What's Going To Happen Next?

For the most part, I like to think of myself as an optimistic and practical kind of guy. I would normally start of writing about Real Estate this and Real Estate that...However, these are some very difficult times we are living in.
My grandpa Doc worked for Good Year Tires for 45 years, and I remember him saying that he had gone up to Azusa Canyon, in Azusa, CA, panning for gold just to make ends-meet. You see - he lived in the great depression and I am begining to get worried that we may not be far behind those times today.
Bob Dylan said it the best - "You had better start swimming or you'll sin like a stone, Oh the times, they are a changing." (Great song from the 60's).
I have had several clients this year who had lost their jobs and homes. I tried to get them a "loan modification" without success due to the fall in property values.
The real estate market has always gone Up & Down...I've been selling through four of these real estate cycles. In the past - there has always been some other industry that usually has pulled the USA out of its economic troubles.
My company has had its share of tough times and cut backs over the last three years...But I am proud to say that "The Shire" is celebrating its 11th year anniversary. To quote my uncle Denny, "calm seas do not make a good sailor."
To navigate throught these waters, I have attended severl advanced training classes to brush up on short sales, foreclosures, and the new lending procedure laws. Additionally, I am hosting similar training classes for my agents.
The loan side of real estate has also gone through some huge changes as well. These changes in te lending disclosure laws and the new appraisal rules and procedures have a dramatic effect on the purchasing and the selling of residential homes. This is effecting all homeowners as well as real estate professionals and the way we do business.
The government has now taken control of the appraisal industry. Basically turning it into a "Union Hall." This new policy has cut the average appraiser's income in half, offering nothing of value in return.
You might ask - "How does this effect me?" - good question! Many of the more qualified and experienced appraisers are leaving he residential side of the market. Meaning...
The fee charged for the average home appraisal is between $410 and $460 taking 3 - 5 hours of work to complete. An appraiser could run his business, pay staff and make a decent living if he worked hard. NOW the ramifications of this new policy has changed things for everyone!
Now the appraiser is paid about half for the same work and the "Union Hall" gets the other half. Lenders may no longer rely upon past relationships with LOCAL AND EXPERIENCED appraisers. The appraiser may even come from out of the area. This last month I had two out-of-the-area appraisers, one from Riverside and the other from Temecula, for a Brea and Lakewood sale! Both were challenged for review appriasals - more money out of pocket to the Buyer or Seller.
Banks have impemented some new strategies. Once such strategy is withholding many of the foreclosed properties from the market, in an effort to reduce inventory, artivicially driving up prices. Hiring Property Management Companies - such as mine0 to renovate and rent-out these houses.
Unfortunatley, this tactic is a couble edged sword. In theory - it will help to stablize the fall of prices. However - all over Southern California I see appraisals coming in lower than the agreed sales price, or the appraisal is challenged by the Buyer's Lender and the Review Appraiser then cuts the priced due to short sale comps.
I believe there is not a master conspiracy - Too many panks have TARP money allowing time to be on their side - hoping to ride out this market and reduce their loss from it.
What's going to happen next? If I knew the anser to this question - I would be as wealty as Donald Trump (with a better hairdo).
I believe the real estate market may dip a little more (3-5%) by the end of 2010. The real estate market should then flatten in 2011 and 2012 - prices won't go Up or Down, allowing the market to right itself - FINALLY! A new real estate cycle should start to increase home prices - at whatever number the cost of living index is - in the spring of 2013.
The changing of the trees is a strong indication that Fall is here. An economic in congress - stop the spending and bail-outs - maybe all we need to change the economic "Fall" of America's economy and the real estate market.