As we enter a new decade, buyers who have hesitated are increasingly discovering that there are some very compelling reasons to make the move now. After an initial shift from a “seller’s market” to a “buyer’s market” at the end of 2007, home sale prices weakened considerably in 2008.
Single-family home sale prices in Santa Monica have dropped another 17-20% in 2009, although at a much slower rate in the fourth quarter.
The current housing market is a puzzle with many moving parts. There are periods when the moving parts appear to be ambiguous. Although buyers have fewer homes to select from at the start of 2010 than we have seen for more than a year, sellers whose homes have not sold for many months are often willing to accept prices lower than most people would have expected.
As long as interest rates remain relatively low, buyers are likely to continue finding that the market is in their favor and be in a position to purchase homes that even six months ago would not have been affordable. Of course, buyers need to have sufficient liquid assets and income, a secure job, and good credit scores in order to qualify for financing.
The total number of local homes sold in 2009 was almost identical to the numbers in 2008. However, in December 2009 there were 19 sales as compared with only five in December 2008. This increase has obviously contributed to there being an inventory of 19% fewer homes available.
Areas such as Santa Monica have felt very little impact due to foreclosure sales. The overall increase in such types of sales has had some negative effect. However, even if only on a psychological level. If the level of sales continues to be higher in 2010 than it has been, buyers may absorb the housing inventory even if the inventory is somewhat increased by homes for sale due to financial pressures.
Buyers who hesitate to actually make a purchase may miss this golden opportunity of optimizing their home purchasing power with low prices and interest rates. As has been observed, no one will ring a bell at the optimum moment, and it is only by looking back later are we able to see when the market turned.
It may encourage buyers to remember and appreciate that they are primarily buying a home, not merely making an investment. Although real estate has proven to be an excellent long-term investment, homes are where people center their lives, make future plans, and create their dreams.
This is the time for serious buyers to be getting pre-approved by an experienced loan source so they are prepared in advance to make purchase offers. This will also give them more leverage in negotiations with a seller. Most prospective buyers already are doing considerable research on the internet, and many stop by open houses on weekends to become familiar with the inventory in person. It can also be helpful to use various property search sites such as Realtor.com, Search.www.LALuxuryHomesNow.com, and the www.MLS.com.
Once a buyer is ready to identify a specific home, they would do well to select a knowledgeable realtor who is an expert in that particular area. Such an agent can provide important information regarding specific neighborhoods, schools, and other important details about the various properties. A wise buyer will carefully interview prospective agents to be satisfied as to their experience, level of negotiating skills, and familiarity with the present challenging market.
With the anticipated increase in the number of new homes available which typically occurs in the early part of a new year, 2010 is sure to present some excellent opportunities. Happy home-buying!
For the past 24 years Michael Edlen has provided real estate counseling services to prospective buyers and sellers. More tips and information are available on www.MichaelEdlen.com. He can be reached at 310.230.7373.
Real Estate ConsultantMichael@MichaelEdlen.com