Let me share with you some very good adviceâ€¦all real estate markets are local markets and you must â€œIgnoreâ€ any data which you read within the newspapers, internet or television which talk about the US average sales price. Such sources would be the Schilling real estate data and even information from the National Assoc. of REALTORSâ€¦yes you read that correctly.
I can literally write pages and pages about this topic but I must keep it as simple as I can here. The real question to ask yourself is why am I considering buying and where am I looking into purchasing a property? Your answer dictates the technique and/or approach you will have if you are an investor or someone looking to buy a home to occupy.
For example, investors in 2008 to 2010 were purchasing homes at a discount to whole sale then it became the trend of buying properties to flip. Then the focus changed to buying properties to rent due to the number of people needing a home to live in who were being displaced. Now investors are buying at market value focusing more on the Cap Rate to gain access to automatic appreciation which means they understand time in on their side.
Even the big boys such as private equity companies, hedge funds and REITS are focused on purchasing real estate in bulk due to the market place. It is estimated they are looking to buy upwards to 10 million homes over time due to their understanding of the real estate market trend and they will focus on the up and coming â€œlocal marketsâ€ that exist in different states.
The reason I bring up investors here is that they are all about the numbers and the bottom line. Home owners purchase for different reasons and their approach is based on needs for the family. So when you consider that investors are very careful with their money then that is a sign to those seeking to buy a home to live in that the light at the end of the tunnel can be seen.
Your key to success is to create a relationship with a REALTOR who is very familiar with todayâ€™s market place and the trends which are out there. Unfortunately what you will discover is that there are very very few who are in tune with what is happening which is sad.
The hard core data for Los Angeles and Orange County is stating that we still need to be cautious right now. Signs of strength are there and have been so for the past three quarters but what concerns me is the lack of inventory which is in a way creating an almost artificial appreciation on home values when you take into consideration that we are still hurting for jobs, lack economic growth, and our state is dealing with budget issues.
Hope this was of some help to you.
The foreclosure crisis was not the result of exploding option ARMs, poor housing policies or a lack of data.
Instead, Paul Willen, senior economist and policy advisor for the Federal Reserve Bank of Boston, blames it on a type of bubble fever that infected borrowers and financial institutions alike.
"It wasn't the insiders who deceived borrowers and investors," Willen said when speaking to a panel at the HousingWire REperform Conference in Dallas. "It was the idea that this was one of the greatest real estate booms in American history."
In fact, Willen suggests all of the common causes typically assigned to the downturn are wrong.
First and foremost, he says the adjustable-rate, exploding mortgages blamed for loan payment shocks were not new to the marketplace. And the majority of borrowers who lost homes had fixed-rate mortgages or had already defaulted before the ARMs reset, Willen asserted.
No documentation loans, where borrowers provide no paper evidence backing their creditworthiness, also shouldered some of the blame. But Willen shot down that narrative saying "the idea of low documentation mortgages is not new."
To prove his point, he pulled out an ad from the 1980s, which clearly promoted no documentation home loans.
it's also wrong to suggest the investment banks had no clue about the possibility of a meltdown, the Fed economist asserted Thursday. In fact, Willen uses 2005 data from the now defunct Lehman Brothers to prove this point.
Lehman apparently conducted stress tests of mortgages inhouse. Under a meltdown-worst case scenario, the investment bank reached an outcome on subprime mortgage deals where lenders could end up foreclosing on one-third of the loans in the pool.
"The analysis underscores investorsâ€™ knowledge about the sensitivity of subprime loans to adverse movements in housing prices, and it refutes the idea that investors did not or could not determine how risky these loans were," Willen wrote in his research report.
Willen warns that too many assumptions are dangerous when dealing with asset prices and even today's low interest rates.
"It's especially dangerous when everyone is confident nothing will happen," he said. "That is when the system is really vulnerable. There are people who really believe that interest rates will not go up over the next several years, but that could become a concern if interest rates do go up."
Additionally, at some point we're going to have to wake up and smell the cash buring in the Quantitative Easing Hell Fire abyss. We will have to pay the piper of inflation vis a vie higher interest rates thereby putting home ownership once again out of reach for many.
As a RE broker I'm obviously wishing and hoping for the best but as a 67 year old seasoned stakeholder in the RE and construction industry I've got my concerns. If you're sitting on the fence I'd strongly recommend pulling the trigger sooner rather than later. Just my opinion for what it's worth.
The election will have little to no affect on the housing market. Homes prices are driven by supply, demand, interest rates and the availability of financing.
In Anaheim we have seen about a 2% increase in home prices since Jan. 2012. Although we can not predict the future, the past 9 months should serve as a good indicator that prices are on the rise. Other indicators of increased home prices are: favorable interest rates, a low inventory of homes and the guarantee from the Federal Reserve that they will continue to spend 14 billion dollars per month to purchase mortgage backed securities through 2015. This effort by the Federal Reserve will keep the interest rates low for the next few years.
Keep in mind the banks have already told us they have "No Shadow Inventory" of homes, so we know we won't be hit by an influx of REOs. However, unless the Mortgage Dept Forgiveness Relief Act is extended, many potential short sales my never become sales at all but foreclosures and deeds-in-lieu of foreclosures. These homes would then go back onto the housing market as bank owned properties which tend to sell 5% to 10% below market value. Obviously home prices would be affected, but the overall significance of such would depend.
The prices seem to be driven by the inventory, interest rates and buyers' needs more than by who is in the oval office. My take on home prices is that with inventory low and interest rates low (lowest since being tracked) the buyer demand is high. If the mortgage debt forgiveness act (see this link to read on the act: http://www.irs.gov/Individuals/The-Mortgage-Forgiveness-Debt ) is not extended then we may see less of the short sale inventory. If the owners can't get out from under the large debt then they may just stay in the home as long as possible and not list their home for sale.
I believe the prices are pretty flat right now and in some instances going up due to the local market conditions. We would really need to discuss where you are looking to buy and at what price point. Even with interest rates so low the loans are not that easy to get, the buyer still needs to qualify and the house still needs to appraise.
This is definitely an interesting time for the housing market.
Good luck with your search,
Brian Wilson, Realtor
I dought the election will have any impact on prices.