Hi Hien, congratulations on your Pre-Approval. Honestly, if it were my own money I would not buy right now unless you have to, it's an understament to say that we are in uncharted waters concerning the housing market and its recovery. From an BUYER perspective the following may be of interest in helping you to pick the right time to buy your new home.
JOBS: Local net jobs growth rate (local jobs growth rate â€“ local unemployment rate) is THE early predictor for housing recovery in any specific area. The larger the â€œnet jobs growth rateâ€œ, the greater the "velocity" of the recovery in an area. With jobs creation comes a heightened demand for housing, allowing prices to stabilize. Eventually, housing appreciation will develop. Right now we are hearing of job cuts.
LOAN RESETS: Barring any successful government intervention, the end of 2011 is when the brunt of â€œquestionable loansâ€ is flushed from the financial system. While the predominate amount of foreclosures tied to â€œsubprimeâ€ loan products has passed, we're not in the clear. By Jan of 2013 itâ€™s all gone, but my sincere hope is housing appreciation occurs well before 2011 and with enough zest to allow some homeowners to refinance out of these final loans and into more affordable loans prior to the currently projected reset schedule.
Option/Alt-A/Unsecuritized ARM loans are the next phase to provide a destabilizing economic affect. We have taken on some of the projected Option ARM pain earlier than is shown in the reset schedule. The following chart shows how the resetting of these loans has shifted due to valuation based resetting and I have also provided an explanation.
HISTORICALLY, since 1968 there has only been one time where California housing had consecutive years of price decline. That would be 92-96. Note that after this period the entire decline had been made up within the following two years (92-96 total decline of 12.2%, 97-98 total increase of 12.5%). While past performance is not a 100% predictor of future performance, I believe in the resiliency of California as an international destination location for work and living.
HOW TO BUY IN THIS ENVIRONMENT:
Confirm that you are in fact Pre-Approved and NOT Pre-Qualified, see: http://www.Steven-Anthony.com/default.aspx?pp=39377
for the difference between the two. This is important so you can be ready to act when you need to, or be aware of any issues that may prevent you from buying when you want to.
I'm suggesting my buyers hold their cash until the end of Q109 and then reassess the direction of the economy. I donâ€™t see anything concrete indicating Q2 will be better. The resulting reduction in jobs will lead to less demand for housing and more distressed supply, FURTHER REDUCING PRICES.
A Comparative Market Analysis (CMA) gives you the best representation of market activity/direction - for the specific property details you search on. DO NOT rely on median and average-based statitics, these measures are meaningless for targeted selling/purchasing as they have no regard for any of the specifics you may be searching for and can be skewed by segments of market activity not matching your individual situation.
Your Realtor should start by meeting with you and your family to establish your housing needs. I would like to start collecting the specifics of your target criteria/area, and then use Comparative Market Analysis reports to monitor the best time to buy for you. Using your search criteria, I can also set up an automated "search agent" for you so you get notifications automatically via email as soon as they are made on the MLS. Please contact via cell/email if you would like to get started.
Steven A. Ornellas, MBA, GRI, ABR, e-PRO, CMPS, RE Masters
REALTORÂ® / Mortgage Banker-Broker