Dear Friends and Clients, each year we put together a letter thanking you for your support the past year welcoming phone calls, notes, emails and referrals during the coming 12 months. Our motto is "Building Clients for Life" and we pursue that goal with each one of you. We hope we have earned the right to be the agent you think of when you have real estate questions.
In that pursuit we would like to share our perspective on the Real Estate Market of 2009 and some thoughts on where the single family home and condominium market is headed for 2010.
What a difference a year makes. January 2009 found us hard pressed to find anything positive to say about this business we love. With the aid of aggressive subsidies (the first time homebuyer tax credit was extended and revised in 2009 to include some qualifying move-up buyers) sales began to increase by May 2009, fueled by the fact that job losses had helped to swell distressed home inventories appeared to be easing by year’s end. In December, the Labor Department announced that initial loss claims were lowest since September 2008. The number of sales in 2009 increased over 2008, fueled by increasing affordability.
Looking forward into 2010, we see that as long as interest rates remain below 6%, the number of home sales is expected to continue to rising. Despite this, prices will still face considerable headwinds. There will be a continued supply of inventory from distressed homes, and interest rates are expected to rise when the government stops subsidizing mortgage-backed securities.
Since the conventional wisdom is that all real estate is local – what does this mean for home buyers and sellers in the San Fernando Valley and Los Angeles County? If you are buying or selling in prices below or around $800,000, you will find financing available and in many cases competition among buyers quite stiff. If your interests and needs lie in price ranges above this level, you will find that the pendulum has still not swung back to what is normally considered a balanced market (housing supply is said to be balanced at six months inventory on hand). Pricing in all price ranges is extremely critical. The best advice is to price your home at or below the most recent comparable sales in your neighborhood.
The major concern going forward is a possible increase in foreclosure and short sale activity. Foreclosure filings in 2009 increased in California 21% over totals for 2008. This concern, coupled with likely increases in interest rates, would tend to indicate that pricing increases will not be a factor for the next couple of years.
If you are in need of purchasing a home, the timing couldn’t be better. Prices remain down and interest rates are at record lows. If you are in need of selling your home you should consider that waiting may not produce higher prices in the foreseeable future. Interest rate increases will exert a downward pressure on prices.
As always we would love to hear from each one of you. If you have any questions we are here to help.