For a couple of weeks now, I’ve been trying to figure out a way to share with you some of my thoughts about what’s been happening in the market lately.
This real estate market continues to be highly unpredictable as both natural and unnatural forces manipulate the normal economic cycles that typically dictate change.
The California Foreclosure Moratorium has had a significant influence on the market. First, let’s talk about what the moratorium is supposed to be. The purpose of this program was to force lenders to try harder to negotiate with distressed homeowners in an effort to avoid “preventable” foreclosure.
Although most lenders already meet the requirements for communicating with and working with distressed owners, just the same they suspended their foreclosure activities to avoid standing out in a time when all eyes are on the evil doers that take peoples homes.
The result? There is a back-log of inevitable foreclosures stacking up as the tens of thousands of toxic mortgages continue to mature. What makes these loans so toxic is that the home owners do not have the ability to meet the strict guidelines for proving the ability to afford the mortgage payments, even after a modification is presented.
Now that we are just over 30 days into this 90 day moratorium we seeing the affect of the screeching halt (maybe too dramatic?…you can insert ‘aggressive slowing’ if you like) in inventory of available homes for sale. If you’re out there shopping for homes now – you know exactly what I’m talking about – The mother of all COMPETITION has set up camp and she’s here to stay….for how long? Not sure.
I’ve had many conversations with people much smarter than myself on this subject. Although we are dealing primarily with conjecture, there are some educated opinions out there that all point toward the same conclusion. The conclusion may be good for home buyers.
The silver lining seems to be that the powers that be may be out of options for avoiding preventable foreclosures and simply allow this market to correct itself in a natural way. Should this be the case, once the moratorium comes to an end or nears an end, it is the widely accepted opinion of some professionals in the business that there will be “opening of the flood gates” of sorts toward the end of this summer and early fall 2009.
This means that more homes will be available to buy. Unless the demand (new buyers coming entering the market) for these homes increases to the same degree as the available inventory – we should see less offers, less competitions and less headache for frustrated home buyers.
Oh boy, there I go – I said it. I’m putting my neck and reputation on the line by trying to predict ANYTHING in this crazy real estate market. Now, before you bookmark this so you can go back and tell me i’m an idiot for not knowing what i’m talking about, let me restate that this is only an “educated guess” at best.
You know what? Since I’m jeopardizing my reputation as an analyst of the real estate market I might as well go all the way – let’s talk about a couple other opinions (aka educated guess) I have about opportunities that are still on the horizon for home buyers.
Down payment assistance programs seem to be coming back around. CalHFA announced the reinstatement of it’s CHDAP down payment and closing cost assistance program, Santa Clara County just funded a new down payment assistance program and we’ve found almost a dozen new down payment assistance programs with a recent update to the California Down Payment Assistance Programs website.
The federal first time homebuyer tax credit is due to expire on December 1st, 2009 and there’s talk about revising and extending this program as well – I’m thinking they will.
What I would like to leave you with is this…..Nobody can predict how this is all going to play out. If there is no “flood” of available homes for sale this fall, or at all, this might be what you can expect if you want to take advantage of the low housing prices in California.
Yes, i would expect that there will be more incentives and assistance available and I also believe that there’s another good year of volatility as the real estate market and the economy work themselves out. For the most part, these are natural economic cycles – it’s not the first time it’s happened, it’s not the last time it will happen.
The best thing you can do is continue to educate yourself about your local market, work with professionals that you trust to provide you with the insight and guidance to help understand the changes in your market and finally…..Manage your expectations.
I know it’s one of the most annoying phrases ever conceived but it seems appropriate to utter at this moment….The best way I can describe this Real Estate Market…..”It is what it is”.
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