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November 2006 newsletter - OCBuyersMarket.com SOME ROBUST STATS CONTRADICT THE MARKET-GONE-BUST REPORTS --- LATEST FIGURES DON’T POINT TO A HOUSING CRASH… This was a recent headline in the LA Times. Let’s face it; the market is experiencing a correction right now. If you talk to an economist who is more pro stock market and money markets, they will tell you the sky is falling. If you talk to an economist with ties to real estate and who has experienced several cycles of the real estate market, they will tell you that we are having a market correction. The data backs up the latter assessment. That recent article went on to talk about low, low, interest rates. In fact, rates have been quietly slipping back to almost 40 year lows and to their lowest in the past six months. Even if they creep up slightly, they are still awfully good. The report was just published on consumer spending, which is solid and the same report showed incomes increasing faster than expected. It was reported by Katie Couric and CBS Evening News (October 25th) that the housing slump is expected to end next year. This is great news. In case you haven’t followed real estate cycles for the past 30 years, cycles usually last much longer. Downturns are nothing new and all of us who own homes know that real estate is a long-term investment. Owning a home is part of the American Dream and that Dream incorporates a place to raise one’s family, while getting an interest deduction and a gradual appreciation in a long term asset. What is disappointing many amateur investors is that they started treating real estate like any other commodity such as stocks and bonds. That’s truly apples and oranges. Let’s enjoy the fact that we just received a gift—because that’s what 100% - 150% or even 200% appreciation in five years is – a gift. Now let’s not all hit the panic button because we’re cycling through a normal part of the market. (Los Angeles Times)
HAVING SAID ALL THAT ---- 2007 HOME PRICES EXPECTED TO FALL – A MODEST 7%... The word “modest” is very important here. Newspapers would have us believe that the market turn is catastrophic. That must be what sells newspapers. But a 7% - 10% decline in light of 150% appreciation is hardly a tough pill to swallow. Of course, nobody likes a decline at all, but every seller loved this market on its way up. Leslie Appleton-Young, chief economist for the California Association of Realtors, is projecting that home sales will decrease 23% this year and another 7% next year. This volume drop marks the first declines in nearly a decade of growth. (OC Register)
FEDERAL RESERVE HOLDS RATES STEADY… Basically, the Feds see a balancing act between a slowing economy and inflation. Rather than stall the economy by raising rates to stave off inflation, they are willing to let it happen naturally with a downturn in the economy from, you guessed it, the housing sector. Donald L. Kohn, the Federal Reserve’s vice chairman addressed the housing conundrum in a recent speech at New York University. His outlook is worth keeping in mind if you want to keep all the negative hype in perspective. Kohn sees, “no imminent bust or crash in housing. It is a correction that’s underway – a cyclical re-balancing of a marketplace that got too hot for too long in some parts of the country.” He adds the market, “is now heading back toward more normal conditions, where prices are more in line with what consumers can afford.”
WHAT WERE THE NUMBERS FOR SEPTEMBER… The total number of homes sold was 2,664. That number includes 1,695 single-family resale, 693 condominiums and 276 new homes. That number is 31% off from a year ago on single family, 41% off on condominiums and 35% off on new homes. Prices are still slightly up, less than 1% for resale homes. The overall median price on all homes is $626,000 and the monthly payment median is $3,025 which is way up from last year’s median payment of $2,576.
CALL US REGARDING LATEST TRENDS… The market is changing all the time. One thing is certain. Homes priced correctly are selling. If you need to know what your home is worth, today, please give our office a call. If you are looking to buy a property, the choices can be overwhelming and you will need a professional to help negotiate your very best buy. The value that we have is the value we bring to your situation. Buying or selling, please allow us to serve you in all your real estate needs.
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