Wednesday, October 19, 2011
Monday, October 17, 2011
If You Are Afraid of the Market, You Just Might Miss The Market!
Can you believe how fast the year has gone by? Now that’s a haunting thought. The real scary thought is how many buyers and sellers are just sitting on the sidelines, too afraid to make a move. Waiting and waiting for some apparition or a sign from the great beyond, telling them it’s safe to buy a home or that their house value is going to go up in value in the next six months. Hoo-hoo-haa haa!!! Maybe I can shed some light where the dark monster of real estate fear may be lurking.
History has always been the best champion through murky and unstable times, guiding us through and out of the darkest of real estate slump markets and back into the light of day. This has been the roughest and scariest real estate market down turn since 1978 thru 1982 or maybe 1990 thru 1994.
Looking back to 1982, home loan interest rates were 18% & 19%. That was Scary! Creative Financing was born! President Reagan regained control of the economy by lowering taxes and we enjoyed stable real estate growth until late 1989. Then came the S & L financial collapse, whereas many huge companies such as Ford, GM, Anheuser Busch, Toyota, Robert Shaw, etc., left California. Unemployment was terrible! Money was tight and banks weren’t lending. In 1990, interest rates were floating around 11.9% to 13%. Hoo-hoo-haa -haa!!!!”” The Adjustable Rate Mortgage (ARM) became the light to save the day!
Even in the darkest of nights, the scariest of storms, eventually, the sun starts to shine and the storm passes. Both of these down markets lasted approximately 5 1/2 Years. What happened after the storm “Katrina” had passed? They began to rebuild and New Orleans was back, with the huge success of Mardi Gras in 2010 and 2011.
In 1995 & 1996 the R.E. Market was flat. Interest rates were around 8%. Property values were not going up nor were they going down. The monthly entry level mortgage payment was about the same as monthly rent in a good neighborhood. The bottom of the market had finally hit. However, buyers and seller’s were to afraid to move. Boooo!
Flat sales & low R.E. inventory left buyers and sellers sitting on the sidelines! Overall a pretty frighten public opinion of the housing market! History “SHOWS US” that was the time to make some moves! Hind sight is 20/20!
Now, I don’t want you to think that the “Mean Old Real Estate Boogeyman” does not exist, because he does exist. He exists in good markets as well as tough markets. Getting good and solid advice from an experienced Realtor, is the best decision one can make. With good information one can make good decisions, taking the fear away.
We all know people who purchased homes at the bottom of the market. They had the same fears that many buyers and sellers have today. “Is this the right time to buy? Is this the right time to sell? Will the home I buy go down in value after I buy it? If I wait to sell will the price go down further or should I wait and watch what happens next year or the year after?”
How have the buyers and sellers of 1996, 97, 98 through 2004 faired? Pretty darn good. I believe that in today's R.E. market, there are real opportunities to do well.
Whether you are planning to move up or you’re empty nesters looking to down-size, there are opportunities on both sides of the transaction.
Today's interest rates are absolutely fabulous! With conforming rates around 4% and Jumbo rates around 5.25% there is no cheaper money. Entry level mortgage payments are the same or cheaper than renting. Home prices have or are stabilizing, in the markets below $450,000, especially in Orange Co. The higher end markets are still selling; Maybe not as high as in the past, but they are still selling. Sellers with equity are finding some real bargains with their purchasing power today.
Fear and sitting on the sidelines has driven many real estate agents out of the business, as well. The less experienced, or the agents who did not embrace real estate as a career or were in the business just for the quick buck, have left or will be leaving soon.
According to Robert Kleinhenz, Deputy Chief Economist for the California Association of Realtors (CAR), there are approximately 162,000 licensed real estate agents state wide. At the recent Broker/Manager meeting in Orange, CA, he said he expects that number to drop again by the end of next year, to 152,000.
Do you want to hear something really scary? In 1980 – 1983 the realtor population decreased from 148,350 to 102,600 (-31% of Realtors), and decreased again in 1990 to 1997 from 146,000 to 90,500 (-38% of Realtors). From the beginning of this real estate decline in 2006, there were 211,300 Realtors to date. There has been a 26% decline in realtors to 162,000(Sourced CAR data). I also believe that many realtors will not renew their local & CAR dues next year and that we should hit a 30% decline in Realtors by the end of summer next year! Only the dedicated professionals will survive. My opinion only.
(Here is the fun scary stuff!) Do you think history will repeat itself once more! 1982 President Reagan won election over Pres. Jimmy Carter therein 1984 through 1990 there was a 6 year upswing in the RE market and prices went up. Pres. Bush Sr. left a surplus for Pres. Bill Clinton who began spending & implemented the ease of loan requirements. In 1998 George Bush Jr. takes office and that upswing ride lasted 8 years. The top of the market was 2005. We’ve been in decline for 6 years and next year is election year. I think the year will be flat, prices won’t go up or down. However, check out the buying power with today's interest rates; between 3.5% and 4.5% 30 Year Fixed Rate. I’m banking on a history repeating itself this coming election. Now that’s a scary thought. Boo!
History has always been the best champion through murky and unstable times, guiding us through and out of the darkest of real estate slump markets and back into the light of day. This has been the roughest and scariest real estate market down turn since 1978 thru 1982 or maybe 1990 thru 1994.
Looking back to 1982, home loan interest rates were 18% & 19%. That was Scary! Creative Financing was born! President Reagan regained control of the economy by lowering taxes and we enjoyed stable real estate growth until late 1989. Then came the S & L financial collapse, whereas many huge companies such as Ford, GM, Anheuser Busch, Toyota, Robert Shaw, etc., left California. Unemployment was terrible! Money was tight and banks weren’t lending. In 1990, interest rates were floating around 11.9% to 13%. Hoo-hoo-haa -haa!!!!”” The Adjustable Rate Mortgage (ARM) became the light to save the day!
Even in the darkest of nights, the scariest of storms, eventually, the sun starts to shine and the storm passes. Both of these down markets lasted approximately 5 1/2 Years. What happened after the storm “Katrina” had passed? They began to rebuild and New Orleans was back, with the huge success of Mardi Gras in 2010 and 2011.
In 1995 & 1996 the R.E. Market was flat. Interest rates were around 8%. Property values were not going up nor were they going down. The monthly entry level mortgage payment was about the same as monthly rent in a good neighborhood. The bottom of the market had finally hit. However, buyers and seller’s were to afraid to move. Boooo!
Flat sales & low R.E. inventory left buyers and sellers sitting on the sidelines! Overall a pretty frighten public opinion of the housing market! History “SHOWS US” that was the time to make some moves! Hind sight is 20/20!
Now, I don’t want you to think that the “Mean Old Real Estate Boogeyman” does not exist, because he does exist. He exists in good markets as well as tough markets. Getting good and solid advice from an experienced Realtor, is the best decision one can make. With good information one can make good decisions, taking the fear away.
We all know people who purchased homes at the bottom of the market. They had the same fears that many buyers and sellers have today. “Is this the right time to buy? Is this the right time to sell? Will the home I buy go down in value after I buy it? If I wait to sell will the price go down further or should I wait and watch what happens next year or the year after?”
How have the buyers and sellers of 1996, 97, 98 through 2004 faired? Pretty darn good. I believe that in today's R.E. market, there are real opportunities to do well.
Whether you are planning to move up or you’re empty nesters looking to down-size, there are opportunities on both sides of the transaction.
Today's interest rates are absolutely fabulous! With conforming rates around 4% and Jumbo rates around 5.25% there is no cheaper money. Entry level mortgage payments are the same or cheaper than renting. Home prices have or are stabilizing, in the markets below $450,000, especially in Orange Co. The higher end markets are still selling; Maybe not as high as in the past, but they are still selling. Sellers with equity are finding some real bargains with their purchasing power today.
Fear and sitting on the sidelines has driven many real estate agents out of the business, as well. The less experienced, or the agents who did not embrace real estate as a career or were in the business just for the quick buck, have left or will be leaving soon.
According to Robert Kleinhenz, Deputy Chief Economist for the California Association of Realtors (CAR), there are approximately 162,000 licensed real estate agents state wide. At the recent Broker/Manager meeting in Orange, CA, he said he expects that number to drop again by the end of next year, to 152,000.
Do you want to hear something really scary? In 1980 – 1983 the realtor population decreased from 148,350 to 102,600 (-31% of Realtors), and decreased again in 1990 to 1997 from 146,000 to 90,500 (-38% of Realtors). From the beginning of this real estate decline in 2006, there were 211,300 Realtors to date. There has been a 26% decline in realtors to 162,000(Sourced CAR data). I also believe that many realtors will not renew their local & CAR dues next year and that we should hit a 30% decline in Realtors by the end of summer next year! Only the dedicated professionals will survive. My opinion only.
(Here is the fun scary stuff!) Do you think history will repeat itself once more! 1982 President Reagan won election over Pres. Jimmy Carter therein 1984 through 1990 there was a 6 year upswing in the RE market and prices went up. Pres. Bush Sr. left a surplus for Pres. Bill Clinton who began spending & implemented the ease of loan requirements. In 1998 George Bush Jr. takes office and that upswing ride lasted 8 years. The top of the market was 2005. We’ve been in decline for 6 years and next year is election year. I think the year will be flat, prices won’t go up or down. However, check out the buying power with today's interest rates; between 3.5% and 4.5% 30 Year Fixed Rate. I’m banking on a history repeating itself this coming election. Now that’s a scary thought. Boo!
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