So the tax credit is essentially expired - for now.  Where will the market go from this point?  

The answer really depends on three factors.

Interest Rates - Rates are still really low.  If rates climb significantly - 1 point or more, I would expect price and volume to be affected.  Anything less than that has not had, in my experience, a tangible impact on pricing or demand.

Supply - Probably the key element in the equation because it directly impacts the next factor.  Right now supply is low.  The problem is especially pronounced at the lower price ranges.  When you look online at Trulia, Realtor.com and Zillow keep in mind that as much as 95% of the "active" inventory is actually short sales with multiple offers waiting for bank approval.  I have a short sale that is 18 months in the making right now.  At the higher ranges there is lots of supply, but the homes are over priced and the owners are generally unwilling to sell at a market clearing price.  The key to this will be if and when bank release some inventory. 

My guess is that there is not that much inventory in the quality areas to affect demand, and if there was, the banks would slowly release properties so as not to create a panic.  There is likely a large supply of inventory for outlying areas. 

Market Perception - Markets are driven by fear.   If you fear that houses will double in value next year, you will pay a lot to buy one.  If you fear they will crash in value, you wouldn't buy one.  Right now most buyers probably fear that prices are going up, so they are motivated to purchase.  Some still fear the opposite, but supply is so low, it only takes a small segment to affect the market.

Predictions:  Expect lower end properties in the LA Area to sell for the same or slightly more next year.  Expect further, but reasonable (+/- 10%) drops in higher priced homes ($500,000-$1,250,000) and expect lots of uncertainty above that.

Check back in a year to see if I'm right.


If you need help buying or selling a home, or know someone who does, please contact me at 310-482-0173.

Richard Schulman
Keller Williams Westside Realty
#1 Listing and Selling Agent
310-482-0173
schulmanrd@yahoo.com 

Profiting in a Real Estate Recession

Come to a Free Real Estate Workshop About Opportunities in Today's Market

Sunday, July 12th
10am-12pm
Westwood

∙ How to Find the Best Deals
∙ Unique Opportunities for First Time Homebuyers
∙ Squeezing the Bank
∙ Analyzing Properties for Rental
∙ Market Conditions
∙ Loans and Down Payments
∙ How to Purchase Multiple Properties

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Richard Schulman
REALTOR
(310) 482-0173
schulmanrd@yahoo.com

Saturday, May 9th
10am-12pm
Westwood

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∙ Market Conditions
∙ Loans and Down Payments
∙ How to Purchase Multiple Properties with Low Down Payments

Contact me to RSVP and to get directions.