“Real estate has always been about supply and demand. When there is no supply, there is no resistance to rates. When there is supply, there is resistance to rates,” said Samuel Zell, a billionaire real estate investor, during an August 2008 interview with Greg Miles of Bloomberg Television.
During the interview, Zell predicted a turnaround in the broader real estate market. He said, “I think the direction of the real estate market will change in the first part of next year (2009).”
His contrarian prediction has since proven true. Zell's macro concept of restricted supply clearly articulates Carlsbad's current real estate market.
A restricted supply of Carlsbad housing halted the downward trend in pricing in 2009. In 2008, Carlsbad had more than12 months of sellable homes.
Buyers had a number of choices and were demanding steep discounts off already lower prices. But as fewer homes came onto the market in 2009, sellable inventory shrank to two and a half months of supply.
Buyers would search for months and find the same few “dog” or undesirable properties. More desirable homes in the $800,000's and less had multiple parties willing to bid near full asking price to be the winning bid.
In mid-2009, the bid to asking-price went up to 99 percent, an increase from the 96 percent average in 2008. The final three months of the 2009 real estate market in Carlsbad saw an increase in sales and lower market time when compared to the previous year.
More than 206 homes went under contract and/or sold from October to December, which is a 36 percent increase in sales when compared to the same period in 2008. The average time to sell a home decreased from nearly 90 days to about 60 days.
Even as buying activity is comparatively stronger than the previous year, prices have stayed relatively flat. Conservative appraisals are keeping housing appreciation low and steady.
Buyers should not feel pressured to buy because of low rates or tax credits. Buyers should take their time, focus on the area they want to live in and find a home that fits all of their needs.
But if you are waiting for prices to decrease further, it could be a long wait.
Housing bears are hoping for a double dip in housing prices. This is predicated on the sudden release of large amounts of shadow inventory from banks and a sharp increase in mortgage rates.
Banks have shown that although they have an unknown number of homes sitting vacant and unsold, their intent is not to flood the market with their own property and compete with themselves. Mortgage rates will rise when federal stimulus ends and the government withdraws from the secondary mortgage market.
But as of Jan. 15, the Federal Reserve plans to continue stimulus until the broader economy shows clear signs of sustainability and recovery. With recovery comes confidence and income.
Since inventory is expected to remain restricted, buyers will reluctantly pay the higher cost associated with increased mortgage rates, according to Zell's theory.
Short sale update
Short sales are a reality in today's real estate market. Postponements have played an integral role to staving off foreclosure and allowing the seller to complete the long and arduous short sale.
A postponement occurs when the bank reschedules the foreclosure auction date, allowing the homeowner to remain in possession of the property throughout the 90 to more than 120 day short sale approval process. Recently, an undocumented source at Fannie Mae leaked information stating that Fannie Mae will be much stricter and not even allow a postponement date for its properties.
Since Fannie Mae guarantees a majority of the mortgage market, homeowners that are or close to being upside-down on their property should seek educated, unbiased council at the first sign of financial distress; before they stop making payments on their homes. With the new changes, it will require crackerjack timing to secure a buyer, get an approval and close escrow before the home goes to auction.
For more information, contact Tyson Lund at (760) 438-0800 or [email protected].
During the interview, Zell predicted a turnaround in the broader real estate market. He said, “I think the direction of the real estate market will change in the first part of next year (2009).”
His contrarian prediction has since proven true. Zell's macro concept of restricted supply clearly articulates Carlsbad's current real estate market.
A restricted supply of Carlsbad housing halted the downward trend in pricing in 2009. In 2008, Carlsbad had more than12 months of sellable homes.
Buyers had a number of choices and were demanding steep discounts off already lower prices. But as fewer homes came onto the market in 2009, sellable inventory shrank to two and a half months of supply.
Buyers would search for months and find the same few “dog” or undesirable properties. More desirable homes in the $800,000's and less had multiple parties willing to bid near full asking price to be the winning bid.
In mid-2009, the bid to asking-price went up to 99 percent, an increase from the 96 percent average in 2008. The final three months of the 2009 real estate market in Carlsbad saw an increase in sales and lower market time when compared to the previous year.
More than 206 homes went under contract and/or sold from October to December, which is a 36 percent increase in sales when compared to the same period in 2008. The average time to sell a home decreased from nearly 90 days to about 60 days.
Even as buying activity is comparatively stronger than the previous year, prices have stayed relatively flat. Conservative appraisals are keeping housing appreciation low and steady.
Buyers should not feel pressured to buy because of low rates or tax credits. Buyers should take their time, focus on the area they want to live in and find a home that fits all of their needs.
But if you are waiting for prices to decrease further, it could be a long wait.
Housing bears are hoping for a double dip in housing prices. This is predicated on the sudden release of large amounts of shadow inventory from banks and a sharp increase in mortgage rates.
Banks have shown that although they have an unknown number of homes sitting vacant and unsold, their intent is not to flood the market with their own property and compete with themselves. Mortgage rates will rise when federal stimulus ends and the government withdraws from the secondary mortgage market.
But as of Jan. 15, the Federal Reserve plans to continue stimulus until the broader economy shows clear signs of sustainability and recovery. With recovery comes confidence and income.
Since inventory is expected to remain restricted, buyers will reluctantly pay the higher cost associated with increased mortgage rates, according to Zell's theory.
Short sale update
Short sales are a reality in today's real estate market. Postponements have played an integral role to staving off foreclosure and allowing the seller to complete the long and arduous short sale.
A postponement occurs when the bank reschedules the foreclosure auction date, allowing the homeowner to remain in possession of the property throughout the 90 to more than 120 day short sale approval process. Recently, an undocumented source at Fannie Mae leaked information stating that Fannie Mae will be much stricter and not even allow a postponement date for its properties.
Since Fannie Mae guarantees a majority of the mortgage market, homeowners that are or close to being upside-down on their property should seek educated, unbiased council at the first sign of financial distress; before they stop making payments on their homes. With the new changes, it will require crackerjack timing to secure a buyer, get an approval and close escrow before the home goes to auction.
For more information, contact Tyson Lund at (760) 438-0800 or [email protected].