What a challenging real estate market! Ask the average “Joe” on the street about its status (who is not currently shopping for a home) and he would probably tell you:
1) There are tons of homes for sale, most of them foreclosures 2) Prices are in a free-fall 3) Banks are eager to cut deals with anyone to avoid foreclosures
Unfortunately, “Average Joe” would be completely wrong. In fact, the opposite is true.
If you’re shopping for a home today, you know the truth! You have felt the frustration!! You know it’s a great time to buy. Prices are affordable, interest rates are fantastic, but there’s just one problem. You can’t find a house.
Months of Inventory is one of the best measures of supply of homes for sale and gives you a real look at what’s happening today. These are numbers for properties priced under $600,000 for the month of August:
Huntington Beach: 1.74
Fountain Valley: 1.12
Mission Viejo: 1.85
Irvine: 2.29
Corona: 1.51
Fullerton: 1.89
Rancho Cucamonga: 1.24
Here’s what those numbers generally mean:
*Numbers above 3 indicate a lot of inventory and deflated pricing.
*Numbers at 3 indicate a stable market and pricing.
*Numbers below 3 indicate low inventory and inflated pricing.
These are approaching record-low inventory numbers. Yes, this is a major obstacle, but it is just one of the factors making it difficult for today’s buyer. Here are a few more:
- A buyer should expect multiple offers. It’s common to have over 10 offers submitted on any foreclosure or short sale listing.
- The listing agent and/or bank will make you jump through hoops. One of my favorites is “You must be pre-approved through ‘Jane Jones’ before submitting your offer”. It’s alway’s fun to find out ‘Jane’ is the listing agents’ friend or 2nd Cousin.
- Don’t expect any negotiations. Because of the number of offers received, the seller wants your Best and Highest offer right up front.
- Repairs? Credits? Nope! Don’t even ask in most cases.
- Little or no communication from the seller. Listing agents are inundated with calls making it near impossible to get questions answered.
- Be prepared to write your initial offer over asking price. In many cases, the selling price ends up being significantly over asking price.
Oh, and don’t forget about the recent regulations our Government has put on appraisals! The Home Valuation Code of Conduct (HVCC) is the most recent attempt of our Government to slow our eventual recovery. In a measure to make sure appraisals are done at “arm’s length” without undue influence. They have created a system that has appraisers doing appraisals on properties that are miles away, and sometimes in a different state, from their sphere of expertise. The HVCC has already caused hundreds of deals to dissolve.
To change the climate of the current market, one thing is needed, Inventory. No more moratoriums on foreclosures. No more giving false-hope to those realistically beyond seeking mortgage relief. And no more manipulating supply and demand. If this were to be done, we would be on our way to reaching the “true” bottom of the market and our eventual recovery.
But even with all that being said, it’s still a great time to buy. It’s just not a great time to be a buyer!
Posted In Real Estate
This entry was posted on Thursday, August 27th, 2009 at 3:12 pm and is filed under Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.