By Each time a glimmer of positive news about the real estate market shows its face, economists, real estate professionals, and politicians alike begin to shout, “We’re on our way back up! Nothing but blue skies ahead!”
While I remain hopeful, I think assertions like this are foolhardy and irresponsible.
Anyone who lives in the State of California, or who’s considered moving here, knows that the real estate market for the past several years has been pretty grim. As quickly as California’s home values increased through 2005, they have since fallen considerably due to the economic downturn, and foreclosures have run rampant.
Recently, some improvements have been noted. In the last S&P/Case-Shiller home price index, for example, home prices in California were shown to have strong gains. In Los Angeles, prices rose 1.8% in January. There were gains in San Diego of 0.9% and in San Francisco, the gain was 0.6%.
This is terrific news, make no mistake, but I suggest that a more cautious view be taken.
Here’s why.
Historically, spring home sales (and the spring market doesn’t wait til March to begin, I assure you) are the strongest of any throughout the year. Weather improves, making it more pleasant to look at homes, and people want to be able to buy a new home, so that they can move at the end of the school year, or what-have-you.
This year, we also have the Homebuyer’s Tax Credit driving more buyers into the marketplace. Add to this the fact that mortgage rates are still at rock-bottom levels, which have been made possible, in large part due to the Federal Government’s sizable activity in mortgage-backed securities, and the market for buyers is very, very attractive.
Here’s where things get sticky.
The tax credit is set to expire in just a couple of weeks. The pressure to buy before it expires will be gone. Strike one. The Federal government is about to remove itself from the mortgage-backed securities game. Mortgage rates are going to rise. Strike two. There’s wide speculation that foreclosures are going to get worse before they get better (unfortunately). Strike three.
At Intero, we choose to stay level-headed. We choose to stay in the game that’s currently being played, not the one that may or may not come in the near future. We are hopeful that things will improve, but until they do, you need agents who are dealing with reality. You need agents who will tell you like it is. Agents who know the markets in which they work and live. Intero are those agents.
