1/2 Point drop in the Fed Rate -could it be one small step for Man, one giant leap for Wall Street, and maybe a little shuffle for the lower income home owner?
Now if the banks can see past how to profit on the losses, and help out some of the recent home buyers who got in, out of their depth without swimming lessons, then there's hope for the floundering economy.
Trouble is, an iceberg shows only a small percentage of its bulk at the water surface. The U.S. and European "default bergs" have only just broken away from the lender-created and unstable ice shelf and global warming can't be blamed here. The bergs are floating dangerously close to the economic shipping lanes. When the many low income homeowners due to convert to their adjustable rates over the next 18 months hit those icebergs - will there be lifeboats built in time, or will the sharks have a feeding frenzy? (Puns all intended).
Barry Noble, So Cal RE Appraiser & Broker
www.FastAppraisalValue.com/barrynoblesblog
Barry@PalmSpringsCA.net
As the residential real estate Market appears to be spiraling into a melt down there remain thousands of home owners who's Adjustable rates (ARMs) still are languishing in the early teaser fixed rate period, but they may enter the dreaded start of adjustable rates within a few months to a year. All of those people who now realize they won't be able to resell their homes at the super profit their sales agents had suggested, when they first bought the house, and who also may not be able to make the rising adjustable rate monthly payments, even with a two or three incomes, when the loan converts - Now is the time to be talking to an honest loan broker or lender. Yes, they are out there - get a referral, and probably it will not be the lender who put you into the questionable loan in the first place. Now is the time to negotiate a change in your loan - don't wait until payments are getting behind and more difficult to make. By then the house will have lost enough value you'll need a sharply "short" sale and you may ruin your credit for any future home or major purchase for a decade or more.
Find out quickly what your home is worth. Not from a potential listing agent who wants your listing and may value it high, only to tell you three months later it must be dropped 20%. Then it may be too late again. Get an appraisal of your property - be prepared to accept an independent, honest and accurate estimate of Current Market Value by a local Appraiser. Yes, there are honest local appraisers out there and here. This will set the ball rolling, and get a referral to a good lender to see what can be done to save the home and adjust the mortgage to workable payments.
In a dropping Market - the Current Market Value may only be within the actual value range for a short period - maybe 2 months. (It is usually to 6 months in a strong or rising Market, but a declining Market often drops fast and the lenders will not loan on equity that they believe will no longer be there in 3 months. Thus an appraisal is conservative and far more accurate for THAT Market in this portion of the Real estate Market Cycle.
Values may continue to drop through 2009 at least, barring major economic up-turns. With the pace of dwindling sales and resales or residences in most areas of the country, the attendant massive numbers of job losses in related businesses, such as contractors, builders, transportation, building supply sales and manufacture, ad infinitum, will spill over to all commercial and retail resale and services who in turn will be laying off employees. As people lose their jobs and cannot maintain purchasing to the levels seen over the past five years, that dreaded Recession word may come into play earlier than some of the more daring predictions would have us believe.
Barry Noble (760) 992-9523
REAL ESTATE APPRAISALS & BROKER CONSULTATION
IN PALM SPRINGS AND ALL OF THE SOUTHERN CALIFORNIA
DESERT RESORT CITIES
barry@PalmSpringsFinest.com
HOME SELLERS IN THE COACHELLA VALLEY MUST PAUSE AND TAKE STOCK OF THE CURRENT MARKET.
© 2007 Barry Noble, Palm Springs
To all current or potential Home Sellers in any of the Desert Resort Cities of Coachella Valley - including but not limited to Palm Springs, Rancho Mirage, Cathedral City, Palm Desert, Indian Wells, La Quinta, Indo, Coachella, Desert Hot Springs and Yucca Valley and other outlying areas:
Values in all but the highest value range should continue a notable decline. IT IS A NORMAL MARKET CYCLE -the 2006 inflated values are settling down and the Market should remain in a decline for at least the next 18 months. The Sub-Prime debacle is only making it more severe than a typical decline.
Gone are the "sold within a week of listing" sales and short Escrows.
Gone is this Cycle's "Seller's Market".
If you've been advised to wait until new Season to list your house at the OLD price you had it listed for sale in early 2007, assume that was "Bad Advice" and other bad advice often follows bad advice.
The Market Values are no longer stable or rising. It truly is a Buyer's Market - so you need to price that residence or income property to be competitive. Waiting will only result in yet an even lower value. You might consider sitting and holding the property - or rent it out - two good moves if you can wait until at least into 2009 for a stabilizing Market at its lower dip of the Market Cycle - or to late 2009 early 2010 for a potential rising Market again. The rise should be a good one, barring unforeseen other economic downturns or "the" earthquake, but it is for the patient Home owner or Seller.
If a Real Estate agent is willing to take on the listing of your home without clearly illustrating the true Current Market Values of the neighborhood - be wary. If your agent is ready to tell you the truth about values, even if you don't want to hear about value declines when you are ready to sell - hang on to that agent, He or She is doing you a big favor. Don't sit on the Market for months with a now unreasonable asking price - wasting your time as the home drops further in value. I can help you and your agent get ahead of the game.
If you are thinking of selling, don't have an agent yet and need advice - call me.
If you are having financial problems with an unwieldy sudden change in an adjustable mortgage rate - call me for a referral to someone who will give you some of the most honest advice you can ask for.
If you REALLY want or need to sell soon, and want to be TRULY competitive in the Current Market - with an ever growing list of homes for sale, call me or have your agent call me - I am here to help you - use me to round out your team of experts to put you ahead of the game. The Market is so volatile now, don't delay - USE me as soon as possible, to establish the most accurate Current Market Value Estimate - get advice on how your property compares with other properties in your value and quality range - and be well ahead of the game with a Key Listing Appraisal that not only estimates the Current Market Value and tells you what you need to know to help that listing, but also get a prediction of what values are doing over the next 6 months - so you can truly list that property ahead of the many (and growing list of) competing properties. You'll know just where it should be listed - and then it's up to you - Go all out for the sale, with your agent or broker - or sit back and be one of the many listings languishing on the MLS with little chance of a sale in the next 8 months because they are nowhere near their most accurate Current Market Values.
A listing Appraisal will help you with a professional Appraiser's opinion of the most accurate estimate of the property's Current Market Value to that date. You will also get a short consultant commentary on your property as it measures up to the competition and my insight into where the Market values appear to be going over the 6 months time you may be listed.
Barry Noble
760-992-9523 barry@PalmSpringsFinest.com
Barry Noble is a local Real estate Broker working out of Palm Springs, California. He's seen all the So California real estate cycles and studied other areas across the US and their relation to the overall Market. (Ask me about the real estate cycles) and has appraised locally for over 18 years. He's also a RE Broker who adds his Broker experience and knowledge to offer his best efforts in determining the most accurate estimate of Current Market Values for Listing, Purchase and Refinance loans, estate , Tax and other services.
Residential Real Estate Coachella Valley Resort cities and the High Desert
Barry Noble Predicts September 2007 through March 2008.
(C) 2007 Barry Noble, all rights reserved.
September 2007: I am of the opinion there will be steady but much slower, almost the old "normal" Residential Real Estate sales here in the Coachella Valley BUT the dynamic has dramatically changed - a "Normal Market" is in the offing for 12 to 18+ months, despite dire predictions about sub-primes and foreclosures. As the current 07-08 new high season approaches, a Market of a moderate number of residential sales with a notable decline in inflationary property values is "normal" to the ever active Real Estate cycle, made somewhat tighter by the general economic downturns affected by sub-prime lending woes. This may not be what real estate sellers and their agents want to hear, after these past several years of wild sales and notably inflating values. Foreclosures will greatly increase through 2008, unless something drastic is accomplished in the lending industry to help those homeowners who might survive, with some mortgage assistance. Overall, the foreclosures debacle should not adversely affect most of the retirement and second home residential market.
So, who will be purchasing? The highest number of buyers will come from the very fast growing, middle class "boomer" second home and retirement market with, most importantly, cash to put down and good credit. They will buy primarily in Palm Springs, Palm Desert, and La Quinta and, possibly and surprisingly, Yucca Valley - one of the Top Ten California Cities touted for retirement in 2007. (Aside: Look for the next five years to be a big boost to Yucca Valley and Joshua Tree).
Also, the gay second home and retirement groups, with, again, good credit and down-payments, will continue to seek and buy homes in primarily in Palm Springs, Rancho Mirage and Cathedral City. They too will be approaching it as a "Buyer's Market" and looking for real bargains, as their primary homes to the North, South West and East will all be hurt by their own local price declines.
Another local Market to pay a lot more attention to is the Hispanic Market - throughout the Coachella Valley. They will buy in all levels of value and are Buyers to be courted and many remain very loyal to honest real estate professionals for future business and referrals.
A smaller group of buyers - but a group with much clout, is that of the high-end home buyers. They were not necessarily hurt by Sub-Prime loans, unless, perhaps, they invested in those now struggling lending companies, however, don't make the mistake of not understanding that they too will be looking at the Market as a "Buyer's Market" and shying away from inflated pricing. There will be few wealthy buyers looking for "high end fixers". The high end buyers are more and more looking for the extraordinary, the largest, and the unusual and ultimate luxury offerings. It is almost a competition now to have the biggest and the best - in a new Gilded Age for those who can afford it.
Overall, the sales will be fewer, but those sellers who realize the Market is waterlogged (in the desert?), with a flash flood of houses and condos for sale, and who bring their homes down to below neighborhoods current Market values - and who are selling retrofitted or updated homes - will find a strong Market - the others will continue to clutter the MLS with over priced offerings. It is not a good time for "fixer" homes - as the "investors" are "gun shy" and can't see inflated profits in the offing, three to six months from now for their retrofits. Offered "fixers" will have to be at an exciting low price against comparable fixers in the area, and those "fixers" should only be unusual or notably special architectural gems - of historical interest or in a highly sought after neighborhood.
Hurting will be the Orange County-like tracts, on the outskirts of most Coachella Valley wide cities - and the "Higher-End " developments in early and mid phases of development, Some foreclosures and "desperation" sales will hurt, plus many developers are going to hold back on completing later phases until the Market turns again. Some major builders have already started "selling off" final phases in notable developments - much to the chagrin of the buyers who closed within the past 6 months, as they see their home models selling up to 20% lower than they recently paid. Others are pricing their models "down" or either adding incentives in the base prices, or down grading the interior features to soften prices.
I so enjoy living in the Southern California desert resorts area and have been working here almost 18 years. I've seen the up and down Real Estate cycles first hand, both here and in the greater Los Angeles area. I predicted the current sub-prime problems, over 18 months ago, even when many didn't want to hear about it.
Caveat: These predictions assume the "San Andreas faultline" earthquake doesn't adversely affect the Coachella Valley in the next 18 months period. Unfortunately, I can't claim abilities to predict that event.
Copyright 2007 Barry Noble, all rights reserved
www.FastAppraisalValue.com
barry@PalmSpringsCA.com
Office: (760) 992-9523
Fax: (760) 327-4119
Barry Noble is a Coachella Valley local State Of California Licensed Real Estate Appraiser and independent Broker, who has been appraising residential real estate in the Coachella Valley and high desert around Yucca Valley for almost 18 years. Prior to that, he appraised residential properties in the greater Los Angeles area. He lives in and works out of Palm Springs and can be reached at www.fastappraisalvalue.com.
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