Yes, the economy is in poor shape. Yes, the stock market is down and yes, real estate prices are down. My friends will tell you that Im not a huge optimist, but I dont think Im pessimistic either. I think that I see things how they are and I tell it like it is. And what Im seeing now, is that a lot of people are taking advantage of the cards that have been dealt.
If you bought a home in the last 3“4 years, its more than likely that youll lose money if you try and sell now. Unfortunately, thats just reality. With that said, as a potential buyer or investor, one would think that all the homes on the market are being sold by distressed sellers. Right? Why else would they be looking to sell?
Sure. Some people are still in denile and are testing the water “ Ill sell my home if I get the right price. Right. Like thats going to happen. Others sellers may have over extended themselves and pulled equity out of their homes to buy cars, or pay off credit cards, or even to provide down payments on second and third homes. Others may be trying to sell their homes because they got into aggressive loans and cant afford their newly adjusted mortgage payments. Regardless of why someone is selling, I can confidently say that no one is selling because they think its a great time to sell.
So what? My point is that buyers have the upper hand in the real estate world right now. Right? Of course they do. If you cant see that this is a great time to buy, then Ill bet that you did think it was a great time to buy back in 04“05. Yes prices may slip over the next year, but how much? And how will interest rates affect your buying power? Do you think it will be easier to qualify for a loan? Doubtful.
Yes there will be more short sales and foreclosures as peoples rates adjust, but this will also tighten the requirements to fund loans. Theres plenty of money to lend, but the problem is that many people cant qualify for these loans. The banks have learned their lessons(better late then never) and money isnt easy to come by.
For those of you who think theres too much inventory out there, what are you basing that on? Is it because you, or your neighbor cant sell their home? Is it because thats what everyone else is saying? Or is it because you see cranes all over downtown? Well, here are the facts. Year to date, September of 2008 had the fewest amount of active listings the MLS(for downtown San Diego). September also had the highest amount of condos go into escrow for the year. Additionally, almost all of the proposed residential projects downtown are either on hold, or are no longer going forward. Many of those cranes are for much needed hotels, apartments and commercial space “ not so much for condos.
In fact, since July of 2008, downtown San Diego has seen fewer new listings come onto the market and a steady increase in pending units. From what Ive seen, this is primarily due to the fact that people are seeing deals and because prices are so low. They realize that this is the best time to buy and that prices will not be this low in downtown San Diego ever again. Sure, they might drop a bit more. But can you really time the bottom of the market?
*NOTE – The values above are based on weekly averages.
If youre looking to flip a house, good luck. Ive only seen one or two deals this year that were that good. But if youre looking for a good investment and you plan on holding onto this property for the next 5“10 years, I have complete confidence that youll do well. San Diego is a very young downtown. This is the time to invest and take advantage of other peoples misfortunes. Is that cruel? Not at all. I feel bad for everyone who is hurting, but I did not put them in that position. I didnt tell them to buy, nor did I tell them to pull equity out of their home.
Again, I feel bad for them and things were different, but theyre not. It is what it is and those who can should take advantage of it. Im not telling you to get a 3 year Interest Only ARM and Im not telling you that youll make a ton of money in a few years. I am telling you that prices are low and deals are being made. Once the media starts talking positively about the real estate market, youll be too late.
If youre thinking about buying a home, I suggest you really look at the facts and forget about the headlines. Figure out what your plans are for the next 5 years and see what you can afford. Are you expecting kids? Maybe youre kids are going off to college and you wont need a 5 bedroom house. How much more would you be paying if you bought and stopped renting?
Regardless of what you do, look into it and dont believe everything you hear. If you have any questions, please feel free to contact me at 858“243“2092 or [email protected]. And keep in mind, your homes only worth what you can get the day you sell it.
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