Roots2RealEstate

Wow what a ride it’s been…The latest reports from National Association of Realtors index of signed purchase agreements state resale homes have plunged down 12% in July; the most since records began in 2001.  This is 5% worse than the media’s economic forecast projection. The cause, many mortgage commitments were not able to perform at the closing last minute, and buyers fell out of contract at the 11th hour.  Ironically the same index reported last month that buyers in contract were up 5% in June.  It goes to show media i.e. what we watch and what we hear, does impact our financial futures.  We all know, misery loves company and that bad news sells more newspapers and gets more of us to watch.  Least no one is jumping out of buildings, yet.

 I must get asked at least four times a day my take on what is happening in the real estate market.  Well, all people need a roof over their head to sleep well, right?  And, people need to move in either rain or shine, and in good times and in bad times.  Those entrenched in the real estate market for over 20 years know, this too shall pass.  It’s bad news if you bought within the last two years under a sub-prime loan.  It’s bad news if you need to sell and have owned your home for less than four years.  However, there are those who are weathering this storm and even profiting from it.  The news is not showing that the higher end market is moving, a.k.a. “the rich” know to cash in on a downturn.  As the old saying goes “A true investor doesn’t wait for the very bottom to buy or the very top to sell”  Another motto that gets slung around, “If you want to be rich, do the exact opposite of what the majority is doing”, meaning the better time to buy is when the market goes down! 

Remember 1987?  When interest rates shot up from 8-9% to over 22% overnight - literally flattening the housing market for almost 10 years. Ironically, we had an oil crisis going on back then too.  Once it rebound in the early 90’s, we had a surplus in our budget, and the economy and stocks were doing great with the birth of the dot.com industry.  1% interest rate loans stimulated a lot of risk taking in the real estate market and helped those buy homes who couldn’t normally afford to.  It also fueled a very speculative market, one that we may never see again. (The, been there done that syndrome).   Us as agents had to be so aggressive and competitive in a raging sellers market for so long that we seem to forget what a normal market feels like.  So again, the question needs to be asked, what is a normal housing market for the Bay Area? 

Before the crazed days of too low of homes for sale as inventory, before the 1-4% interest rate loan products to fuel the economy, and before the creative sub-prime loans to make everyone’s dream to own a house a reality - a normal market was 5000 homes on the market at any given time.  It used to take 2-4 months from listing your home to closing escrow.  Last week we were running at 4700 for Santa Clara County. 4% of those listed accounted for the foreclosure market.  It takes 40-90 days to sell a property when it’s priced right.  It feels all too familar to me…

The economic forecasters (Which to me are like weather news broadcasters, they get paid to point and project, never being held accountable for any of  their predictions, or for their scare-tactics), these forecasters predict that by the early part of 2008 this valley foreclosure rate will rise to 10%.  Good news is we shall see the sub-prime fallout lighten by the mid 2009 timeframe.  It will be a much slower and gradual climb the next time around though.  Don’t think you’ll double your money in real estate either, it’s rare that we’ll ever repeat such a speculative market again, especially now with the harder, tighter lending restrictions and with interest rates going up.  I’ll be happy to make another huge profit in 5-10 years once this cycle works itself out or the American people forget. 

Bookmark my blog and log back in for my educated opinion on the best places to buy into in every price range and another cool article about what a million dollars get you in San Jose. 

For Further answers to your questions, link to:     http://www.amberlists.com/buying/index.cfm?page_ID=3524&TopicId=buy&SubTopicId=Appraisal

Heat Map and Price Evaluation For the San Jose, CA Area

http://www.trulia.com/home_prices/California/San_Jose-heat_map/