“Locally the median price has dropped about $100,000 in 2007 and it is likely to drop another $100,000 in 2008,” said the central coast California realtor, “but we are in better shape than many areas.”
Not too many years back realtors were knocking on doors searching for listings because property values were shooting up. It had been reminiscent of Tokyo real estate property inside the 1990’s, a period when any fool may make funds in www.mammothlakesresortrealty.com.
In January California home foreclosures equaled the number of sales, a frightening figure if there ever was one.
For a while the getting was good and then any investment today could be worth more tomorrow. In that form of environment sub prime lending — lending for the marginally credit worthy — begun to flourish. Even the lower paid and unskilled could hop on the real estate boom and boost their value and equity by signing in the sub prime dotted line.
Consider it greed, flipping, speculation, gam-bling or maybe bad business; consider it any one of those activities nevertheless it has resulted in the worst housing crisis California has faced. The crisis is specially bad in California’s interior. Upscale coastal areas like Santa Cruz, Carmel, and Monterey have gotten a steep decline in housing 85dexypky but because of the demographics and desirability, the decline is not as severe and is also not likely to last so long.
“We only have with regards to a nine month inventory which happens to be not bad,” said one Scotts Valley realtor, “some places like Miami have more than a three year inventory meaning it will require years for that market to recover. Element of that is certainly we have been inside a ‘no growth’ area so there isn’t an excellent influx of new homes on the market. We’re lucky.”
That is because one of the most desirable areas have not many very first time home buyers. The upwardly mobile real estate property treadmill is extremely hard once the median home price exceeds $700,000. Several of these “outside” buyers do not need financing.
Upwardly mobile locals are certainly not buying up homes in Pacific Grove and Capitola. Non-locals utilizing parts of the usa and foreigners make up the majority of home buyers. And thus, the demographics and “look and feel” have changed. No more is Santa Cruz the hippie haven for artists; every one of the starving artists couldn’t manage to starve anymore and get moved out. What was as soon as the bastion of far left liberal thinking is now slowly turning right into a techie “Arnold Republican” free zone.
In towns like Watsonville and Stockton banks and construction companies are attracting buses for foreclosed housing auctions. Rumors are rampant about cheap homes and rumors fuel speculation; what home buyer wouldn’t such as a 50% discount?
“But buyer beware” said one realtor, “the fact is the two banks and construction companies are sending in their ‘dummy bidders’ to drive up the auction price.”
“They are aware what they want to obtain for that house and they also drive up the bidding to get to that price. Banking institutions and construction companies can’t lose: they either obtain their price or don’t. They will not take it around the chin…at least at this time.”
Section of the boom in the interior was brought on by Bay Area commuters seeking cheaper housing they could pay for with good paying Bay Area jobs. But as gas approaches $4 a gallon commute costs have skyrocketed. Therefore the poor commuter is not only seeing their house equity plummet however commuting expenses are constantly rising. For most Bay Area commuters, buying in Tracy or Merced was actually a big mistake.
Even most of the Latino immigrants decided the American Dream has stopped being for these people. Most can tell of the cousin or brother that signed on the subprime dotted line and then walked away after they could not afford a $3800 monthly mortgage.
Most of these immigrants have become saving and likely to return and acquire property in Mexico, which in several aspects of Mexico is affordable if an individual earns United states dollars. Mexico is definitely the next real estate property boom. The California property industry is in a transition since it is experiencing a decline, consolidation and subsequent “shake out.”
“The hobby and part-time realtors have closed up shop and gone back to what they were doing before the boom,” said one Aptos realtor, “some are receiving bought up through the bigger players who happen to be better positioned to weather this storm.”
We’ll find out how this plays out. Remember it has taken Tokyo a great decade for real estate market to take care of itself. It’s just not clear if California actually features a decade to produce that correction.