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Real Estate: Market Time Report for 8/23

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  • Real Estate: Market Time Report for 8/23

    The latest market time report is out. Not very good news for sellers, but it's a GREAT time to be a buyer. As always, if you're getting ready to buy or sell real estate here in Orange County, I can help! Send me a PM and we'll talk. Or you can visit my real estate blog at www.countyofcastles.com


    Market Time Report: Market Time Passes the One Year Mark

    August 23, 2007

    Good Afternoon!
    The lack of liquidity in the financial market due to the past few weeks on Wall Street has put a giant lid on demand here in Orange County.12.12 months

    Currently short sales and foreclosures in Orange County account for 6%ofthe active inventory. Of all the short sales and foreclosures currently on the market, 55% are below $500,000 and 92% are below $750,000. So, short sales have really impacted the condominium market and areas with lower average sales prices. For example, Santa Ana has a market time of 25.49 months, or more than two years.



    With Wall Street stabilized due to Bernanke and the Federal Reserves emergency action last week, it looks as if they can now wait until their next meeting in mid-September to take any further steps to stabilize the financial markets. It appears now that they are poised to cut both the discount and short term rates at that meeting. Rates over the past week have already started to move in the downward direction in anticipation of such a move. Current demand is 37% less than last year and 60% less than two years ago. While the Department of Treasury, the Federal Reserve, congress, Wall Street, etc., seek to repair the financial marketplace, it looks as if demand will continue to be hampered until liquidity increases. Demand will most likely receive a boost after Bernanke and the Federal Reserve announce a drop in rates. Even though rates are already dropping in anticipation, the announcement will be a psychological boost to the housing market. It is back to school over the next couple of weeks, marking the beginning of the Autumn market. Now is the beginning of the season of sellers pulling their homes off the market. With demand dropping and nearly 18,000 homes on the market, most sellers will not be successful in selling their homes over the Autumn and Holiday markets; thus, to avoid the hassle and frustration, the sellers who really do not have to sell will just throw in the towel. The active inventory will drop over the coming months. The Holiday market, Halloween through the first couple of weeks of the New Year, will be marked be very low demand, typically the lowest levels of the year (we may be experiencing the lowest levels right now), and a further drop in the active inventory as more and more sellers throw in the towel.

    How should a seller approach the marketGiven current demand, 16,406 homeowners will NOT be successful over the course of the next month, or an 8% chance of achieving success. Sellers who are unwilling to price their homes aggressively in this market do not stand a chance. In our offices, I have heard many agents who are surprised at their sellers who are reluctant to listen to the market facts, most recent sales and escrows, and price according to their own needs or desires. Unfortunately, buyers do not care about sellers needs when it comes to purchasing a home. The sellers who have been successful recently are those that have stepped out of the box and are willing to price their home to sell. Pricing a home correctly upon entering the market is extremely important as well. Homes that have been on the market for a long period of time end up reducing a number of times and chase the market down in price. Buyers ask why these homes have been on the market for so long and they essentially become stigmatized. It goes without saying that a home must be in excellent condition too. With so much competition, homes that look great and are priced well achieve success. With low demand, though, sellers must also be patient. The right price and condition do not guarantee a quick sale. So, now is the time for a real gut check for sellers: if you are not priced right and do not have the stomach for the current market, it is time to pull your home off of the market.

    How should a buyer approach the market?historically Southern California and Orange County is a fantastic long term investment, not to mention an enviable place to live with a real lack of buildable raw land.

    The following areas have inventories of less than ten months: Anaheim Hills, Brea, Canyon Areas, Cypress, Foothill Ranch, Huntington Beach, Laguna Woods, Mission Viejo, Rancho Santa Margarita and Seal Beach.

    The following areas have inventories greater than fourteen months: Anaheim, Corona Del Mar, Dove Canyon, Garden Grove, Laguna Hills, La Habra, Lake Forest, Portola Hills, San Clemente, San Juan, Santa Ana, Talega, Tustin, Villa Park and all ranges above $2 million.

    Unusually and exceedingly peculiar and altogether quite impossible to describe...


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