On Jan 31st Penny ( the original poster )wrote "So the Penny's sister indicator is thumbs up for the market! Second, my friend Larry from LD Termite has been twiddling his thumbs waiting for the phone to ring for termite inspections in Santa Maria, California. Yesterday he did 5 termite inspections!!! Amazing turn around in the Penny's friend Larry the termite guy indicator!!! Yup, things are looking up!"
I give more credence to Larry's termite twiddling thumbs than to Bernanke Ben' s benign beard. And I believe him to be more reliable in the short term. Anecdotes lead statistics by extended and significant time frames in this industry. Ignore anecdotal evidence at your peril. But do continue to have fun with it..
Even with today's uptick in the existing home sales, I seriously doubt that we've seen the bottom. I doubt it because in order to determine whether or not we are close to the bottom, one has to ask how we got off the top. Housing prices began declining after the first lenders started going under and the sub-prime mess started unraveling. More and more lenders started closing shop, creating the credit crunch (which as I remember was announced about 9 months ago). Big lenders like Countrywide were unscathed for a while, but not long after they started announcing serious trouble. Even today, take a stroll through the Countrywide website and look at their REO listing. It's page after page, after page of REOs. The big banks are also holding a big bag of subprime loans - even though many of their loans have been already sold at a discount to other companies. So there's no question that the Fed understands the profoundity of this issue, they've recognized the potential of banks having serious financial problems - hence the lowering of the overnight interest rates and the 200B injection of liquidity into the banking system.
The underlying economic conditions that started this downward slide are still in effect. The Fed has continued to cut interest rates even with inflation as a concern. At some point the interest rates will have to climb again, which will again provide another punch to the housing market. Additionally, we haven't even seen the worse of the maturing arm loans - yes, the worst is yet to come - which will flood the market with even more foreclosures, short sales and institutions trying to offload inventories, competing with homeowners trying to retain some of the equity they've built up over the past few years. Not such good news for owners with negative equity though, they may have to ride it out for a few years.
So, when looking for the bottom always look for the underlying causes of the mess to be better, right now they are not. The economic outlook has continued to deteriorate, many think we're in the middle of a recession. Hoping that the housing market will stabilize in the middle of a recession is unreasonable. When median home prices reach 2000 levels (adjusted for inflation), I would expect to see a short dip even lower, and then start seeing some recovery. The dip would be caused by economic pressures, it happens after almost every bubble (housing and stock market). Keep an eye on the economy and the home prices - the bottom isn't close yet, but the good news is that it will come, the market will recover and prices will go up again over the next 2-4 years.
We are two counties above San Francisco and when they mention "Bay Area" we get lumped into this and the major media outlets all broadcast into our area. Last night they had a SF Realtor saying how the upper end is selling like "Hotcakes" (I should invest in a IHOP!). Here in Sonoma County we have and 24 months supply of those "Hotcakes"--ever eaten a cold pancake? Bleeeech! What I'm getting at is all real estate is local. We as Realtors should not "buy-in" to any NAR announcements (irrational cheerleaders) or even statewide predictions (California's Leslie Appleton-Young is much more tempered than Mr. Yung!).
Keep it local, follow the stats, and check the trends. If you're on a listing appoint with someone who has equity and youâ€™re in a sea of REO's and Short-Sales THEY need to know this! They are going to get BEAT UP! Do they really have to sell? Your counsel is now why you get paid the big bucks. Bread upon the waters today will equate to additional business years from now.
The last time we went through a downturn like this we were flat for almost 5 years AFTER the fall and bottom. I have not heard a big SPLAT!! Yet so I don't know if we've gotten to the bottom to start our way back to the top!
My market indicator is up, Investors are coming out of the wood work and starting to sniff around, not buying just yet but, the interest is there. First time buyers are getting qualified and we're pounding the pavement finding them homes. I feel that the market may be at its' bitter end for falling prices and starting to level out.
People if you're waiting for the market to bottom out look in your rear view mirror, you've just missed it! Meaning if you would like to have prime pickens of the properties available now, start looking now.
My congrats to Sis! Homeownership is a wonderous thing!
What a great question! It doesn't appear that we are through the storm. But prices are good and I have more buyers than the inventory will accomodate and there are routinely multiple bids on bank owned properties, so I think buying is a good move if you plan on holding a minimum of 3-5 years.
If I were a seller and didn't have to sell -- I wouldn't . The real estate market is a fast lane right now -- if you're not prepared or unwilling to go fast -- you have to get over to the right. Check out my latest article for home sellers in the Santa Maria and Orcutt market: http://santamariarealestateblog.com/2008/07/06/selling-your-
My response is directed to Michael's answer below.
I hear you Michael and I'll share your comments with our team. We've noticed this as well and are currently analyzing how we can make our search options more apparent and better for users.
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