One of the biggest speculations today is, ‘When is the real estate recovery?’ We can’t have an economic recovery without it.
I got an email from a client and friend this morning. He and I have had some wonderful conversations about the market over the last couple years. As I was putting together an email for him – I thought this is a great topic for ‘The Voice’.
The good news in Orange County…Steven Thomas, Re/Max Real Estate Services’ President, wrote in his May 29th Market Time Report, “Current Orange County houseing demand not only obliterats 2007 levels, but it now has surpassed 2006 levels as well. Demand has reached a mark not seen in 24 months.”
So what is holding back a real estate recovery in Orange County?
? Short sale inventory- I’ve said it before but it’s worth repeating…this is dramatically impacting the market. Banking institutions could easily improve this by changing their approach and preapproving a hardship and determining a short sale price before properties hit the market.
As it stands today, I have to list a home low enough to even get an offer, then I submit the hardship and the offer to the bank for approval. Backwards! The bank can deny both the offers and the hardship! The result – inflated inventory and below market values to elicit offers that may never be approved. Traditional sellers competing with absurdly priced short sales! Until this part of the problem is solved – we are in this thing.
? Shortage of financing options and collective perception - This is improving to some degree. The irony is that it’s not that bad. It’s perception. I was talking to my dad about some of his real estate purchases when I was a kid – AITD financing, seller carrybacks, and 12 to 15% interest rates. We have collectively been spoiled by unrealistically low interest rates and lowered qualification standards for too long.
? Economic Uncertainty – With a strange election process and a new presidency on the horizon, fuel prices, increased unemployment, and inflationary woes – consumer confidence is an issue.
? Buyer Psychology - People love to buy as things are going up. It’s just simply human nature. It’s fun jumping in and riding a wave up when friends and family are all doing the same thing. It’s not as fun when there is so much negative media. What if the market goes down 10% after you buy? Even if you are not intending to sell, it doesn’t feel good. And then there is the added bonus of friends and family having the option to say, “See, I told you to wait.” So buyers continue to wait until we are back in the upswing – even if it costs them a bit more in price and higher interest rates.
