“I DON’T THINK THERE’S ANYTHING SCARY ABOUT WHAT’S HAPPENING IN THE HOUSING MARKET.”… This is a quote by Patrick Newport, an economist at Global Insight, on data pointing to a housing slowdown; he noted that the decline was coming from record highs. Newport brings up a very valid point. Prices are softening compared to what? Sellers need to remember that although they may be lowering prices 5% to 10% (and maybe even more on multi-million dollar listings), they are still achieving profits and equity never dreamed of before in the housing industry. Most sellers are still going to get 150% to 175% on their investment dollar depending on long they’ve held the property. Perhaps everyone needs to be reasonable. Buyers must also realize that they cannot come into an offer situation and “lowball” unrealistically because many sellers in this market are not having to sell, but choosing to sell. Price should not be the only motivator.
WHAT ARE THE ACTUAL NUMBERS… Remember that although the following figures are lower, we are still in a solid market. The papers would have you believe that real estate is in a state of flux. This is not completely true. We know that factors that affect real estate such as jobs and interest rates are holding steady. (More on that later.) But there was still plenty of activity. The total number of sales was 3,113. That was just 5% off from April and 31% off from May ’05. There were 1,832 single-family resale, 935 condominium sales and 346 new homes. Price range once again shows why the median price keeps rising. It is the sheer number of homes being sold over $700,000. Even though those homes are selling less than full price of list, they drive up the median price because they easily offset another sale in the 500 or 600 thousand price ranges. There were 349 sales under $400,000 and 447 from $400,000 to $500,000. Moving on to the $500,000 to $600,000 range there were 530 and 541 sales from $600,000 to $700,000. Sales over $700,000 were a whopping 1,231.
WHAT ARE THE ECONOMISTS SAYING… Both the Chapman Report and UCLA’s Anderson Forecast had positive things to say about jobs. Chapman predicted faster job growth, with emphasis in tourism, professional services and commercial building. Those trends among others were the decisive factors in their projection of 1.7%, or 26,000 jobs for 2006 job growth. The Anderson Forecast was optimistic because it predicts that although California will lose jobs in the real estate related industries, it will not be enough to cause a “housing –related” recession for the state’s economy. Although Notices of Default increased to 444, up 18%, actual foreclosures were a paltry 37. This is another sign of a stabilizing market going from “hot” to “normal.”
MID-JUNE SAW LOCAL MORTGAGE RATES HIT 4-YEAR HIGH… This would be a bigger cause for concern if we weren’t coming off a period of historical 40 year lows. We made a little history when interest rates hit the high 4’s and low 5’s and actually hovered in the mid-5’s for months. When interest rates in the recent past have been 8 to 12%, do we really want to complain about anything in the 6’s or low 7’s? Analysts say the Federal rate hikes are no big deal for mortgages. They see nothing “unexpected or out of control” according to Christopher Cagen, director of research and analytics for First American Real Estate Solutions. It’s true that rates may continue to climb. It’s true that because of that purchasing power may lessen and prices will come down somewhat. But should action be delayed? Not really. The money you think you’re saving by paying less for a property will easily be devoured by the higher interest rate payments.
IN ANY MARKET THERE ARE GREAT OPPORTUNITES… The trick is finding them because it can be like the proverbial needle in a haystack. Likewise if you need to sell, don’t be dismayed, but your agent is vital. This is the time when a true professional shines. I have the marketing plan you need. And I have the negotiation skills that are vital. If you are looking to buy another home or an investment property, how will you ever find the right one for you with all the properties out there? That’s my job too. And I will make it easy for you. Let me do all the work. Also, referrals are the lifeline of my business and you can count on my perseverance, hard work and integrity whenever you refer someone to me. I look for the summer to present phenomenal opportunities for those of us who are hearty enough to look for them. Call me anytime.