IT’S IMPORTANT TO UNDERSTAND THE HOUSING MARKET REGIONALLY AS OPPOSED TO NATIONALLY...

That is not to say that prices are not poised for a further drop, because they are. There is more on that in the next section. But it does mean that when you try to apprise yourself of what the facts are, in order to make a decision as to whether right now, is a good time for you to sell or buy, you should compare apples to apples. For example, if you have a compelling reason to sell your home, i.e. a job transfer, divorce, a health issue, than now is defi nitely the right time because experts agree, there is more loss on the way before we are done. But if selling is optional, consider your benefits. If you want to sell and capitalize on a move up, then maybe now is good. You need to talk to an expert and gather all the facts. If you are looking to buy, what are your financing needs? Will what you need in a loan program be there in 12 months to make waiting worth while. Is the price drop of 10% worth waiting for over the need for a place to live, especially if you have found the “right house” as a 25% decrease over its high? After all, houses are not meant to be day traded. That was a bad habit that most of the country and certainly Californians partook of for a few years. Read on to see why regional knowledge is good when it comes to real estate.

This is probably the biggest hurdle the real estate industry has to get over in the minds of consumers. Unfortunately a lot of the news out there is the dismal outlook for national housing. Regions such as the mid-west, specific cities such as Detroit, or sub-prime havens such as Riverside and San Bernardino or even Las Vegas and Phoenix, have many more problems than we do here in Orange County and Los Angeles.

EXPERTS SEEM TO AGREE ON HOW MUCH FURTHER PRICES WILL DROP...

The Kiplinger Report thought the drop would be 10% in 2009 saying, “Home prices have a ways more to drop before leveling off late next year, then staying fl at during most of 2010. Difficulties will vary by region. The Inland Empire and Central Valley are sure to have the biggest price drops. Orange County and San Diego prices won’t fall as much. Bargain hunters will spur sales, probably by year end.” We are definitely experiencing that right now. Sales picked up for the first time from May numbers to June. (The latest numbers that are available for a full month.)

Broker and local economist Tom Moon’s predicted price drop for next year, also 10%. Obviously these projections are on top of the already 20% to 25% we’ve seen, depending on the location of the property. So we are looking at a grand total of approximately 35% before we are done. Is there anyone reading this that doesn’t see what impact this will have on the affordability index and how it will spur sales with old fashioned supply and demand. Don’t forget we still have people arriving here that need to buy, we still have a lot of people who were left out of the sub-prime run up and if you read on, you will see that we still have decent economic prospects in Orange County.

Real Estate Economics, a homebuilder consulting firm in Irvine has this to say about the Orange County housing market: “Opportunity/Risk Index currently resides slightly below equilibrium, but the trend is toward equilibrium. Any O/R index above equilibrium represents market opportunity, and any index number below equilibrium represents market risk... Within 12 months, (the O/R) index should reach equilibrium... There is a need for an additional 5.6% drop in housing prices before equilibrium is reached in the Orange County market.

MOST OTHER INDUSTRIES ARE IN GOOD SHAPE, AVOIDING THE DOWNTURN...

Again, The Kiplinger Editors have interesting data on Southern California. It is important to mention because again, they are experts on California and their information is regional, not national. What do they say? Tourism is getting a huge boost because of how strong the Euro is right now. “High tech will benefit from consumer demand for cell phones, games, and software.” Kiplinger believes agriculture will benefi t from foreign consumers buying more food. Entertainment is counting on strong ad dollars for TV this fall. Some areas will lag such as retail shopping centers and state and local governments.

THE NUMBERS ARE ENCOURAGING IF YOU UNDERSTAND THEM...

It is not unusual for any property under $600,000, but especially for a bank owned one to have 6 to 12 offers or more. Orange County had 1,184 bank owned properties in the MLS as of July 11. How many were bought in May? Just about half of them sold with a total of 570. Time needed to sell all foreclosed homes? That was a low number of 44 days. We are nearing the end of loan adjustments for sub-prime loans, which means we are nearing the foreclosure peak and the end all at the same time. Please feel free to call my office at any time and I will let you know current listing counts and the total number of listings that are bank owned. Remember, no one can predict the bottom.

People need to decide based on their own circumstance if it is time for them to act. But what is really happening in the market is a far cry from what you read. Affordability increases every day. Congress has passed the “Homeowner Rescue.” Fannie Mae and Freddie Mac are stable and FHA is a phenomenal opportunity, all made permanent with the new $625,500 loan limits. Expect real estate to be what it has always been: a cornerstone of our local economy, for better or worse. But you can bet on this; there is opportunity here right now that may never be here again. There is no question that investors are eyeing the market very carefully. If you need information, look no further as it is my pleasure to serve you.

This is a buyer’s market so obviously the numbers are encouraging to them, not sellers. But, if you think the market is stagnant, if you think people are sitting around waiting, you would be wrong.

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