On home prices.
There are a LOT of opinions, sentiment, tons of data with unlimited ways of interpreting it, interest rates, etc. etc.
I have been selling Real Estate a long time, long enough to know not to make concrete predictions. This market will have to play out.
I believe whole heartily that home prices will stabilize and eventually start going up. I'm pretty sure the vast majority of home owners feel the same way, if they didn't, wouldn't there be a lot more homes on the market?
I hold open houses every weekend, every Sat. and Sun. I know this isn't scientific, but I have seen a very substantial increase in the number of people coming through my open houses. I've been typically printing up 6 or 7 brochures for each day and that has normally been enough, in fact, from Oct. through January last year, 1 or 2 would have been enough many days. Well, yesterday, I printed 15 and ran out! That has NEVER happened to me before. Yes, it's that time of year, and it's common for interest to increase, but not THAT much.
There were a few neighbors, but the majority of people were looking to buy a home. They were, without exception, all looking for super deals too.
Beware of the short sale - One of the things that is happening today, is the Short sale phenomenon. We all want a great deal on a home, it's human nature, and many believe that the short sale is the route to that great deal. It may be, but more likely, it is not. We are seeing multiple offers on short sale properties, and lenders taking a LONG time to process offers through their systems. The properties stay on the market while the first offer is being considered. There was one property here locally that was said to have had 16 offers on it! That is very unusual, but 5 or 6 offers is common. If the lender decides to allow a short sale at all, they are going to accept the one that makes the most sense to them. Lenders don't have to accept any Short sale offer, and can chose to foreclose instead. Sometimes foreclosure makes better financial sense to the lender. You often here repeated that "lenders are not in the business of selling homes", but what you don't hear, is that they are not in business to lose money either (at least not intentionally). They are going to take what ever measures net them the greatest return. Since there are homes selling in this market, they are going to foreclose if a short sale offer isn't presented that would a net them as much as they would expect if they foreclosed and then sold the home as an REO (Real Estate Owned). Just take a look at how many REOs are on the market to prove this out.
So, here is how the typical Short Sale story goes. The Realtor lists the property for sale and puts into the remarks that the sale price is "subject to lender approval". Read that again.... It basically gives the Realtor free rein to list the property well below true market value. Not that all Agents are doing this, but believe me, it is being done. When a home is listed way below market, it generates a lot of attention, even in todays market. Next, the offers start coming in. All lenders have their own methods of dealing with Short Sale offers, but as far as I know, none will state what price they will accept until after an offer is submitted. Then the process starts. The process can, and usually does, take a VERY LONG time. While that first offer is being considered, the home is still marketed, and additional offers can and will be presented. This drives the price up.
When it's all said and done, if there may be a successful buyer, they will be purchasing the home very close to market value after having to wait many months to know whether it is their offer that got accepted. In the mean time, all of those other poor souls have also been hoping that their offer will be the one accepted.
My advice is, if you have all the time in the world, you could care less whether you purchase the home or not, you are not at all concerned that home prices may start edging up while you are trying to purchase a short sale home, you won't purchase a home unless it is this home for this price, you don't mind that the home is sold AS-IS, and you are well aware that your odds of "Winning" the home because your offer is the best one they will receive, then you might want to consider looking at short sales.
If, on the other hand, you would rather find the RIGHT home, and negotiate a good price in this down market, not be concerned with multiple bids and months and months of waiting and not knowing. You should be looking at homes that are not short sales.
You DO want a great deal, but the odds of getting that great deal through a Short Sale are slim, and getting worse.
I would steer you toward the many other alternatives. Anxious sellers, Corporate Owned, or Bank Owned. The prices they set are not subject to approval (if you offer less than full price they are, but that's normal).
Short Sales are making home values appear lower than they actually are. You can't believe the list price on a Short Sale, and you have to go by the prices that similar homes have RECENTLY sold for. Those that have actually CLOSED and the sales price is recorded. That may not be simple, because there may not have been any sales in your area of interest in the recent past. If that is the case, you'll either have to find smaller or larger homes in the immediate vicinity and do a price per square foot comparison, or go to the surrounding areas to find similar sales.
So, this was a very long response to what started out to be my reply to home prices. We ARE at or close to the bottom of the market, but close is relative. It's my "feeling" based on my very unscientific analysis of foot traffic at my open houses, that sentiment is starting to change. It may take a couple of months, it might take a year (but I don't think so).
The fact remains that almost everyone has an opinion on the direction of Real Estate prices, and no one knows for sure. Some LUCKY person is going to make a prediction, and they are going to be right. For years after that, this person is going to look back and say, see, I KNOW what I am talking about. For everyone else, we will be giving reasons why we were wrong. I have seen it time and time again. It's similar to the stock market, but it moves a lot slower.
We will only know that we have hit the bottom, 6 months AFTER we have hit it. Then we'll look back and say, that was it, those were the days, that was the time, we should have purchased.
Again, that is why I mentioned my crystal ball in my first post, because I know that I DON'T know.
Finally, if you believe in America as I do, if you feel that Real Estate will eventually recover, if you are in a position to purchase, can afford a 30 year fixed mortgage payment, and most importantly, if you want a house for you and your family to call home, I honestly believe that this is a great time to buy. Prices may continue to go down, but then they may start to go up. At some point they assuredly will, this has proven itself out many more times than I have witnessed in my lifetime. Don't buy a home for a quick profit, buy it for the neighborhood to raise your family in, to get your children into a good school, to find great neighbors. To have a place you can do what you want with (as long as the HOA is ok with it ;-).
Oh, and I agree with the statements about Portola Hills and Foothill ranch. When I talk about Rancho Santa Margarita, in my mind, those two areas are extensions of RSM. I really like both of those communities.
Short Plug - If you would like any information on Short Sales, or anything related to Real Estate in South Orange County, send me an email or give me a call - visit my Website
www.McDuell.com where you can look up homes for sale and get information on local schools and find lots of information on Real Estate. I've posted short explanations covering many subjects.
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On Home Prices, Short Sales, and Home Ownership
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