Manhattan Beach-Beach Cities: Home Prices and Loans..

On Friday the FED lowered the discount rate and is widely expected to lower the funds rate at it's next meeting in September. The discount rate is the rate banks charge each other for short term loans and the funds rate deals with the cost of money or interest rates. The discount rate will help the credit market retain liquidity and the funds rate rate will have an effect on mortgage rates down line. It's a bit confusing as mortgage rates are actually determined by the bond market...but let's not get too technical.

The credit market is not out of the woods yet and Jumbo loans will continue high as long as the market sees them as risky. Lenders are going out of business as fast as they used to go into business. If you aren't familiar with Implode.com and it's Mortgage Lender Implode-0-Meter take a look. There are now 128 lenders that have officially shut down their lending programs. National City Mortgage which is a big player in the second market is also in trouble. When you get players like Countrywide, WAMU and National City looking shaky then you have big problems. This is not going to go away in a week or two with business returning to normal. To see how rate hikes on Jumbo loans affect our market read The Great Loan Blog post..

So what does it mean to us... well Manhattan Beach has only had 8 properties (homes and townhomes) go into escrow since August 1, 2007. North Redondo, our affordable property gage, has seen 15 pending sales(homes and townhomes).. and 8 of those were before August 4, 2007 when the market took the big dive. South Redondo is actually the big winner with 21 pending sales... El Segundo has 4 and Hermosa Beach only has 3 pending sales since August 1, 2007 .

New listings are not coming on the market and I'm beginning to see some larger price reductions in North and South Redondo. I expect to see home prices in Hermosa Beach and Manhattan Beach shift downward a little in those markets with large inventory over the $2 million mark.

If you have a home that has been on the market over 60 days and no one loves you it might be time to either take it off the market, rent it or think about a realistic price reduction. Otherwise you are going to be chasing a down market and in the end it will cost you more then a quick price reduction today. Trust me on this... the jumbo loan market isn't going to get significantly better even if the FED cuts rates in September. I don't see a major fall in prices (25%+) but I do believe our market is headed for some tougher times as the real estate market tries to adjust to the woes of the financial markets.

No one wants to believe that the South Bay-Beach Cities real estate market will be affected but it will... so be smart now. If you have to sell.. bite the bullet and price your home to sell in today's market not last year's market.