Making a housing decision based on Doom and Gloom will wind up costing consumers who want to buy a home. Most people think they can time the market and buy at the bottom. A number of potential buyers are afraid that if they buy now the housing market will drop drastically and they will lose money. The fact is that a lot of buyers will wind up missing the point when the market begins to change. They will miss it because they are so caught up in bad news that they will not be able to tell when the market changes and take advantage of the change.
I don't know when the market will reach bottom. I do know that once it reaches that point it will stay relatively flat for a time before cautiously moving upward. I know this because this is how the Manhattan Beach-Beach Cities and the general California real estate market has behaved for many years. I know that the flat time will be a good time to buy. I also know that bar a massive recession or other disaster we may see the market begin to level off within the next 6-8 months. A number of buyers will miss that period because they don't understand that a flat market after a down market is the bottom. Too many prospective purchasers keep waiting for the bottom long after the bottom has been reached and the market begins to move upward.
In a recent Daily Breeze article on California foreclosures the article noted that most of the foreclosures in the South Bay were in Carson and Gardena and other areas to the east. The article pointed out that the rate of foreclosures in the South Bay was half what it was last year... Hmmm...now that would have been an interesting headline but it wasn't the one chosen by the paper. Nope the headline was about the large number of foreclosures in CA. I'm betting a number of potential buyers caught the headlines and missed most of the report.
Negativity sells newspapers. But negativity can also cost you money. Most of the people who are trying to time the market will fail miserably. A number of those who are the most adamant about waiting for prices to drop are the same people who missed the late 90's and early 2000 market. They are going to miss this one too.
If you are thinking about buying a home then you need to find out what is really happening in the market where you want to buy. Do you want to know about the number of foreclosures in your zip code... check out Foreclosures: How Does your Zip code Fare . This tells you the number of foreclosed properties in your zip code. There are 2 in Manhattan Beach, 3 in Hermosa Beach, 7 in North Redondo, 9 in South Redondo and 1 in El Segundo. If you are waiting to buy a foreclosed property in the Beach Cities... it could be a long wait.
Its tough for prospective buyers in this market. The media cries that the entire state of California is in foreclosure but most of the highly desirable local markets just don't seem to reflect that data. Buyers still don't understand that when the headlines talk about massive foreclosures they are in Palmdale and Lancaster not Manhattan, Hermosa or Redondo. Prices have gone down but they haven't reached meltdown.... and are not headed in that direction. Real estate agents get blamed for spinning if they don't talk about the terrible real estate market in the Beach Cities. The truth is the market isn't what it was four years ago but it isn't awful.
Since April 1, 2008 20 homes and 6 townhomes have gone into escrow in Manhattan Beach. That's a bit more then one per day. This is not a bad market.. not great... but definitely not bad. We need to stop comparing the current market to that of a few years ago. More homes sold in 2003, 2004, 2005 and 2006 then at any other time in the last 50 years. We won't see those numbers again.
I don't know when the market will reach bottom. I do know that once it reaches that point it will stay relatively flat for a time before cautiously moving upward. I know this because this is how the Manhattan Beach-Beach Cities and the general California real estate market has behaved for many years. I know that the flat time will be a good time to buy. I also know that bar a massive recession or other disaster we may see the market begin to level off within the next 6-8 months. A number of buyers will miss that period because they don't understand that a flat market after a down market is the bottom. Too many prospective purchasers keep waiting for the bottom long after the bottom has been reached and the market begins to move upward.
In a recent Daily Breeze article on California foreclosures the article noted that most of the foreclosures in the South Bay were in Carson and Gardena and other areas to the east. The article pointed out that the rate of foreclosures in the South Bay was half what it was last year... Hmmm...now that would have been an interesting headline but it wasn't the one chosen by the paper. Nope the headline was about the large number of foreclosures in CA. I'm betting a number of potential buyers caught the headlines and missed most of the report.
Negativity sells newspapers. But negativity can also cost you money. Most of the people who are trying to time the market will fail miserably. A number of those who are the most adamant about waiting for prices to drop are the same people who missed the late 90's and early 2000 market. They are going to miss this one too.
If you are thinking about buying a home then you need to find out what is really happening in the market where you want to buy. Do you want to know about the number of foreclosures in your zip code... check out Foreclosures: How Does your Zip code Fare . This tells you the number of foreclosed properties in your zip code. There are 2 in Manhattan Beach, 3 in Hermosa Beach, 7 in North Redondo, 9 in South Redondo and 1 in El Segundo. If you are waiting to buy a foreclosed property in the Beach Cities... it could be a long wait.
Its tough for prospective buyers in this market. The media cries that the entire state of California is in foreclosure but most of the highly desirable local markets just don't seem to reflect that data. Buyers still don't understand that when the headlines talk about massive foreclosures they are in Palmdale and Lancaster not Manhattan, Hermosa or Redondo. Prices have gone down but they haven't reached meltdown.... and are not headed in that direction. Real estate agents get blamed for spinning if they don't talk about the terrible real estate market in the Beach Cities. The truth is the market isn't what it was four years ago but it isn't awful.
Since April 1, 2008 20 homes and 6 townhomes have gone into escrow in Manhattan Beach. That's a bit more then one per day. This is not a bad market.. not great... but definitely not bad. We need to stop comparing the current market to that of a few years ago. More homes sold in 2003, 2004, 2005 and 2006 then at any other time in the last 50 years. We won't see those numbers again.
It's time to look at the current market. If you are thinking of buying make your judgement on what you need to do personally and on what you see happening in this market.... not the one in 2004. Buy something you can afford and plan to stay there for awhile... 5-7 years at a minimum. Understand that you are buying a place to live not a mutual fund. If you plan smart and buy a property that makes sense the chances are very good that you will have a nice place to live and maybe make a little money along the way.
3 comments:
Kaye, from what I know of you (mainly through this blog), you seem to be a straight shooter. However, look at what you are doing here:
"Negativity sells newspapers"
and then
"A number of those who are the most adamant about waiting...are the same people who missed the late 90's and early 2000 market. They are going to miss this one too."
Isn't that the same sort of attitude you are complaining about...using fear (of being 'priced out forever') in order to get people to buy houses...now?
During the last downturn, the "flat bottom" was several years in length...and the prices of the peak were not reached again until 9 years later.
Another scary thing to realize is that many of the same people who said that "there is no bubble", "the higher house prices are based on fundamentals" and "we have full employment, house prices won't fall" are the same ones calling the (impending) housing bottom.
We may agree to disagree about the timing of a market bottom, but I don't think that people waiting a year to "see how the market shakes out" will be priced out forever any time soon. And they may very well be able to continue to rent a house (in many cases, the exact same house) for a few years, and avoid paying excessive $$$ each month on a high mortgage, property taxes, insurance, etc. that takes up a significant percentage of their take home pay (especially in this era of high energy and food costs).
- arroyogrande
Arroyogrande,
You have to realize that it is different here. These fundamentals don't apply to an area like Manhattan Beach. Prices will start to rise over the summer and we'll be beack to 10% yearly it to the bank. This is truly one of the three most desirable cummunities in North America.
mbrealist,
Being sarcastic doesn't cut it either.. Just because the local market hasn't been devastated doesn't mean there are not issues.
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