3rd quarter of this year, fewer homes will be coming on the market.,
2) REOs and short sales have peaked. Technically they peaked in 2010, but each year from this point on, they will decrease 20% a year. Right now they comprise over 40% of the market, in 2012 it will be 30%, in 2013 22%, 2014 15%, 2015 10%...
3) The economic recovery of SoCal has already begun. It will be in full swing in 2012.
4) New home starts will rise, rates may rise (but consumers will opt for adjustables) and optimism will build.
5) By 2014 we will have equilibrium in the market and there will actually be a "seller's market".
The fundamentals are there and we have languished for over 5 years in this misery. I look forward to my agents and myself going on listing appointments with good news and sellers selling because they choose to, not because they have to.
Monday, December 6, 2010
The Top 10 Reasons to Sell in 2011 (6-10)
As promised, here are the final 5 reasons to sell in 2011:
6) Few Believe It Will Get Much Better in 2013.
This recovery will be long and slow. Most economists don't see unemployment dropping to its "normal" level (5 to 6%) for another 5 years. It typically takes real estate 5 years to recover from a 25% drop in prices and there are some areas in Southern California that suffered a 50% drop in prices. Even if 2013 improves, it will do so incrementally.
7) It May Be A Great Time to Move ON.
The nice aspect about this recession (if there is anything nice about a recession) is that it is national in scope. It seems like no part of the country escaped unscathed, and if you are thinking of selling and moving on with your life, the prices should be reasonable wherever you are moving. If you like where you live and have the means, refinance and stay. If you ever had plans to retire or pursue a higher quality of life elsewhere, now may be the time to do so.
8) No Capital Gains on Most Sales.
With every city, county, state and even the federal government looking for additional revenue, they have yet to tap homeowner's equity as a tax vehicle. For most homeowners, the sale of their property will not result in a capital gains tax. Married couples can net $500,000 from the sale of their primary residence, and not pay a penny in taxes.
9) Few Believe It Will Get Much Better in 2014.
Even if the market starts to improve in 2013 or 2014, the first action by the Federal Reserve and the Central Bank will be to increase interest rates and cool down the economy. The first victim of increased interest rates is the housing market. Additionally, with the federal deficit sitting at 1 trillion dollars, there will be added pressure to increase personal taxes and elimate tax reductions such as the mortgage interest deduction. Once again, it may get slowly, incrementally better, but not signifantly better than 2011.
10) Who Knows What Tomorrow Way Bring?
This is perhaps the most important reason to sell when you feel you want to. I have met a number of folks who have waited for a better market, higher prices, or lower rates, and by the time the stars align, the opportunity has passed. Someone once told me, "Make the best decision you can with the best information you have at hand.", and I believe that. Sometimes we miss on life waiting for things we cannot control to occur. If you feel it is time to move up or on, and have the capacity and desire to do so, I suggest doing so.
There you have it: the 10 reasons to sell in 2011. I hope this has been illuminating or at least partially entertaining. If you have additional questions or just want to discuess your particular situation, feel free to call or email.
6) Few Believe It Will Get Much Better in 2013.
This recovery will be long and slow. Most economists don't see unemployment dropping to its "normal" level (5 to 6%) for another 5 years. It typically takes real estate 5 years to recover from a 25% drop in prices and there are some areas in Southern California that suffered a 50% drop in prices. Even if 2013 improves, it will do so incrementally.
7) It May Be A Great Time to Move ON.
The nice aspect about this recession (if there is anything nice about a recession) is that it is national in scope. It seems like no part of the country escaped unscathed, and if you are thinking of selling and moving on with your life, the prices should be reasonable wherever you are moving. If you like where you live and have the means, refinance and stay. If you ever had plans to retire or pursue a higher quality of life elsewhere, now may be the time to do so.
8) No Capital Gains on Most Sales.
With every city, county, state and even the federal government looking for additional revenue, they have yet to tap homeowner's equity as a tax vehicle. For most homeowners, the sale of their property will not result in a capital gains tax. Married couples can net $500,000 from the sale of their primary residence, and not pay a penny in taxes.
9) Few Believe It Will Get Much Better in 2014.
Even if the market starts to improve in 2013 or 2014, the first action by the Federal Reserve and the Central Bank will be to increase interest rates and cool down the economy. The first victim of increased interest rates is the housing market. Additionally, with the federal deficit sitting at 1 trillion dollars, there will be added pressure to increase personal taxes and elimate tax reductions such as the mortgage interest deduction. Once again, it may get slowly, incrementally better, but not signifantly better than 2011.
10) Who Knows What Tomorrow Way Bring?
This is perhaps the most important reason to sell when you feel you want to. I have met a number of folks who have waited for a better market, higher prices, or lower rates, and by the time the stars align, the opportunity has passed. Someone once told me, "Make the best decision you can with the best information you have at hand.", and I believe that. Sometimes we miss on life waiting for things we cannot control to occur. If you feel it is time to move up or on, and have the capacity and desire to do so, I suggest doing so.
There you have it: the 10 reasons to sell in 2011. I hope this has been illuminating or at least partially entertaining. If you have additional questions or just want to discuess your particular situation, feel free to call or email.
Friday, November 12, 2010
The Top Reasons to Sell in 2011
Usually it is either a good time to buy or a good time to sell, but not both. If prices are moving up, that is the time to buy. If prices have peaked and will be moving down, that is the time to sell. But this market is one of the few times it will be a good time to do both. I have already covered "The Top 10 Reasons to Buy in 2011", so here is my list for sellers:
1) Plenty of excited buyers
As my previous blog noted, buyers are in the market and looking to buy. Almost 1/2 of the buyers in the marketplace are first time buyers, (the first time of anything is generally exciting, but sometimes awkward). Buyers feel prices are way off the peak, rates are low (see #2), and there are a lot of homes to choose from. If your home is priced right, shows well, and is marketed properly, you will have buyers interested in purchasing it.
2) Rates are at all time lows.
What does that matter to a seller? Well, low rates mean lower payments, and allow a buyer to pay more money for your home. More importantly, what comes down inevitably goes back up, and when that happens, prices may move in the opposite direction. A few years ago 7% didn't look that bad, but after buyers have acclimated to 4%, an interest rate of 6% will look downright outrageous.
3) It won't get much better in 2012.
Sorry, but there simply won't be a quick bounce back in the market. Since all loans are underwritten (indirectly) and purchased (directly) by the government, there won't be a stampede of unqualified buyers in the marketplace like 2001. Rates may rise, government cuts are on the horizon (as of this writing, the federal government had a 1 trillion deficit and California had a 25 billion shortage) and it may be years to go through the mortgage defaults. Few analysts feel the housing market in 2012 will be materially better than 2011, and we are always one catastrophe (e.g., major earthquake) from a hiccup in the market.
4) Banks are encouraging short sales
18 months ago I advised any and all buyers to avoid pursuing short sales because they were anything but short. Less than 25% of short sales actually came to terms and closed escrow, even after months of negotiating torture. Banks have finally staffed up, trained that staff, and have the systems in place to process, approve and close short sales. If you are a seller who owes more on your home than it it worth, there is real hope for a solution via a short sale.
5) It may be time to move UP.
Your home may be worth now than when you bought it, or it is certainly worth less than it was in the Summer of 2006. So what? So is the home you may want to purchase. You can add on to your home, but the cost to do that hasn't move to much lower than at the peak. You may over-improve your property, or if you do add on, it just won't "flow" properly. This may be the time to sell your home at a market price and buy your dream home at a severe discount. People dump stock all the time to buy one that will perform better. If your family has grown, or your needs have changed, and you can qualify for the financing, this may be the time to lock in your home of the future.
Stay tuned for reasons 6-10.
1) Plenty of excited buyers
As my previous blog noted, buyers are in the market and looking to buy. Almost 1/2 of the buyers in the marketplace are first time buyers, (the first time of anything is generally exciting, but sometimes awkward). Buyers feel prices are way off the peak, rates are low (see #2), and there are a lot of homes to choose from. If your home is priced right, shows well, and is marketed properly, you will have buyers interested in purchasing it.
2) Rates are at all time lows.
What does that matter to a seller? Well, low rates mean lower payments, and allow a buyer to pay more money for your home. More importantly, what comes down inevitably goes back up, and when that happens, prices may move in the opposite direction. A few years ago 7% didn't look that bad, but after buyers have acclimated to 4%, an interest rate of 6% will look downright outrageous.
3) It won't get much better in 2012.
Sorry, but there simply won't be a quick bounce back in the market. Since all loans are underwritten (indirectly) and purchased (directly) by the government, there won't be a stampede of unqualified buyers in the marketplace like 2001. Rates may rise, government cuts are on the horizon (as of this writing, the federal government had a 1 trillion deficit and California had a 25 billion shortage) and it may be years to go through the mortgage defaults. Few analysts feel the housing market in 2012 will be materially better than 2011, and we are always one catastrophe (e.g., major earthquake) from a hiccup in the market.
4) Banks are encouraging short sales
18 months ago I advised any and all buyers to avoid pursuing short sales because they were anything but short. Less than 25% of short sales actually came to terms and closed escrow, even after months of negotiating torture. Banks have finally staffed up, trained that staff, and have the systems in place to process, approve and close short sales. If you are a seller who owes more on your home than it it worth, there is real hope for a solution via a short sale.
5) It may be time to move UP.
Your home may be worth now than when you bought it, or it is certainly worth less than it was in the Summer of 2006. So what? So is the home you may want to purchase. You can add on to your home, but the cost to do that hasn't move to much lower than at the peak. You may over-improve your property, or if you do add on, it just won't "flow" properly. This may be the time to sell your home at a market price and buy your dream home at a severe discount. People dump stock all the time to buy one that will perform better. If your family has grown, or your needs have changed, and you can qualify for the financing, this may be the time to lock in your home of the future.
Stay tuned for reasons 6-10.
Thursday, November 4, 2010
Top 10 Reasons to Buy (6 - 10)
I continue with this post and now present reasons 6 thorugh 10 on why (and I really mean it) it is a great time buy real estate now, and throughout 2011:
6) Lender are lending (to qualified buyers)
What does 600 billion to 1 trillion buy you? Lower rates. It appears as though rates for 30-year mortgages will stay in the low 4's and may even drop to the mid 3's. Wow. The US will be buying its own debt in order to keep rates low. When people refinance and save on their monthly payment they have a tendency to transfer those savings to consumer goods and not the retirement plan which is good for the economy. Lenders are lending and with such low rates, they are starting to offer Quick Qualfiers (stated income) with large down payments and low down programs. If you have income, or a large down payment there is a lender for you.
7) Realistic and negotiable sellers.
There was a time when sellers thought they determined the sales price: comparable sales and market trends be damned. Now sellers can't ignore the REO down the street and buyers are too savvy to accept any price demanded by the sellers. Technology and transparancy has caught up with sellers looking for that one buyer who is blind to the marketplace. Depending on the cirmcumstance and motivation, sellers are willing to flex on price in order to close as agreed.
8) Real Estate still offers great tax breaks.
There is a saying that when it is cheaper to buy than it is to rent, buy. Barring the unforseen, and the politically dangerous, the major components of the monthly house payment will continue to be a write-off on your tax returns: mortgage interest and property taxes. For example, I am selling a lovely home for $400,000 that I could have leased for $2,000. With 5% down, at current rates, the total monthly payment is $2,686. But with the standard deductions at typical incomes, the net payment is $1,900...which is $100 less than the rental payment.
9) Your second home is within reach.
They have done studies (I assume agents who sell real estate in vacation areas) and found that the single greatest source of pride for a purchase is a second home. Although I personally don't own a second home, I can understand why: these people have already started their retirement prior to retirement. Rather than waiting to enjoy the mountains, beach or islands, start the experience sooner and immerse yourself in the lifestyle earlier. Bad markets hit the second home market hardest and prices in these areas is as much as 50% lower than the peak.
10) Add a rental property to your portfolio.
Few dispute that in the long term real estate will be a good investment. At these prices, with these rates, and with more potential tenants (you must now qualify for a loan and show income), you can find properties and units where th tenant will make the entire payment for you. There are dependable property management companies (may I suggest Progressive Property Management, my company?) that will take care of the all "ills" of rental properties: tenant interaction, maintenance, tenant acquisition. All you have to do is find a property with the right cash flows, use the tax benefit, raise rents when you can, and wait for appreciation.
There they are, the Top 10 Reasons to Buy in 2011. But if it is a good time to buy, then it can't be a good time to sell as well. It would seem they are mutually exclusive? But they aren't. Next week watch for my post, "The Top 10 Reasons to Sell in 2011".
6) Lender are lending (to qualified buyers)
What does 600 billion to 1 trillion buy you? Lower rates. It appears as though rates for 30-year mortgages will stay in the low 4's and may even drop to the mid 3's. Wow. The US will be buying its own debt in order to keep rates low. When people refinance and save on their monthly payment they have a tendency to transfer those savings to consumer goods and not the retirement plan which is good for the economy. Lenders are lending and with such low rates, they are starting to offer Quick Qualfiers (stated income) with large down payments and low down programs. If you have income, or a large down payment there is a lender for you.
7) Realistic and negotiable sellers.
There was a time when sellers thought they determined the sales price: comparable sales and market trends be damned. Now sellers can't ignore the REO down the street and buyers are too savvy to accept any price demanded by the sellers. Technology and transparancy has caught up with sellers looking for that one buyer who is blind to the marketplace. Depending on the cirmcumstance and motivation, sellers are willing to flex on price in order to close as agreed.
8) Real Estate still offers great tax breaks.
There is a saying that when it is cheaper to buy than it is to rent, buy. Barring the unforseen, and the politically dangerous, the major components of the monthly house payment will continue to be a write-off on your tax returns: mortgage interest and property taxes. For example, I am selling a lovely home for $400,000 that I could have leased for $2,000. With 5% down, at current rates, the total monthly payment is $2,686. But with the standard deductions at typical incomes, the net payment is $1,900...which is $100 less than the rental payment.
9) Your second home is within reach.
They have done studies (I assume agents who sell real estate in vacation areas) and found that the single greatest source of pride for a purchase is a second home. Although I personally don't own a second home, I can understand why: these people have already started their retirement prior to retirement. Rather than waiting to enjoy the mountains, beach or islands, start the experience sooner and immerse yourself in the lifestyle earlier. Bad markets hit the second home market hardest and prices in these areas is as much as 50% lower than the peak.
10) Add a rental property to your portfolio.
Few dispute that in the long term real estate will be a good investment. At these prices, with these rates, and with more potential tenants (you must now qualify for a loan and show income), you can find properties and units where th tenant will make the entire payment for you. There are dependable property management companies (may I suggest Progressive Property Management, my company?) that will take care of the all "ills" of rental properties: tenant interaction, maintenance, tenant acquisition. All you have to do is find a property with the right cash flows, use the tax benefit, raise rents when you can, and wait for appreciation.
There they are, the Top 10 Reasons to Buy in 2011. But if it is a good time to buy, then it can't be a good time to sell as well. It would seem they are mutually exclusive? But they aren't. Next week watch for my post, "The Top 10 Reasons to Sell in 2011".
Wednesday, October 27, 2010
The Top 10 Reasons to Buy in 2011
Now that the Pumpkin Patch Party is over (great success and next year El Dorado High School sports teams will have their own Pumpkin Patch Party the day after in order to raise funds for their respective teams) it is time to think about real estate. You may hear all the time (or at lease every time you speak to a real estate agent) that it is a great time to buy (or sell) a home. Well, believe it or not, in the next 12 months, it will be a good time to do both and I have prepared a David Letterman-like list for both. Let's start with the Top 10 Reasons to Buy:
1) Thousands of homes to choose from.
Inventory, comprised of equity sellers, relocations, foreclosures, short sales and standard sales are flooding the market. There are a plethora of homes from which to choose. A bunch. A lot. You don't have to settle. You will find a home in the location and amenities you want.
2) Interest rates are at 40 year lows (4%).
A few years from now, when rates are at historical norms (7%), everyone will talk whistfully about the days of incredibly low rates. These days. It will be like we talk about the times gas was rationed or when we bought vinyl LPs.
3) Prices are down 30% from the peak.
I just listed today (lovely home, please call if you are in the market) a home for $400,000. The owner paid $550,000 in early 2006 and put another $50,000 in it in improvements. At this price, at these rates, it is cheaper to buy this home (with tax deductions) than it is to lease it. Can prices fall further? Perhaps. Will they drop another 10 or 10%? Hardly. This is "buy low" time.
4) 3 Words: Bank Owned Properties.
Mark my words, 2011 will be the year of the foreclosures. Banks have healthy balance sheets and no appetite for non-performing loans. The current moratorium on foreclosures will end soon, and there will be ample bank owned properties on the market. This will keep prices down, inventory up, and excitement in the marketplace.
5) 2 Words: Short Sales.
The days of avoiding the dreaded "short sale" is over. An agent in my office had full approval on a Chase Short Sale in 60 days and it will close in 30. They sellers owe $1.1mm and the sales price is $850,000. Chase will take a $300,000, the sellers will take a ding on their credit but not a foreclosure, the buyer gets a great deal, and the agents get paid properly. If handled professionally by the listing agent and if the sellers are cooperative, a Short Sale can be a beautiful thing.
Look for the next 5 next week....
1) Thousands of homes to choose from.
Inventory, comprised of equity sellers, relocations, foreclosures, short sales and standard sales are flooding the market. There are a plethora of homes from which to choose. A bunch. A lot. You don't have to settle. You will find a home in the location and amenities you want.
2) Interest rates are at 40 year lows (4%).
A few years from now, when rates are at historical norms (7%), everyone will talk whistfully about the days of incredibly low rates. These days. It will be like we talk about the times gas was rationed or when we bought vinyl LPs.
3) Prices are down 30% from the peak.
I just listed today (lovely home, please call if you are in the market) a home for $400,000. The owner paid $550,000 in early 2006 and put another $50,000 in it in improvements. At this price, at these rates, it is cheaper to buy this home (with tax deductions) than it is to lease it. Can prices fall further? Perhaps. Will they drop another 10 or 10%? Hardly. This is "buy low" time.
4) 3 Words: Bank Owned Properties.
Mark my words, 2011 will be the year of the foreclosures. Banks have healthy balance sheets and no appetite for non-performing loans. The current moratorium on foreclosures will end soon, and there will be ample bank owned properties on the market. This will keep prices down, inventory up, and excitement in the marketplace.
5) 2 Words: Short Sales.
The days of avoiding the dreaded "short sale" is over. An agent in my office had full approval on a Chase Short Sale in 60 days and it will close in 30. They sellers owe $1.1mm and the sales price is $850,000. Chase will take a $300,000, the sellers will take a ding on their credit but not a foreclosure, the buyer gets a great deal, and the agents get paid properly. If handled professionally by the listing agent and if the sellers are cooperative, a Short Sale can be a beautiful thing.
Look for the next 5 next week....
Monday, July 12, 2010
Double Dip or Little Lull?
It has been obvious to everyone in the real estate business, particularly in the past 4 weeks, there has been a distinct lull in activity, sales and interested buyers. Not 3 months ago, in April, there was a palpable feeling that we may be through the proverbial woods and greener pastures lay ahead. There is plenty of anecdotal evidence that there may be still be more trees to march through. For example, I listed a home in Placentia 18 months ago for $549,500 and had over 15 showings in the first 2 weeks, had 2 offers and although my sellers decided not to sell (job worries), would have accepted an offer for $525,000. I listed that same home 2 weeks ago, in better condition with additional improvements from 18 months ago, and have had 3 showings and no offers and we are priced $15,000 less than the previous time. Inventory (the number of homes on the market) is growing, but the number of buyers is not. Rates are at all-time lows (4.5% or lower), prices are still depressed, but activity is down. Why? Here is my theory:
• A Little Help Can Hurt – The federal stimulus for homebuyers, an $8,000 dollar for dollar reduction on income taxes expired at the end of April. Every March, April, May, June and July buyer decided to take advantage of this government largess. The problem is, and was, that the number of homes on the market did not increase accordingly. This program incentivized buyer to move up their timeline, but sellers did not alter theirs. Buyers gobbled up all the inventory, particularly REO’s and equity sales (those that could be expected to close on time, unlike Short Sales) and prices stayed firm. Now that the May, June and July sellers have come on the market, they want for buyers who have already purchased. Inventory has ballooned, but these sellers must wait for the August and September buyers to get in the game.
• Short Sale Good News/Bad News – It appears as though, across the board, more short sales are actually closing escrow. Of course, compared to the pathetic success rates of 2008 and 2009, banks should not gloat. But, as perhaps 30 or 35% of short sales navigate successfully through the choppy waters of the short sale process, up from the paltry 10 or 15% of previous years, buyers are more confident of pursuing these sales where in the past only the brave and blindly optimistic did before. For the past few years most Realtors advised their clients, no, begged their clients to avoid these listings like the plague. Now, more are choosing to represent buyers on these sales and the “premium” for standard, equity sales has diminished.
• It’s the Economy, Stupid – Until we are definitively and concretely out of this recession, probably best evidenced by a stock market north of 13,000 and unemployment near 8%, buyers will be hesitant to buy. Everyone wants to own a home or improve their quality of life, but they must be able to afford it and sustain it. This “feeling” of an improving economy could happen rapidly and consumer confidence become quite optimistic quickly.
Bottom line, buyers will buy if they feel like they are paying a “market” price, but that market price must be discounted for the higher success rate of short sales and the shortage of qualified buyers. But with rates so low, prices bumbling around at the bottom and the economy (hopefully) in the last throes of a recession, I see this as a lull, not a double dip.
• A Little Help Can Hurt – The federal stimulus for homebuyers, an $8,000 dollar for dollar reduction on income taxes expired at the end of April. Every March, April, May, June and July buyer decided to take advantage of this government largess. The problem is, and was, that the number of homes on the market did not increase accordingly. This program incentivized buyer to move up their timeline, but sellers did not alter theirs. Buyers gobbled up all the inventory, particularly REO’s and equity sales (those that could be expected to close on time, unlike Short Sales) and prices stayed firm. Now that the May, June and July sellers have come on the market, they want for buyers who have already purchased. Inventory has ballooned, but these sellers must wait for the August and September buyers to get in the game.
• Short Sale Good News/Bad News – It appears as though, across the board, more short sales are actually closing escrow. Of course, compared to the pathetic success rates of 2008 and 2009, banks should not gloat. But, as perhaps 30 or 35% of short sales navigate successfully through the choppy waters of the short sale process, up from the paltry 10 or 15% of previous years, buyers are more confident of pursuing these sales where in the past only the brave and blindly optimistic did before. For the past few years most Realtors advised their clients, no, begged their clients to avoid these listings like the plague. Now, more are choosing to represent buyers on these sales and the “premium” for standard, equity sales has diminished.
• It’s the Economy, Stupid – Until we are definitively and concretely out of this recession, probably best evidenced by a stock market north of 13,000 and unemployment near 8%, buyers will be hesitant to buy. Everyone wants to own a home or improve their quality of life, but they must be able to afford it and sustain it. This “feeling” of an improving economy could happen rapidly and consumer confidence become quite optimistic quickly.
Bottom line, buyers will buy if they feel like they are paying a “market” price, but that market price must be discounted for the higher success rate of short sales and the shortage of qualified buyers. But with rates so low, prices bumbling around at the bottom and the economy (hopefully) in the last throes of a recession, I see this as a lull, not a double dip.
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