Real Estate News

Inman Real Estate News is our source for real estate industry news.

Feature Story

The summer of 2006 marked the last peak in values. At that time, low down payments and adjustable rate mortgages were the norm. Most of us believed values would likely continue to soar, or at worst flatten. Many of us now believe that the unfortunate chain of events that have lead up to the meltdown of our country's financial system was carefully orchestrated by Fannie Mae and the Federal Reserve. The consequences were, I believe, under-calculated, but maybe not. At any rate, the result is a need to print more money, which will lead to inflation, an even weaker dollar and the need for more tax revenue.

The State of the Market

By the beginning of this year we had already been in a seemingly hopeless foreclosure meltdown for a year and a half. Interest rates had fallen, but qualification requirements were making it extremely hard for first-time home buyers.

Investors, for the first time in decades, started looking to California for opportunities. Then Fannie Mae and Freddie Mac shot themselves in the feet by putting a 4-property per person ceiling on loans that they would buy on the secondary market. So they took the last segment of people who could buy houses in quantity and trashed them. Then the market trashed Fannie and Fred, who were ultimately rescued by the taxpayer.

As for "short sales" and REO's (bank repos), there is finally a growing percentage of REO properties that are not to hard to close. Banks have yet to soften on short sales, but that may change as they come to the realization that they will lose less money if they liquidate these before foreclosing... a fact that investors and Realtors have been telling them for years.

There aren't too many "normal sales" (where someone actually has to move or wants to sell for a traditional reason). Whenever I see a listing that is neither a short sale or an REO, I have to look closer in disbelief. It is the worst time to sell a house in the last 16 years, with most homeowners upside down (owing more than the value of the house) unless they bought their house a decade ago.

So what's this market good for?

Any market, regardless of condition, is always good for someone. At this time, the market is good for first-time home buyers because they can get a good deal and qualify for an FHA 3% down loan. It's not too risky, since the values are already on the rocks. If it's been at least 3 years since you've bought a home you might also qualify. There are condos right here in North Orange County for Under $200,000! They are fixers, but there's a $7,500 tax incentive that can help fix up that distressed property (ask your tax preparer).

If a rental property or a first-time home for someone in your family is something that you would like to check into, please feel free to call so we can talk things over. If it's the right thing for you to do at this time, I will enjoy helping you and can even make it a fun experience.

Let's talk! Call me direct at (714) 925-1599.