Market Conditions in Irvine>Question Details

Drew Foma'i, Real Estate Pro in Newport Coast, CA

How long do you think it will take before the real estate market returns to normal?

Asked by Drew Foma'i, Newport Coast, CA Sun Oct 17, 2010

Some economists indicate that the market in California has reached the "bottom" and many speculate that it will remain steady for many many years. Some expect a return to a normal market by 2013 or mid-2014. What your thoughts?

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What is normal? For Many years, a home would be a home and would only go up a minimal amount. Then all of a sudden instead of going up equal with inflation, it would go up at an average of 5-6% then it went to 15% a year. Now it is dropping. It seems to be leveling off. I would like to see it go back to 2-3% but we will have to wait til the job market is back to 5%
0 votes Thank Flag Link Thu Nov 3, 2011
I've decided that I am the ultimate judge of what is "NORMAL":
You may call the New York Times and alert them; I'm sure they will want to know.
Millions of people are sitting on the fence, waiting for ME.
Economists across the Country are sitting on my every word.
Metro Goldwin has asked me to STAR.
Too bad I can't shoot under PAR.

Unfortunately for you plebians,
I have decided to withold my favors until at least six months after the blessed occassion;
That way you'll know that I was right!
0 votes Thank Flag Link Wed Nov 2, 2011
Drew,

What caused all this mess that we are experiencing today was abnormal. Although, it was normal at the time. Currently REO and short sales are normal. Our current economy is abnormal. What normal are you referring to in 2013 or mid-2014?

Happy funding, Rudi
Web Reference: http://www.umboc.com
0 votes Thank Flag Link Wed Nov 2, 2011
IMHO. After the Nov election we will see some improvement. Normal could be summer 2014.
0 votes Thank Flag Link Tue Nov 1, 2011
Well, the unemployment rate is not expected to return to 5% (normal) until 2017. But, I've got even worse news than that--maybe this is normal and what we all experienced 6 years ago was not considered normal. Now, that would be a Halloween trick, for sure!
0 votes Thank Flag Link Tue Nov 1, 2011
What is your definition of "normal"?
0 votes Thank Flag Link Tue Nov 1, 2011
I LOVE this question!!!! Normal? We don't need no stinking normal! "Knock on Wood", we are seeing an amazing amount of activity comparatively speaking to the rest of CA, and the US, as a whole. Long Beach has so much to offer its residents, and now it can add "Affordability", which is something it hasn't always had, to that list :-)

I would agree with most in regards to what we will see in the near future, but I would say REO's, as we know them now, will be gone and the "New" Short Sales" revolution will begin. That will last until Americans are able to "Purge" themselves of debt related to their homes, and rebuild their financial futures. How long? Wow! I wish I had that answer, but I would hazard a guess, it will be some time. In the interim, our Clients are Buying and Selling in Long Beach and OC as if it's a great time in Real Estate, and we love them for that!

Drew, a "Deal" is a "Deal" in ANY Market...This seems to be difficult for a lot of Agents to comprehend right now, but it is a GREAT time to be in Real Estate...

Best of Luck!

TheRECoach

@CBRELongBeach
0 votes Thank Flag Link Mon Oct 18, 2010
Normal?, this market is the new normal. Foreclosures and short sales will be around for a long time. With homeowners getting into bad loan mods and REO companys taking out every lender to dinner for a listing. This is it:)
0 votes Thank Flag Link Mon Oct 18, 2010
The only thing that is "normal" in real estate is that it's constantly changing. Based on that definition, we are in a normal market. Think about it for a second. Have you ever been in a "buyer's" market? And then, a few years later be in a "seller's" market in the same area? The foreclosures have caused us all to reajust our strategies, but we are still buying and selling based on basic real estate principals. First time homebuyers will always be generated via the renting market. Pepole get married. People have babies. People need a home to call their own. This will never change. What has changed is the 2nd+3rd time homebuyer market. Right now, in our area, what is happening is we have a glut of foreclosures and they just keep coming. The investors are out there scooping them up, fixing them, and putting them back on the market for profit. The first time homebuyers are looking at the available homes. They could try and buy a short sale, which may or may not happen. Or, they could just buy one of these "investor rehabbed" homes which are all pretty and new and they don't have to deal with the uncertainties of a short sale. Of course, most are picking the investor homes. This is great for investors and a LOT of investors are making some very good money in the "FLIP" market. The problem is the 2nd/3rd time buyer market. Yes, we are moving lower priced homes. However, the 2nd time market gets its buyers from the first time homebuyer that has lived in his home for a few years and is now ready to move up. The problem we have is the majority of those people are all upside down on their mortgages. They can't sell. If they go the short sale route, they destroy their credit and can't buy another home. They are stuck. Same goes for the 3rd time buyer. They are locked into their upside down home as well. For those that are lucky enough to NOT be upside down, they can't find a buyer for their home because of the aforementioned problems. We will not return to a fluid market until those 2nd and 3rd time buyers are out there as normal. That won't happen until this new crop of first time homebuyers who are buying all the rehabbed homes become 2nd time homebuyers and free up the upper pricing inventory. Based on the market average of a homebuyer living in their home for 5-7 years before needing to move, and the fact the foreclosures started flooding the market in 2008, we are looking at at least another 3-5 years before we have a fluid market. Just my opinion. We shall see.
0 votes Thank Flag Link Mon Oct 18, 2010
Hi Drew. Is normal considered when I could buy homes in Philly for $15-35K and rent them out for $2000/month? Is that normal? For me, it is.

Real estate is local, so is normal. It's subjective, each location having what's normal for them. Buyers are shocked at how low prices are here in FL now b/c they were so used to high prices for many years.

If you're asking if prices are still sliding, then in my opinion the answer is YES. They are still sliding. I see it daily in my MLS. Can't argue with price reductions, right? Can't argue with numbers from closed sales, right? There are pockets in real estate in places where it's leveled off a little bit and some have had slight increases. Is this across the board? Absolutely not.

GOOD LUCK.

Scott Miller, Realty Associates, Boca Raton, FL
0 votes Thank Flag Link Mon Oct 18, 2010
I think the answer below are right on the point. What is normal? Do wse want to see the markt like it was in the peak; where just about everyone was getting a mortgage? That is what lead to the mess we are in now. I thnk the market is stabilizing and correcting itself. I do not know when it will be back to a regualr standard. but, i know that in order for the market to fix itself we need to get through the bumps we have right now. hopefully we will have learned from our past mistakes and the makret will stabilize and grow at a more reasonable pace in the future.

i like to eventually see a balanced market and one where foreclosures and short sales are not the predominant choice of buyers and sellers....only then will the market i feel be stable and ready for a slow but steady growth. When that happens is anyone's guess. jsut when you think it is going to get better we ahve the fiasco with some of the banks in the wya they are handling the foreclosures. So, it is an unknown and time will tell....
Web Reference: http://www.davedicecco.com
0 votes Thank Flag Link Mon Oct 18, 2010
I agree with both Bonnie and DP2 and have to ask the question 'What is normal'
I think now is the best time if you have to sell, because I believe the market may continue to drop in pricing in certain areas, so why wait? But I don't have a crystal ball, so I can't say for sure. Right now as a buyer, there are great deals out there and interest rates are the lowest they've been in many years, so it is an excellent buyers market. If you were to wait to purchase, it's quite possible that interest rates will rise, even though property values may not. In which case, waiting means you will have to buy less than you can afford right now!
0 votes Thank Flag Link Mon Oct 18, 2010
Hi Drew,
The past is the past, why ever would you want to look back. I agree with virigina, what is normal. I for one do not want to ever see 13% interest rates again like om the late 70's. We have what I have heard called a corrected market. Prices have returned toNormal if you will from the inflated amounts we rose to. Lenders will not lend to a borrower just because they fog a mirror, and I see nothing wrong with that. When people feel stable they will buy just as always. And that is happening right now. 2005 and part of 06 was not normal. I hope you are not looking at that as normal. If so you will have a very long wait. I believe we are exactly where we are supposed to be; and we should make the best of This Market and what it has to offer.
Connie Bramble
Prudential CA Realty
714-337-8718
0 votes Thank Flag Link Sun Oct 17, 2010
It depends on one's definition of normal. The market in other areas are doing fine.

It's too early to predict anything about the market in 2013 and 2014. It will be just as interesting if nothing gets done to remedy the unemployment.
0 votes Thank Flag Link Sun Oct 17, 2010
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