Is It Safe To Buy Now? Later? Never?

Thanks to our national media spreading the fear of financial calamity into all of our lives, many of us who were shut out of buying homes in the L.A. area due to astronomical prices, are still waiting on the sidelines to buy...even though prices in some parts of L.A. County have dropped like a rock. No one wants to be the first to put their toes in the water - and the question that we are asked every time we enter a cocktail party is "When do you think we will hit the bottom?"

If only we had a crystal ball...we would be floating in a pool somewhere in the sunny South Pacific; but here are the facts that we can currently report to you:

1. Sales of single family homes have increased by almost 100% (97% to be precise) from a low of 255,340 homes in September 2007 to 502,190 homes sold in September 2008.

2. 50+% of all the homes being sold in California are bank-owned properties and prices have declined to a median of $316,480 from a peak high of $535,760.

3. According to the California Association of Realtors the unsold inventory index as of September 2008 was now at 6.7 months, versus a peak of 16 months a year ago. At 6 months the market is considered "balanced" - so we are technically shifting back towards a more balanced market.

In other words, houses are selling and there is decreasing inventory in the marketplace and greater affordability thanks to price declines - which will contribute to price stabilizing. At the same time, we anticipate that job losses and foreclosures are still increasing which will put a downward pressure on prices. The likelihood is that things won't really even out until some time in 2009.

Oh and let's not forget about interest rates - which have lately been slowly creeping up. A house priced at $500,00 with a 6% rate costs the same monthly as a $450,000 house with a 7% rate. So buying low isn't the only important variable.

For those of us who like to buy property at the very very very very bottom of the market - if you blink you may miss it. Market timing whether it be the stock exchange or real estate market is most effective in hindsight. The only way you know that you have reached the very bottom is when the market has already rebounded...and then you're too late.

For our clients who are planning on buying a home to live in for the next several years, good properties have been getting snapped up. Houses are selling rapidly with multiple offers for many bank-owned properties in neighborhoods where there are lots of them. The junkers that are overpriced are sitting - but most banks have now capitulated to the reality of the times and are unloading their inventory, pricing property to move. Be aware though - not every neighborhood is flooded with REOs. The higher-end neighborhoods where people did not use subprime loans or get 100% financing will never be in this predicament (with the exception of Ed McMahon!)

Also, buying a home takes some foresight and planning: working with your agent to find the right home in the right neighborhood, making sure that you are qualified by your lender, and then opening and closing escrow - all of it takes time and planning.

While the market is not going to dramatically rebound in the near future, its a great time to do your homework, get your financial ducks in a row, and start writing offers - especially on REOs if that's what you are interested in, which are moving very rapidly.

We are working with clients on both sides of the hill: Sherman Oaks, North Hollywood, Studio City, Lake Balboa, Los Feliz, West Los Angeles and Culver City...every neighborhood has its own micro-market and we are tracking prices and inventory for clients wherever they are interested in purchasing.

And for those of you interested in investing - there are lots of opportunities for great bread-and-butter homes and apartment buildings.

We look forward to hearing from you sooner rather than later.