Barry Noble's Blog

Since my last post 4/23/08 I have appraised a number of local properties in the Coachella Valley and note the downward trend for Current Market Values continues, but is now more noticeable in the previously less affected of our more famous cities in the Coachella Valley. An example, a residence that sold in the mid six hundred thousands range late last year, selling in the low three hundred thousands and others in similar short sale or post foreclosure status. 

At least the banks involved are being sensible and letting the properties find their Current Market Value, given the high volume of available properties for sale. Still, there remain hundreds of properties listed way over their now, dramatically lower Current Market Values, as sellers do not or will not believe what is happening in the marketplace, and are holding out for values they saw as prevalent in early 2007.

Typically the Real Estate Market is cyclical. Unfortunately both home owners and real estate agents get blinded in a Market upswing, and some don't believe what goes up will come down.  This is not altogether negative, because what goes down - typically does rise again, and if it keeps to past models, the values go higher than the last high point,  each time the up cycle reaches its  next upswing peak. If you are sitting in your primary or second home, with a relatively low fixed rate mortgage - there is nothing to worry about. It should be pointed out, the greater majority of home owners are unaffected by the market down turn. The majority of home owners are living in homes with low or no mortgages, without the need or desire to move on. However, I cannot stress enough - if you are one of those home owners paying a short term, teaser low rate with and Adjustable rate just around the corner (within the next 12+ months), you had better be negotiating a fixed rate with your current mortgage bank or another lender.  Values continue to drop, and will for quite some time, many homes purchased within the last 3 years are already worth less than their current mortgages owed, and the ability to refinence homes may become harder and harder. If you can sit tight and weather the storm, you should be A-Ok. If you believe you will be in trouble with rising adjustable rates on mortgage payments, act now. You may need to short sell or discuss other options including anything from just asking the lender to drop the mortgage (it has been done rather than their taking back the property) or deeding the property back to the lender in lieu of foreclosure. 

This isn't a short term problem, The last notable down cycle started after values were so inflated in 1989, and declined sharply in 1990 and 1991, and continued down to, and stabilized in, the period 1995-1996.  Even the professionals have been caught up in this current mess.  There are a number of loan and RE agents trying to sell their homes or in short sales and even some in foreclosure. 

Add to the misery, the gasoline prices going through the roof, food prices and everything associated with gasoline delivery costs, rising sharply, and many of the investment homes and apartment buildings, purchased over the past 5 years, as they go into foreclosure, renters are finding themselves out of their homes and facing rising rental rates elsewhere. I watched in horror just today, one sad example of life today, on the TV news, a cluster of some dozen women living together in their respective cars in a parking lot at night, for security, with all their possessions and pets in tow, using what public facilities they could find to wash and such. Many had day jobs or were semi-retired but couldn't afford to rent an apartment.  Wow, this is America in 2008, or have we reverted to the thirties? 

In a change of thought, however, this is a near perfect market for some. Perfect?  Canadians and Brits are amazed with their super rates of exchange against the dollar, and when they also see the values of homes dropping sharply here, in the perfect resort area in America,  they are buying up the short sales and foreclosures for what seems to them, pennies on the dollar.  A number are cash sales.

Investment purchasing will be a hot potato in about 9 to 12+ months from now.  (I may expand that out a few months later. There are many factors to consider still).  It all depends on what happens after the election, whether or not we have any natural disasters and how deep and long is the current recession.  But what do I know, I predicted this to all who would listen nearly three years ago and was told to bide my tongue (a polite way of saying what people really said to me).  I would just like to be able to help people cope and if there is anything this RE appraiser and Broker can do? You can email me and check out my blog. By the way, I appreciate your comments, both positive and negative.