Having largely bucked the trend of falling home prices experienced by most of the country, there is evidence that that may be changing.
With all of the recent economic news as well as the trickle down effect resulting from several industries being hit particularly hard, there is much trepidation among buyers. As a result the majority of buyers are watching homes and waiting for price reductions.
What we are not seeing on the Westside is the glut of foreclosures occurring in other parts of the Southland. Up until now Westside home prices have held in large part because most home sellers that don't get their price are simply taking their homes off the market, or leasing in lieu of selling. This is evidenced by the growing number of expired listings (failed to sell) and homes on the market for lease during the last quarter of this year.
The other factor that is impacting this market is clearly public perception. The first sentence out of every (and I mean EVERY) person I talk with about real estate is "yeah, but no one can get a loan anymore". The reality is that's not the case. I just closed a THIRTY day escrow in 31 days with a 80% LTV loan on the Westside. My experience in this market has been that if you have good credit, full documentation and a 20% down payment; loans are available. And look at the PHENOMENAL interest rates available (refer to recent interest rate postings on this blog).
Many buyers are waiting for prices to come down some more. This might very well happen however, many sellers are waiting for early '09 to put homes on the market because they believe that by then the market will have improved. Do you see the disconnect there? I anticipate more leases.
Remember that in large part real estate prices on the Westside are affected across the board. No home is being bought or sold in a "price vacuum" (all boats rise and fall with the tide). For the buyer that is trading up this presents a wonderful opportunity in this market. For example: If a buyer sells a home for $910,000 (taking a 10% loss from $1mil) the $1.5 million home on the buy side would logically have dropped to $1,350,000.
If buyers are trying to time the market I hearken back to the memorable words of Fred Sands, "No one rings a bell when the market hits bottom." In fact I doubt people who bought homes in 1993, 94, 95, etc. regret their purchases. At the end of the day, home ownership provides buyers with an interest rate tax deduction*, freedom from the whims of their landlord, and a home to call their own.
I'm not trying to imply that everything is "hunky dory" but there are opportunities out there. Find a home that you like, consult with your Realtor and trust your instincts. History has shown us that regardless of the market, you can't beat a home purchase for long term investment and enjoyment.
Stay tuned as this story continues to develop.
*always consult with your accountant or tax planner.
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