This is an update to the July 2, 2007 Reflections article entitled “Market Changes Might Be on the Way.”
Well, as predicted, positive market changes have occurred and are still in process. Across the valley, value has slowly been creeping back into the market. Yes, there is still a lot of over priced junk out there, but if you search hard enough, you can find real value.
At present the news tells us we are going through a crisis of sorts in the real estate market and lending industry. The latest message from the National Association of Realtors (N.A.R.) on August 8, 2007 (from the AP wire) affirms this crisis situation, with headlines like “Home sales will hit a five-year low this year”. But is this all bad? Not necessarily; ultimately it could be very positive. Regarding real estate here in Palm Springs and other parts of the Coachella Valley, we just can’t buy all of the doom and gloom forecasts about how the real estate market is tanking. Every day it’s been the same headlines – foreclosures are up, or there’s a liquidity crisis in home mortgage lending, or sales of new and existing homes are dropping.
Every day we get bombarded with negativity. That’s scaring buyers away. But things are not stagnant. If you believe conditions will improve, as we do, now is the time for you as a Buyer to reenter the market and take action, while the rest stand by, waiting. By the time the majority of the buying public realizes that the situation has improved, the best buys are going to be gone.
Our demographics create special opportunity here, shielding us somewhat from the negative forces affecting many parts of the country. In this little corner of the universe, things are going to be just fine. We don’t see prices collapsing. Perhaps a collapse might be the case in the Rust Belt, or in some of the major urban blighted areas, but not in the Valley. Here we have many young couples out of L.A., S.F. and elsewhere, looking for a second home, and older folks scaling down, searching for a warm, sunny climate where they can retire; and, of course, we have our beloved snow birds who come back annually to their retreats from the grey, winter blahs of colder climes.
No housing bubble is going to burst. Waiting could mean missed opportunity. The dynamics of our market favor continued growth. The uncertainty within the banking industry and volatility of the stock market are blips on the screen and will be resolved. Just today the Fed took action to reduce a key interest rate a half percentage point. This is not a total solution but it is a good initial step. Further action by the Fed is expected in September. When all of this shakes out this fall, relative value will be back in the real estate market, and more Buyers recognizing the change will be back. The savvy Buyer will act now, before all of this is recognized by the general public.
Now, and over the next six months, will be a good time to buy real estate here. Maybe we are just a bunch of contrarians, but usually when everyone is running away from a market or putting off making a decision, it IS the time to do the exact opposite and start looking. Market timing is impossible to predict. By the time everyone realizes it’s a good time to buy, it’s too late for the best bargains.
Really good deals are possible right now. It is truly a Buyers Market, despite Buyers being largely absent, which is a pity. Sellers are really anxious now and want to receive an offer, almost any offer – just to get the negotiating process started.
If you are a potential Buyer, we’d suggest you seriously consider starting your search now. Those who wait until next year will find that today’s bargains and those in the next few months will be gone by then. The “sky is not falling”, and the time to act is now.