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Who said we’re in a bad market?
Part 1
I am so sick of hearing “bad market” I almost puke. We are not — repeat, not — in a bad market for homebuyers right now. We are in one heck of a good market, regardless of the kind of property you are looking to buy. We are in a bad market if you are a seller. Good for one group and bad for the other. What else is new?
In reality, we are in a slow market, relatively speaking.
Recently I attended a seminar taught by the president of Keller Williams Realty, Mo Anderson. Mo has been in the real estate business for over 25 years in Oklahoma, where she entered the business. She talked about Oklahoma, where real estate has never been as “good” as it has been here in California. She talked about Palo Alto and San Francisco, where prices, even during this downturn in housing, have continued to go up. She talked about Malibu, where prices go up even on homes that are clearly susceptible to mudslides into the Pacific. She talked about cycles in real estate, the stock market, and the national and international economy. Who would have thought one year before the dotcom bust that IBM, HP, Xerox, Google, Intel, and high-tech in general would ever have a “slowdown?” But it happened, just as in real estate.
In Redding, though, our numbers are still not that bad. Over 10 years, most homes have doubled in price. In 2000, we were selling apartment buildings to investors at a price based on $20,000 a door, which is a living unit. Today it is $40,000 a door, if you can get it. Most are $50,000 and up, depending on the complex, condition and location. I can remember when Quail Ridge homes eight years ago were selling for less that $100,000. Now they are $200,000. Not bad for an investment.
We are hearing that we might see a turnaround in the 2nd quarter of 2009. What has happened to the housing industry in general? Basically, we have seen a concept covered in basic college economics called supply and demand. For a number of years throughout the nation, the inventory of new homes was very stable. In about 2000, money became much more available because of the growing international economies, and the homebuying public started to buy. In fact, these buyers started buying faster than ever before, so inventory was rapidly reduced. It became a sellers market. Builders found they had an almost unlimited supply of funds available, and they started doing what they do best. They built at an unprecedented rate, and in three to four years, the inventory of available homes grew rapidly. It grew, though, during a period when buyers were buying also at an even greater rate and this rush of buyers caused home prices to go up significantly, especially in desirable areas like California. Because of development and construction timelines, the demand was still just too great and the supply limited. We saw happen statewide what happened in Redding. Prices shot up almost overnight; homeowners in older, stable neighborhoods saw their home values go up and moved to a newer, more expensive home, and so it went. The rest is history. For 18-24 months, we have been waiting for the balance to be restored.
The housing industry is not home free. The home financing market has to get itself back in balance. This money comes from the world economy in general is affected by other issues, such as the price of oil. Not simple. I hope we are heading in the right direction. In Redding, we are back to a more “normal’ market, with average time on the market for home sales about the average over 10 years. Prices are still a little high, but then the cost of construction materials is higher. Time will balance this out, as it will home financing, and as it will the market in general.
The market might be a little slower than a home seller would like, but it’s not a bad market, especially if you are a buyer. And, the economy is cyclical, so some will have to wait their turn.
There’s more to come in Part 2. Check back again.
Ron Largent is a Realtor, business owner and longtime Redding resident. He can be reached at ronlargent@yahoo.com or ronlargent.yourkwagent.com.
If you have an opinion on a local topic and would like to share it with Food for Thought readers, drop a note to attndoni@gmail.com to get guidelines for writing.
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Is this journalism, or marketing, or what? In a “new” medium, does it matter?
I think this is the best line I’ve read all week:
The housing industry is not home free.
Thanks for the chuckle!
What else would you expect from a realtor? Get this clown off of this forum. He’s only using Food for Thought for self promotion.
I pretty much share Ron’s perspective, better to be a buyer than a seller, not so good to be either an agent or a loan officer.
I wouldn’t mind reading what others with different vested interests, or different views, have to say about the topic, either. Jump right in to the conversation with comments here.
For more definitive data though, try zillow.com, trulia.com, and cyberhomes.com, or try news.google looking for either dataquick or case.schiller.
Here at Food for Thought: A News Cafe we encourage differences of opinion and a variety of viewpoints. This is a community website, and all our neighbors are invited to share their thoughts on topics of interest to them, as it says at the end of this piece. If you have something different to say and are willing to put your name on it, follow the guidelines and we will happily publish your opinion, too. But let’s please keep a civil tongue in our head and take our feet off the furniture. Thanks. ~ Kelly
Didn’t Rome fall do to a lack of liquidity? I think the money supply shank by about 90%. Hopefully we can’t keep all this contained and the banks will start loaning again.
I hope you are right, Mr. Largent. We have a home in another area that will be for sale next Spring; we don’t wish to continue going up and down I-5 much longer.
Ron: My Good friend, Good article about the state of Realty in Redding and beyond.
And Bob, whoever you are, My Friend is not and has never been a clown. A realtor for sure and a damn good realtor.
If you don’t have anything to add constructively, why don’t you shut up. You, of course have the right to your opinion, even if it’s rude and inane. But Ron Largent is not a clown and has the same right as you to express his view on the changing real estate market.
Why don’t you start your own web site and we could all avoid it because you don’t really don’t have much to talk about except complaints.
Bob, what’s your last name and what makes you an authority in Realty?
Mr. Largent seemed to have a view of the home market that appeared to be honest. Yes, it was from his prospective, which is quite normal, as with all of us. The Redding area home market has always been up and down for years in the past.
Personally, I feel greed ran the market so high. The greed seemed to have been coming from both seller and buyer. Seller who wanted the highest price, and the buyer who wanted homes above what they could afford in all reality.
Possibly, the seller and the buyer will meet in the middle for the good of both in the future.
Learning to share information and rebuttle, without acid, might be good for all concerned who comment, as we learn to understand the point of the article written.
God bless.
I agree with Ginny that buyers and sellers may have been greedy. I also feel that the relators, spec. builders, house flippers, mortgage lending institutions and pretty much anyone receiving an income from the housing industry share in the blame for what has happened. When my husband and I bought our first house, the one we really wanted cost $75,000.00. The one we bought was $50,000.00 because, realistically, that was what we could afford. No one encouraged us to take out a second mortgage for the additional $25,000.00 even though we could have.
I know people who were caught up in this recent fiasco. In one case, they are hardworking and have very good jobs. They just wanted to buy a house in California. They had a large down payment but not nearly enought to purchase a home in the over inflated real estate market. “Creative financing” helped them get into a house. Nothing spectacular and certainly not their “dream home.” They didn’t take out a home equity loan to buy toys, etc. when their home increased in value. They lost their home recently because of the loan payment increasing and not being able to sell their house. The lender refused to work with them so they could keep their house.
See http://finance.yahoo.com/real-estate/article/105781/America’s-Surprising-Foreclosure-Hot-Spotsfor dome interesting facts.
Kelly,
This is not the RS website. You can be a little more flexible with the comments (that is if you want people to participate and support this blog as it grows).
Realtors make their commission off every sale, but it is less for lower prices and more work if the homes take longer to sell. While it might be a wonderful to be a vulture and pick off underpriced properties, unless you just won the lottery, how are you going to qualify for financing in the current depression with banks unwilling to lend and mortgage companies being very suspect in their accounting?
For those old enough to remember, this has happened before and it will happen again. Banks swapping bad debts for more profit brings back the S&L scandal. Who remembers Neil Bush’s Silverado S&L costing tax payers almost a billion dollars?
One of the previous Redding property issues was the high rate of non-owner ocuppied units. Speculators from the Bay area bought up units using their million dollar equities in Palo Alto etc to rent out to the poor folks up here. When the landlords were shocked that renters would not pay the high rents needed to service the loans, the landlords had to subsidize their properties. Eventually the markets could not sustain the artifically inflated prices, homes sat empty and then foreclosed, and the neighbors who were trying to sell the house next door can’t compete.
The market has not reached bottom despite the cheerleading realtors seeking thei commission.
Lucy, nobody knows better than I do that this isn’t the RS website. If it were, personal attacks in the comments would be routine. But that doesn’t fly here. I see now that the poisonous comment I was responding to earlier has been removed (not by me), so it probably looks as though I overreacted to something mild. Oh, well. It’s not a perfect science. Of course we want people to engage and return, but not the expense of a civilized atmosphere. If some readers leave because they aren’t allowed to maim and injure, I’m comfortable with that. Thanks, Lucy.
Hey gamerjon,
You have spoken what is true. I was wondering why the news was not spotlighting the fact that the last time the united states was in this similar situation it was Neal BUSH who was behind the silverado debacle. It’s like everytime there is a Bush in office we either have a war or a financial crisis. I sold my house that I bought for 96 thousand on 2000 for 279 thousand in 2005. We caught the “Redding Wave” as some realtors liked to call it. Yes I took advantage I guess of the market to my gain. It was a Bay area couple who bought my house. I bet they are spitting nails right about now. I mean real estate always comes back but what about the city of redding making the permits to build 20 thousand dollars more expensive. We literally got in on our house 2 weeks before the city raised the building fee permits. So right away I guess we were 20 thousand to our credit. What my beef is why would the city raise it 20 thousand dollars? Isn;t that a bit steep. Don’t things like that go up gradually. Or was that just the cities way of getting there piece of the pie? Now I heard they are lowering the fee again. That’s even stranger. I don’t know this for sure though but a contractor mentioned it. All I can say is while the hay is being made and the sun is shinining everyone wants to get in your good fortune and a piece of your pie. Problem is the realtors got greedy and so did the loan agents putting people in home who were first time borrowers and didn’t understand how an arm loan worked. In a town where there house payment would go up but not thier wages. Oh well I am just a bit disgusted. With this town. The highest Meth pop, sexual predators, now we are being put on the map for our land and how good it is for the ganja farmers. I am leaving. As soon as I can sell my house for a price where I will not lose money then I am outta here. I can handle the heat but I can’t handle all the good ol boy mentality and the arrogance of the cops here. I have never broken a law nor do I have even a speeding ticket on my record. As a rule I always admire our men and women in uniform. However in thi area you can see the way the cops treat people and look down to them. You ask them a question and it’s like they are too good to talk to you. They are probably all transplants from southern cali but they need to realize they are not there anymore. No Redding coulld be a great place if bigger companies were allowed to come in here and build tall buildings. Who cares about tall buildings? If it brings bigger corporations in with higher paying jobs than so be it. Have you looked in the record searchight at the job ads. I kid you not it is like not even a half a page if you were to put them together. Then all the jobs are either CNA’s or personal care senior attendants and/or mill jobs and minimum wage jobs. I know if it is so bad I should leave. Well don’t worry I plan on it. I just really can’t believe theydon’t do more for the indigent here in helping them get off welfare and the streets. All those old run down motels being used to house them. I don’t know maybe thats a good thing because then they would be on the street. Who knows. All I know i this town is going to hell in a handbasket and I seriously always kept saying well it will grow and better paying jobs will come in. It’s been almost 40 years I have lived here and NOTHING better. Most of the jobs here are minimum wage and we have one of the highest unemployment rates in the country. I hope someday we have some sity council members under the age of 40 that are still young enough to remember what it was like to be younger and struggle and just to make ends meet. They would be more likely instigate change. What is needed in Redding and this country. CHANGE! Oh and in case you can’t tell I am voting for Obama! Yes We CAN!
Ron is right…it is an excellent market right now for Buyers! In fact if you think of it right now is probably better to buy than when the market turns as there is not as much competition right now! Many people are sitting on the fence and what to wait until the “bottom” to get in….I tell them call me when we are at the bottom….I would love to know….
Truth is that NO one can time the market…no one…the only one that could probably even come close is Warren Buffet! When he just invested $5 Billion into a finance company one would have to think that he is planning on making some money!
He certainly doesn’t plan on losing any that is for sure!
Regards
Rick Goates
ECO Broker
Redding Ca