March, 2008

While the weather is not yet warm, it is warmer – and if there is going to be an increase in home sales, this is when it will start.

In the stock market they say, “Bulls make money, Bears make money, but Pigs don’t make money.” That is their way of saying that Buyers and Sellers can’t judge the top and the bottom of a market, so they should be happy to just be somewhere near the top and bottom.

If we are not at the bottom, we are certainly near. If you find a home that meets your requirement AND it is reasonably priced, this u=is the year. That is not to say that the offer should not still be lower, each home currently listed has either a large or small need to sell. While local Realtors sometimes know something about the Owners pressure to sell, NO ONE REALLY KNOWS!

I do not know, and do not WANT to know how much a Buyer will eventually offer on a home, or how much a Seller will eventually sell for. Those decisions are made between spouses, and the Realtor is not privy – nor do they want to be – so only an OFFER will determine the eventual selling price.

But I still advise the use of an Appraiser – on both sides – to have a third party place an objective value on the table. I was designated an Expert Witness on the Subject of Real Estate Values before the Superior Court, State of California, so I know the values. Nevertheless, since I have a dog in the fight, I advise the use of an outside Appraiser.

February, 2008

We remain in a slow market, but is is slower than it really deserves to be.

A home is NOT an investment!

I am not an “Investment Broker!”

A home is a warm place to stay dry, and if a person is warm and dry in their home, that meets the basic requirement. Additionally, it helps if the home meets a number of other requirements – like close to work, and in a neighborhood of compatible people.

But an investment?  Not until you are ready to take your money into a Retirement Home! Before that, if the value of your home goes down then the price on the home you want to move to also went down. In a rising market, when the price of your home goes up, so will the price of the home you want to move to go up! The relative distance between the two homes remains about the same – so if you want or need a new home, just about ANYTIME is a good time to buy.

I am not big on trading homes quickly – my first home was ours for 13 years, the second one 22 years, and this one 13 years and counting. I keep my cars, my homes, and my spouse as long as possible. (She has been with me more than 50 years, and will be forever.)

But as a society we have come to think of a home as an investment. It isn’t. It is a place to LIVE! If, by chance, it also appreciates, more the better, but you didn’t marry your spouse as an “investment” – and for certain your car is NOT an investment.

Neither is your home – at least not by design. If it does appreciate, that is frosting.

Outlook for 2008

The outlook for the local housing market over the next year is that it will continue to decline, but probably at a lower pace than 2007.

Buyers should shop carefully for bargains – vacant homes, and those advertised as “Bring Offers.” Buyers should also be aware that local Realtors know of homes that are for sale that are not listed on the MLS – some Sellers just don’t want to go through the hassle in a slow market. I do not usually recommend “Short Sales” or Foreclosures because in the case of Short Sales the “decider” is the bank, and they are notorious for slow decisions, and Foreclosures have many pitfalls. If you are a serious Buyer, there are bargains, and there will be for another year – but if you find a home you love and intend to live in it for more than five years, the home and the longevity of the purchase dictate that you buy when that home becomes available.

Sellers who do not have to sell, should not try. IF they must move, they should rent out their home for the next three or four years. If circumstances dictate that Sellers must sell, they must be prepared to accept next year’s price to facilitate the sale. I recommend employing an independent appraiser, THEN pricing the home 5%-10% below that appraised price! NO, YOU ARE NOT LOSING MONEY! You are simply not making as much money as you thought you would two years ago. If you have lived in your home more than five years, believe me you are still making a tidy profit! Don’t ne greedy – it will just leave your home unsold and on the market for a long time. Life is too short to go through that. Price your home below the current market, and move! (The “current market” is not what you, or even your Realtor believes it is – both of you have an emotional component in the pricing. Get the emotion out by employing an independent appraiser, then pricing the home to sell at substantially BELOW that price.)

I know Sellers don’t want to hear this – but it is realistic. The market will change about March of 2009, but that just means a stable market because there are thousands of homes being currently held off the market that will slowly be fed back into inventory.

We will not see a potential Sellers Market for five or six years. Buyers and Sellers must deal with REALITY!

November Comments

Making predictions after the fires have destroyed or damaged so many Rancho Bernardo homes is difficult.

Previous fires in the County have caused people to rent, buy motor homes, or purchase another home in that order -- but the % of each is pure guess. The high inventory of homes for sale means that it is unlikely that prices will be changed, but some homes will be taken off the sales market and leased instead.

It looks very much as if we have at least another six months of real estate doldrums. prices are REALLY low, but will go lower. People who must sell will have to sell perhaps 5%-10% below the market today, to sell. That is not good for Sellers, is good for Buyers. There is no stability in the market today, none on the immediate horizon, and a large inventory to eat through once some stability is established. This is starting to look ugly for Sellers, but if they have owned their homes for some time they will still be O.K. -- but, if that was their only retirement money, their retirement will not be so rosy as they had planned. Buyers are in a good position, and I would advise them to get a home they admire appraised by a qualified appraiser, and try to get the home for 5%-10% below the current value.

On either side of the negotiation, you need a tough negotiator. This is a Buyers Market. Buyers should have a "fall-back" position -- another home they can go to if the first negotiation fails, and if it fails it is because the Seller does not NEED to sell. Some Sellers want to sell, but they can stay tough simply because there is no pressing need.

Appraisers are very useful in this market -- it is $350-$400 well spent even before the bank appraiser steps in -- because that may not be until after the 17 day inspection grace period. It is ALWAYS wise to get an Appraisers opinion -- a third party with no stake in the outcome.

October Comments

Sales are happening as investors and people looking for bargains get good deals. That is what it takes -- a really good deal. Unfortunately, really good deals are seldom shown in neon lights, it takes an offer and sometimes several counters to find a "good deal." Some good deals are in neon lights.

There are good deals. Ask you Realtor -- they know which ones can be bought at a good price.

September Comments

I may be grasping at straws, but the investors are out in Rancho Bernardo -- looking for cheap rental property, and that is always a sign of a turnaround. My son, in our RB office, is extra busy in RB with just those investors, people who have been sitting on cash and sitting on the sidelines.

Smart investors do not try to "time the market" looking for the exact bottom, or top -- just being satisfied with being near the bottom or the top. It looks as is those smart investors are now in play.

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Mid-May Analysis

Regardless of what happens in the rest of the County, Rancho Bernardo just keeps moving along -- a bit slower than normal and at a reduced price, but selling nonetheless.

Part of that is the deserved reputation of the community; the Poway Unified School District (the best education available in a moderately- priced San Diego community); and one of the best self-contained communities anywhere.

It is little wonder that Rancho Bernardo continues to sell, even in a relatively slow overall market. The inventory is down from recent months, although it is still high enough to keep prices stable.

With a cool-weather Spring, the warm weather will certainly help increase sales in the lower and middle market. The only holdout area appears to be the luxury market, and that is likely to remain so for at least one more year.

March Analysis, 2007

The market is not terribly active, but it is stable at a lower level that we are accustomed to. Sales continue at what can be considered a reasonable rate, but prices are lower by about 10% from 18 months ago. Sellers who have no need to sell should not place their homes on the market unless they are willing to price their home to meet the existing market prices. Of course everyone thinks their home is the best on in the area and should demand a premium price, but realism demands that a price is placed on the home that will actually sell the home.

I recommend that an independent Appraiser be employed to assist the Seller in pricing the home properly. Even though I was certified as an Expert Witness on Real Estate Values as long ago as 1979, I like to have some uninvolved third party give their opinion. The Seller may not take either my advice on the listing price, or the Appraiser's advice -- it is after all the Seller who places the value of the home in the listing. As a Broker, I may elect to refuse to represent a property that I believe to be so overvalued that it will not sell in any given market but I cannot make the decision of the listing price.

If there is a need to sell, it is wise to be realistic.

Buyers have the best of all worlds right now -- high inventory and many homes that are reasonably priced. There is a tendency for Buyers to believe that in this market they can make unreasonable offers. Sometimes that works, but often that angers Sellers to the point they will refuse further offers from the potential Buyers.

Reasonable offers and reasonable pricing both contribute to making the market a reasonable place in which to do business.