Bleak, Bleaker, Bleakest or Opportunity Knocks?

Well, for this first Monday in December, those of us in the real estate industry (and frankly those of us living and breathing in the United States!) were greeted by further negative economic news:

1. The Dow Jones skidded significantly lower today, closing more than 7% down…(check out the Wall Street Journal at http://online.wsj.com/article/SB122813164021168699.html)

2. Received official acknowledgement by the nonpartisan National Bureau of Economic Research that yes we are indeed in a recession (which started one year ago today)

3. The Commerce Department reported construction spending dropped even more significantly (1.2 percent in October) than the 0.9 percent analysts had predicted.

4. Rethinking Fannie Mae and Freddie Mac’s structure and roles – the hybrid existence of these two agencies providing government-backed lending security while driven to provide profits to private shareholders is being reevaluated on Capitol Hill. Until the future of these two agencies is hammered out in Congress, it will be difficult for many potential homebuyers to obtain financing. (WSJ at http://online.wsj.com/article/SB122809132669667781.html)

Until the credit crisis settles down and housing prices flatten out, it is unlikely that we will see a bottom to the current real estate market. Once liquidity is more readily available to the average American, the threat of continued economic downturn starts to abate, there will be an influx of buyers once again into the market. Current analyst predictions are that the housing market in L.A. County won’t really start to turn around until middle or late 2009. That means that for the next 8-12 months, it’s the optimal time to be buying local real estate.

For those buyers who do have good credit, it’s a great time to go shopping for a home. And for investors with cash and great credit, there are bargains to be had. Last week I was in a conversation with a local broker/developer who bragged about the beautiful brand-new 3/3 bath townhome style condo in a great part of the San Fernando Valley that he picked up for a song at $263,000 (about 40cents on the dollar for what it would have been worth).

We have been working with buyers who are ready to move – and we are finding that if the property is priced well, it’s selling rapidly, with multiple offers. One couple that we have been working with have written offers on well over a dozen homes and had been outbid each time – until last week, when we finally got them into escrow on a great 3/2 home in a nice bedroom community in the Valley with good schools for $300,000.

For my mother-in-law who is considering purchasing a condo in a retirement community in Laguna Woods, prices on condos have dropped by 50%. Units that were running in the mid-300,000s are now being priced in the mid to high $100s.

You know where to find us…