California Real Estate 2009 Forecast is Regional & Local
CNN's Top 10 List of 2009's Worst Real Estate Markets contains 8 California communities: Los Angeles, Stockton, Fresno, Anaheim, San Diego, Sacramento, Riverside, and Fresno.
The economic outlook for the nation is questionable and California is more vulnerable with the state budget crisis and higher unemployment. Unemployment is going to be a major factor in local real estate markets this year.
The 2009 Forecast for California Real Estate is insignificant for buyers and sellers. More than ever, buyers and sellers need to look to their local real estate markets and experts for guidance.
Given CNN's list, we see that the Los Angeles basin represents the largest regional down market in the country. Job losses in construction and the mortgage industry were big contributors to the unemployment figures in 2008. In 2009, we are going to see job losses mount in the financial services industry as banks and investment houses continue the consolidation process and the effects of that ripple out.
Pleasanton, California is a good example of why real estate is always local. Pleasanton is a mature community that is mostly built out - there is not a lot of new construction and home values, though down, have weathered the subprime meltdown better than other areas. Foreclosure activity in Pleasanton is lower than much of Alameda & Contra Costa County, but two major employers in Pleasanton have announced layoffs - Safeway and Washington Mutual. The impact of hundreds of layoffs in a community may have a significant impact on real estate.
I've heard several comments about the upcoming change in Washington, D.C. Some homeowners are thinking that it may be best to wait until March or April to put their homes on the market this year - hoping that Obama and his team can produce some improvement quickly.
Again, if we look at Pleasanton - we know property values are still settling and though over 80% of the subprime loans in California have reset, there are still thousands of homes in the foreclosure process adding pressure to that downward movement. The impact of local unemployment is a unknown negative, but it's not going to help things.
So, here's how I see things stacking up (in general)
Sellers - Knowing your local market at the community level and the neighborhood level is extremely important. Don't base your decision on what happened with your neighbor down the street - find an experienced expert that knows the area. Base your decision to sell and when to list your home on your specific situation and needs, not what you think or hope will happen. For the past year, we have been advising clients that needed to sell in the next two years to sell now - prices are still settling and chances are if you wait, your home will depreciate more. We continue to see sellers lose money by pricing too high. Here are some articles that apply:
Buyers - Though prices have not yet hit bottom, they are close enough and conditions are such that there are other factors more significant at this point than the asking price. Everyone in the country is onboard the "we need to save the economy" and the "stop the foreclosures" bandwagons. Things don't turn around overnight, but today and for the next few months, we know that some of the best deals for homes in the East Bay are at historic highs. Many buyers have totally unrealistic ideas about how a homeowner will respond to current conditions and offers submitted. Contact an experienced agent - it costs you nothing. Whether you are buying an existing resell home or new construction, an agent (based on national data collected for over 60 years) can help you strike a better deal than you can on your own. (Obviously, this is a general statement and doesn't apply in all cases, but statistically it is true over time)
Investors - Sophisticated investors are already in the game. For the person who missed making their fortune in the real estate markets of the 80's and 90's - NOW - is your opportunity. The opportunities and potential are simply incredible - East Bay real estate has never been subjected to the current dynamics. My next post will be a letter that we are sending out to thousands of home owners about investment opportunities and different scenarios. Come back on Monday to read it.
HarperMees & Associates has been working with more and more homeowners and investors over the last six months that are thinking “outside of the box.” These are historic times. There has never been a real estate market like the one we are currently experiencing. This market is full of opportunity, much of which is missed due to “past models.” Banks have an over-abundance of foreclosed properties they want to be rid of – AND – banks have money to lend for deals that make sense.We provide a free copy of The Millionaire Real Estate Investor by Gary Keller to every potential investor we meet with.
