Since last month’s issue, a lot has been said and written about the real estate market we’re in currently. “Sales are up,” “Sales are down,” “The market is jittery again,” etc. So what is the truth? Dataquick published an article on their website September 15th reporting that, “Home sales dipped in Southern California last month, the result of a thinning of properties (available) and financial uncertainty among potential home buyers.” This column begs to differ. The two problems with the sales numbers they cite are sort of mutually exclusive. It’s difficult to have a thinning inventory, because properties are flying off the shelves, and have buyer hesitancy. Actually, talk to those of us in the business and we will tell you that it is not unusual for a property at or below the median price (more on that in another article), to have 25 to 50 offers on it. No, there is no joke or punch line here. The truth is we are in an inverted or, if you prefer, a counter intuitive market. We are in a buyers market because of price, but definitely with a decidedly “seller’s flair” in that we are short of inventory.
Expect that to change by first or second quarter of 2010. The prediction here is that we will see inventory of real estate owned properties, bank owned properties in other words, to climb 300% to 400%. There is no need to panic. There is little doubt that these properties will be absorbed by the demand, no problem. There is also an industry sentiment that the banks learned their lesson in regards to flooding the market with too much inventory, so expect these problem properties to be released in waves.
There have been two differing attitudes discussed by the media in past weeks. The first is by economists who study all factors in a recession and in the general economy. Their belief, at least for the Chapman Report and the Fed, is that the recession has bottomed and we can expect a faltering and shaky recovery, barely noticeable next year.
But there are naysayers, who adamantly exclaim that we are no where near recovery. It is true that jobs came out weaker than expected, consumer confidence took a dip and unemployment hit a high for California since 1967. We have to face the facts. But it is also true that many people did not climb on the loan frenzy bandwagon, and they did not buy a home at sky high prices and would like to do so now. It is also true that some businesses are beginning to hire and some companies are thriving. Perhaps we see what we want to see, but real estate activity seems to be a bright spot, at least right now, without falsifying itself to spur that activity. These are real prices and real loans transpiring right now, no smoke and mirrors.
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