Latest News from The Orange County Register
Latest News from The Wall Street Journal
Latest News from The Lost Angeles Times
My interpretation of the market based on the News and first-hand knowledge:
Buying Market
Now is a great time to buy for those that can qualify for a home loan. Interest rates are still low and home prices are up to 50% less than they were 3 or 4 years ago. Buyers who buy now are buying because they want to have a place to live that they can call their own. The idea of getting rich quickly through homeownership is not the reason buyers are buying. So, if you have saved up for a down payment and are willing to get approved with a lender, now is the time to take the leap into homeownership.
Selling Market
Obviously home prices aren’t what they used to be. In some areas, like Riverside and San Bernardino Counties, prices are down over 50%. Orange County and Los Angeles counties are not down as much from their peaks.
Homes under $500,000 are now seeing stabilization due to the ability to get FHA financing for first time buyers. Homes over $500,000 are still continuing to decline in value as more middle and upper management positions are cut at local companies. In March 2010 there were a record number of $1M+ homes that were going through the short sale market. This is not good news for sellers of luxury homes. It could be awhile before the luxury market recovers.
For sellers who are going through the short sale process, the banks seem to be getting a little bit better on their response time frames. We’re seeing them add more staff and better processes to their short sale departments. Many of the larger banks prefer to allow their clients (sellers) go through the short sale process rather than foreclosing on them. Smaller banks, however, seem to be foreclosing at much higher rates. Each bank is different, and every home sold is unique and must be evaluated on a case by case basis. Overall, however, it does seem to be going smoother in 2010 v. 2009.
Investing
For the “all cash” investors, opportunities abound. Depending on your budget and your risk tolerance, you may be able to acquire property at steep discounts. Many banks are willing to sell off 20 to 150 homes at a time to investors, while other investors are buying straight from the courthouse steps. Investors buying short sales aren’t necessarily getting steep discounts anymore now that banks have become more organized.
Bank repos are fewer this year and investors looking for them are frustrated at the lack of inventory. Lack of inventory has driven demand up for equity or corporate owned homes on the market. That’s why many investors are not turning to buying groups of properties from the banks or buying directly from the court house steps.
This market is very interesting. I make no predictions about the future but I don’t think that all the difficulties are behind us. More short sales and bank repos are on the horizon. You can read my blog on the first page of this website and read my thoughts there on a regular basis.
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