Hi Richard, Barry is right, it seems like the considerable amount of people wanting to purchase will still not be satified when all those possible foreclosures make their way into the market. And between Barry and Ted, they answer a lot of your concerns. I am also the local RealtyTrac representative, you have probably seen my picture there so, I really do keep track of local foreclosure activity and about 75% of my home buyers have successfully purchased preforeclosure or bank owned foreclosure property over the past year with me.

There are economist who predict that interest rates are going to rise. This makes sense with the huge deficit that we have and when we think about previous economic cycles that pattern of inflation, which it looks like we are headed into, does go along with higher interest rates. IF interest rates rise that will have an affect on affordability. This could cause some buyer to not be in a position to purchase in the price range that they were looking in. If this happens to enough buyers then you could see prices stabilize or drift down, depending on how interest rates affect supply and demand. That makes sense right.

So, right now we have too few homes for people who want to purchase, we have nice prices and interest rates that are good. We also have a lot of people who can afford homes but cant qualify to purchase them because they use "stated" loans. When interest rates rise, I anticipate that by then, big banks will start to have stated income loan programs back on their books with 20-30% down payment requirements to protect us from "crazy" lending policies but it is not possible that those with poorly documented income due to the way they structure their income for tax purposes will be unable to purchase forever. And lenders who I know thought it would be about three years before we saw stated income loans back in the marketplace.

So, if we have inflation and interest rate push some buyers "out" but other buyers are allowed back "in" we still may not gain inventory. Richard, sadly, you want to know what I think is going to free up inventory in our area, the next earthquake. Until then, I think that we will see highs, like now, plateaus when interest rates creep up, maybe slight trends up when the market opens up to all those stated income people and I think drastic drops when we have another Northridge type earthquake.

Of course, I'm only making educated guesses, no one has the crystal ball!

Please contact me if there is anything I can do to assist you but it sounds like you have someone who is helping you to find a home and are just frustrated. Good luck!

Richard,

Here is a look at a higher end tract in Simi Valley. The Silverthorne Tract. This will give you a better idea as to individual tracts have moved over the last couple of years.

Richard,

Every month I write about the Simi Valley market conditions on my blog. I post charts & graphs, the actives, the escrows and the closings from our MLS data. I also include quite a bit of commentary as to what's happening.

This market has not turned around, this is a market influenced by very obvious external influences that cannot be maintained forever.

First being, historically low inventory. When inventory is low and there are fewer choices for buyers, prices stabilize and can move up. What is particularly interesting about this low inventory market, is that the low inventory is not a function of all price ranges. More specifically the inventory levels above 500,000 are in surplus and not shortage. Sellers with higher priced homes have a completely different market to deal with over those sellers in the 300,000 to 400,000 range.

Second, historically low interest rates. The low interest rates we are currently experiencing create a affordability. In the entry-level range where we are seeing the most frenetic activity, the low interest rates are creating monthly payments equal to area rental payments. This is a very important factor to keep in mind as any shift in pricing and interest rates that move monthly payments above the area rental payments will have a negative effect on future housing sales.

Third, the first time home buyer tax credit. This tax credit enticed many buyers to enter the market. Many of these buyers in pursuit of the $8000 credit abandoned many of the must haves and purchased homes they typically would not have purchased had the federal $8000 carrot not been dangled in front of them. Now that the tax credit has expired, it will be interesting to see how the market reacts. While Congress and the Senate works frantically to extend the tax credit into 2010 for both first-time homebuyers and existing homeowners, we may enter a time where buyers take a wait and see approach.

As for the backlog in foreclosure inventories. There is a thought and discussion that the banks are controlling the flow of foreclosed inventory much in the same way OPEC controls how much oil is released to the market. I have seen firsthand foreclosed properties sit for substantial periods of time vacant before being put on the market.

We may see a change in the process of short sale properties, where banks will work with existing homeowners who can prove true hardship. The thought is that the property can be maintained while the short sale can be worked out. An occupied property is a better situation for the banks then vacant properties. I am currently working on a short sale, and the lender is willing to provide money to the seller at the close of escrow to assist in moving costs. Foreclosed properties usually have a cash for keys program to help move out the holdover occupants. In my short sale scenario above I believe this to be a smart move by the lender.

I currently work as an REO-foreclosure listing agent with two banks. I have also assisted many buyers purchase foreclosed homes this past year. I have seen the process from both sides.

For more information on the Simi Valley real estate market and foreclosures please see

http://homebuysblog.com/category/market-updates/
http://homebuysblog.com/2008/10/22/12-tips-to-make-your-reo-…
http://homebuysblog.com/2009/03/12/top-3-reo-forclosure-purc…
http://homebuysblog.com/2009/03/23/foreclosure-pitfalls-buyi…
http://homebuysblog.com/2009/08/09/false-recovery-how-fragil…

Hi Richard,
I know what you mean. We have a similar problem here is West Los Angeles. There are many First-Time Homebuyers and Investors in this market. I've heard that about the banks as well. I would not count on the consumer sites for information about Short-Sales. Your agent has the most up to date information.
My Advice is to keep looking and don't give up. It took my current client over 4 months to find a suitable property.

Richard,

Excellent question! Agents Ted, Steve and Bonnie can/will address your local market conditions. The stabilization is not false. It's basic supply and demand. Homebuyers with as little as 3.5% to put down can qualify to buy a home (FHA) and get a rebate on their taxes. No brainer for those that figure it out. We knew we would eventually return to home prices typically seen at the end of 2002-early 2003. We are there. Prices are low, interest rates are low, money is flowing and supplies are dwindling. We are repositioning in the marketplace, so when the new REOs are poured into the housing supply equation (next year), there will be home-hungry buyers ready to snap them up, and avoid a free-fall in local home values!