This is the question that seems to be on a lot of peoples minds these days... Has California Real Estate hit bottom or does it still have room to go down? Should I get back into the market or stay on the sidelines?
I think it is imporant to take a look at many factors when considering this point. I wanted to highlight some data to hopefully shed some light on this issue. I'm not going to give you typical always positive Realtor data that was cherry picked, but yet take into consideration a lot of wide factors affecting Real Estate today.
#1 Sales statistics
According to Dataquick: Estimated 44,167 new and resale houses and condos were sold statewide last month. That was up 13.1 percent from 39,051 in May, and up 25.5 percent from 35,202 for June 2008. Sales have been increasing for the last 12 month period on a regular basis. Sales volumes are up which is a good thing and signs that buyers are coming back into the market, especially at certain price ranges. I have been noticing through my own experiences that homes in the upper end or really even over 500,000 seem to be slow moving. However, homes in the 400,000 or under price range, homes are selling quickly in many cases, many homes receiving multiple offers in some cases, and even some getting into bidding wars on a regular occassion.
#2 Foreclosure Data
According to Foreclosure Radar: California Saw Notice of Defaults rise 11.8% to the second highest level on record at 45,691 filings. Year over year filings increased by 10% from June of 2008. As long as these numbers of foreclosures stay high or close to historic levels, there is going to be continued downward pressure on prices for the foreseable future.
#3 Median Home prices
According to Dataquick: The median price paid for a home last month was $246,000, up 7.0 percent from $230,000 in May, and down 25.0 percent from $328,000 for June a year ago. I think the fact the the median home prices are starting to balance out or even rise a bit is a good sign of stabilization, but not sure if it will hold short to medium term due to the overwhelming delay of foreclosures coming down the pipe. However, if we are not at a bottom at the lower range of homes, I think we are certainly close for certain areas of the state.
#4 Lack of Supply on the Market
Ask other Realtors in the area and you will probably here many of the same things like: "I have clients that we have written 5 offers on 5 different properties with no luck." "There are multiple offers on most of these properties in the 400,000 and under price ranges." The problem is the Foreclosure Moratorium that was implemented by California along with the slew of Federal protection laws which were all introduced to give extra time for the banks to help struggling home owners. A good concept, but ultimately delaying the inevitable for many homeowners unfortunately. 90% of properties currently scheduled for the Foreclosure sale are being delayed or cancelled to a date in the future currently.
We have also noticed that there is almost a "shadow inventory" out there from banks that have taken back properties at the foreclosure sales. These are known as REO's and many times banks want to sell these quickly. However, we have noticed many that banks have been holding for many months after taken them back that they aren't listing at all, they are just holding. They will sell these eventually but they are pinching the inventory right now for some reason, its almost market minipulation in my opinion with a lot of the things that are going on. There are literally tens of thousands of properties that will be coming onto the market in California sometime in the near future when the banks finally start taking their losses and cutting these properties loose. This will help with the supply issue that many are facing now, but will probably cause additional downward pressure on certain price points.
#5 Unemployment Rate
California's Unemployment Rate continues to rise. The most current month of June shows California's unemployment rate rise to 11.6% According to the Bureau of Labor statistics. This is the 6th highest rate in the nation. As this continues to rise or stay high, this will put added pressure on home prices for the foreseable future. It also takes many people out of the market for a new home that could have maybe bought had they still been employed.
#6 Ability to Get Financing
Ability to get financing remains very tough and programs are changing on a daily basis. Historic low interest rates have also started to creep upwards in the last few weeks. According to many Mortgage professionals I speak to on a regular basis all the new guidelines are making it tougher to get loans, not easier. So for the time being its back to the basics. Have a good job, Good credit, have a good down payment, and you will probably get a loan, anything short of that will be tough.
So what does this all mean? I think it means opportunity for certain price ranges (primarily the lower end prices) and areas and extreme caution for certain areas and higher price ranges. For more information click here.
Time will tell what happens but I think looking at a broad range of numbers certainly helps.
To learn more about Pre-Foreclosures, Foreclosures, REO's, and Auctions properties in California please visit us at http://www.fourseasrealty.com/.
I think it is imporant to take a look at many factors when considering this point. I wanted to highlight some data to hopefully shed some light on this issue. I'm not going to give you typical always positive Realtor data that was cherry picked, but yet take into consideration a lot of wide factors affecting Real Estate today.
#1 Sales statistics
According to Dataquick: Estimated 44,167 new and resale houses and condos were sold statewide last month. That was up 13.1 percent from 39,051 in May, and up 25.5 percent from 35,202 for June 2008. Sales have been increasing for the last 12 month period on a regular basis. Sales volumes are up which is a good thing and signs that buyers are coming back into the market, especially at certain price ranges. I have been noticing through my own experiences that homes in the upper end or really even over 500,000 seem to be slow moving. However, homes in the 400,000 or under price range, homes are selling quickly in many cases, many homes receiving multiple offers in some cases, and even some getting into bidding wars on a regular occassion.
#2 Foreclosure Data
According to Foreclosure Radar: California Saw Notice of Defaults rise 11.8% to the second highest level on record at 45,691 filings. Year over year filings increased by 10% from June of 2008. As long as these numbers of foreclosures stay high or close to historic levels, there is going to be continued downward pressure on prices for the foreseable future.
#3 Median Home prices
According to Dataquick: The median price paid for a home last month was $246,000, up 7.0 percent from $230,000 in May, and down 25.0 percent from $328,000 for June a year ago. I think the fact the the median home prices are starting to balance out or even rise a bit is a good sign of stabilization, but not sure if it will hold short to medium term due to the overwhelming delay of foreclosures coming down the pipe. However, if we are not at a bottom at the lower range of homes, I think we are certainly close for certain areas of the state.
#4 Lack of Supply on the Market
Ask other Realtors in the area and you will probably here many of the same things like: "I have clients that we have written 5 offers on 5 different properties with no luck." "There are multiple offers on most of these properties in the 400,000 and under price ranges." The problem is the Foreclosure Moratorium that was implemented by California along with the slew of Federal protection laws which were all introduced to give extra time for the banks to help struggling home owners. A good concept, but ultimately delaying the inevitable for many homeowners unfortunately. 90% of properties currently scheduled for the Foreclosure sale are being delayed or cancelled to a date in the future currently.
We have also noticed that there is almost a "shadow inventory" out there from banks that have taken back properties at the foreclosure sales. These are known as REO's and many times banks want to sell these quickly. However, we have noticed many that banks have been holding for many months after taken them back that they aren't listing at all, they are just holding. They will sell these eventually but they are pinching the inventory right now for some reason, its almost market minipulation in my opinion with a lot of the things that are going on. There are literally tens of thousands of properties that will be coming onto the market in California sometime in the near future when the banks finally start taking their losses and cutting these properties loose. This will help with the supply issue that many are facing now, but will probably cause additional downward pressure on certain price points.
#5 Unemployment Rate
California's Unemployment Rate continues to rise. The most current month of June shows California's unemployment rate rise to 11.6% According to the Bureau of Labor statistics. This is the 6th highest rate in the nation. As this continues to rise or stay high, this will put added pressure on home prices for the foreseable future. It also takes many people out of the market for a new home that could have maybe bought had they still been employed.
#6 Ability to Get Financing
Ability to get financing remains very tough and programs are changing on a daily basis. Historic low interest rates have also started to creep upwards in the last few weeks. According to many Mortgage professionals I speak to on a regular basis all the new guidelines are making it tougher to get loans, not easier. So for the time being its back to the basics. Have a good job, Good credit, have a good down payment, and you will probably get a loan, anything short of that will be tough.
So what does this all mean? I think it means opportunity for certain price ranges (primarily the lower end prices) and areas and extreme caution for certain areas and higher price ranges. For more information click here.
Time will tell what happens but I think looking at a broad range of numbers certainly helps.
To learn more about Pre-Foreclosures, Foreclosures, REO's, and Auctions properties in California please visit us at http://www.fourseasrealty.com/.
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