We would like to buy a house in Claremont (91711). Do you think prices will continue to fall in that area?

Asked by Elizabeth R Stark, California Thu Feb 21, 2008

Are there a lot of "pocket sales" or homes that are not advertised? I do like the Blaisdell Ranch area but never see any of those homes w/a sign out front.

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Tisza Major-…, Agent, Upland, CA
Fri Feb 22, 2008
BEST ANSWER
Hi Elizabeth,

As I am the ONLY Claremont specialist on this site, or on pretty much any other for that matter :-) I feel that I am uniquely qualifed to not only answer your question, but to also offer you my assistance with your search.

As you know, Claremont is a unique community and, as such, is somewhat protected from the ups and downs of the general real estate market. However, that being said, Claremont is not immune to change. Yes, prices here have come down somewhat and may continue to do so for some time in the future.

We are now, as of last month, for the first time in recent memory truly in a buyer's market here in Claremont. Traditionally, the number of homes available for sale and the number of homes purchased tend to stay pretty consistant when you compare year to year and even month for month (November 2007 versus November 2006 for example). I would be happy to share the current and historical market information I have on the area with you if you so desire.

As for "pocket sales" here in Claremont, there are a few scattered here and there, but the bulk of the home sales are handle by and through licensed Realtors. A lack of a sign in front of the home does not mean that the home is not listed for sale it just means that the seller's may have elected to not have signage placed in front of their home advertising the fact that it is available. Also, there are some pretty strict sign rules here in my fair city so, depending upon where one looks, some areas do not allow signage anywhere except in the window of the property being offered.

I would again like to offer you my services in your home search here in Claremont. I know this community very well and truly don't believe you will find anyone better able to serve you.

Thanks for asking your question. I look forward to speaking with you soon.

Take care,

Tisza Major-Posner, Realtor, I.V.P.G. Claremont, CA (909)837-8922
Web Reference:  http://Route66Living.com
2 votes
Newportfiji, , Long Beach, CA
Fri Mar 7, 2008
I would suggest you strongly consider alternatives before buying in this real estate bubble.

Although the realtors on this site will attack me for the following comment, in my opinion this would be a terrible time to buy, unless you must buy now (because of a 1031 exchange, for example). Inventory has increased, sales transaction volume has slowed dramatically, lending standards have tightened (pulling thousands of non-qualified buyers from the market), notices of defaults and foreclosures are increasing substantially, the economy is slowing (looking more and more like a recession) and literally thousands of high paying mortgage and other real estate related jobs have been lost in Southern California over the past year. All of these things will put downward pressure on pricing for some time to come.

The reality is that prices will almost certainly be lower next year, likely lower in 2009 and possibly even lower in 2010. Real estate cycles take many years to play out and we are at the very beginning of a down cycle. I disagree with many realtors who say that it does not matter what price you pay if you are looking to hold on for the property for 5 to 10 to 15 years. Let's say you buy now for $1,000,000 and prices drop 20% (actually, Forbes in a recent article estimated a 26% anticipated decrease from June '07 prices by 2010 for Los Angeles and Orange counties) over the next couple of years. You would have lost $200K in future equity by having not waited. Additionally, you would have to service the $200K by paying property taxes and interest on the $200K. Unlike a stock, when you buy at the wrong time, you need to service your hasty decision through increased property taxes and interest.

I have an MA in Economics from USC and have been in the real estate business for 15 years. In my opinion, this real estate bubble will take many years to play out. The previous down cycle was from 1990-1996 and values dropped approximately 20 - 25% in nominal pricing (40 - 45% in real numbers when factoring inflation). The 82 -85 down cycle was a bit shorter. However, that was a period of higher inflation which masked much of the decrease in real prices.

With cash in hand, time is your ally. Unlike stocks which are very subject to dramatic short term fluctuations, real estate is illiquid and cycles move slowly. If you are paying attention, you likely will not miss the change as prices tend to remain flat for an extended period flowing stability in the home market. Clues will be increasing transaction volume and a closer cost ratio in comparing the costs of renting versus owning. Simply stated, following a down cycle, people are generally more conservative in real estate purchases so prices will not likely rebound quickly.

Despite what the spin doctors at the NAR and realtors would like the public to believe – it is NOT always a good time to buy.

With that said, if you have sufficient assets, you may not care about whether your home decreases substantially in value and there are benefits from home ownership. But, in my opinion, there are ample rental opportunities to wait out the deflating real estate bubble.

Best of luck, and if you want an objective opinion, don't waste your time listening to cheerleading realtors, who have a self interest in being overly optimistic about the real estate market.

NewportFiji
2 votes
Hannah, Home Buyer, Los Angeles, CA
Fri Mar 7, 2008
Anyone who makes blanket statements like "if you are planning on staying in your new home for at least 2 years that you will make money on the home no matter where you buy" clearly can't give credible advice. There is no guarantee. Trulia is a great resource for listing/price comparisons, but has a lot of realtors trying to drum up business for themselves and are listening to the overly optimistic reports of the NAR. I'm not saying listen to the overly pessimistic reports from places like Merrill predicting straight drops until 2010, but the truth is probably somewhere in between.

Don't assume anywhere is automatically protected from the bubble burst. A lot of LA residents moved to Riverside because other out of the way locales like Claremont were getting too expensive.

I'd say it's a good time to start looking, but not necessarily buy. As a fellow buyer, I'd say figure how much payment you can afford and don't forget 20% down; and if you must buy now, bargain for the price you want (within reason) and don't be afraid to walk. Talk to a realtor (interview several to find one you trust), and have them run prior sales histories and how much they owe the bank. This is public info by the way. Also, it would be good to find out if they own another house to find out how badly they need to unload.
1 vote
Sallly M, Home Buyer, Glendora, CA
Thu Mar 6, 2008
You definitely need a local agent to help you find the right home for you. As said below, not all homes will have a sign out front. You need to search the local MLS to find all the listings available. You can search the MLS on my website for free.

Since the beginning of the year the average sold price in Claremont is 3-5% below asking price. Meaning the prices are pretty steady there. Good luck!
1 vote
Christopher…, Agent, Hemet, CA
Thu Feb 21, 2008
Claremont remains a desirable location. There are fewer foreclosures in the area than surrounding communities. You do see an occasional short sale in the area and the few bank owned homes in the area seem to be gone before you blink. "Pocket listings"....not much of that in the bank owned property market. Most lenders strictly prohibit pocket listing activity. If a broker does business that way, their REO business will soon be non-existent.

Developing a great relationship with a local agent who truly knows the local REO market will benefit you in many ways. There are quite a few that claim to know this market yet, very few actually have experience dealing with asset managers which can prove very frustrating for everyone involved. Inspect what you expect....If they claim to be a local bank owned property expert, ask them to see a current list of their own REO listings and sales data. If they don't have it....find another. There is no real mystery to the process if you know the ins and outs of how the process truly works. Good luck in your search. The link below includes the 5 current bank owned home listings in 91711 !
1 vote
Jeff Whitaker, , Charlottesville, VA
Thu Mar 6, 2008
Elizabeth, First of all let me say I know nothing about the local market you are asking about...having said that I will tell you that if you wait for the market to bottom out you will miss it altogether. I believe if you are planning on staying in your new home for at least 2 years that you will make money on the home no matter where you buy. Even with the recent decline in the housing market, it is still a better investment than the stock market. Just look at your tax return and see how much your mortgage helps there as compaired to your 401K
0 votes
Karen Miller, Agent, Long Beach, CA
Thu Feb 21, 2008
Hi Elizabeth,

I'm afraid my crystal ball isn't working tonight. Noone can tell you for sure what will happen in the near future. A local agent can give you specific information about the area. That being said, interest rates are great! If you find a home that you like, you should buy. Your first step should be to find a good local Realtor.

Best of luck,

Karen Miller
0 votes
Bon, Home Buyer, Reynolds, GA
Thu Feb 21, 2008
I would not buy real estate for another 12 months. Prices will continue to decline, despite what any RE agents might tell you on here. Worst case is prices stay flat, but 90% chance that they continue to fall.
0 votes
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