Mortgage rates have continued their downward march toward
the sub 4% mark. The latest five day winning streak should impact lenders with a
steady stream of new business. Those buyers that have been sitting on the
sidelines should take another look at that property that caught their eye but
have yet to see. As we head into the traditionally busy "Buying
Season" of Spring and Summer, you can be sure that with the increased
volatility in rates, more buyers and investors will be jumping in. After watching the
market for months they will be taking advantage of what could be a realistic
floor in both mortgage rates and home prices. Does that mean that homes won't continue to sell at five and ten percent discounts compared to listing prices?
Not at all, but the overall trend of continuing double digit declines is slowing
and before you know it, the news lines will be using the word
"recovery" much more frequently. Timing, as always, is critical when
it comes to getting that "Red Hot" deal on a bank owned, REO or
foreclosure property. The homes that are priced right, have all the things
buyers are looking for and are located in those desirable communities or are on
"The Hottest Street in the Neighborhood" where things seem to go so quickly, will have no
trouble getting sold.
Case in point, since 2009, three
bedroom homes in San Clemente have seen the median price fall
from $610,000 to a very comfortable $555,000, just over a 9% drop. Four bedroom
plus homes saw a more modest decrease from $775,000 to $758,00, barely over a
2% drop. Laguna Beach seemed to be a study in contrast as
it actually recorded just over a 1% gain for the three bedroom segment. The end
of 2009 saw it close at a $950,000 median price point while this past year
ended on a high note with the median price closing at a cool $1,000,000. The
four bedroom plus category however saw a very different story. 2009 closed at
an impressive median of $1,749,000, fast forward just two short years and 2011
closed way down at $1,195,000. That is nearly a 32% decline in that two year
period. I would imagine we would see that number hold close or even post a
modest gain of the nearly $1,200,00 target. Dana Point was a much
more consistent performer posting double digit declines in both segments over
the same periods. Three bedrooms closed 2009 at $693,000 as a recorded median
and dropped nearly 12% to $610,000. The four bedrooms plus index closed 2009 at
$825,000 and etched out a 13% plus drop to close out 2011 with a $715,000
median price.
So, what does all this really mean?
The market, despite many analysts, is beginning to halt its long decline. I am
not saying that all is well and by the end of summer we will see the same
unstoppable freight train of escalating and out of control prices we saw over
the middle part of the last decade. We will most likely never see that type of
unsustainable run up ever again, nor should we. But, we should be able to get
back realistic prices driving the market, in sustainable fashion. It's time we get
back to the basics and fundamentals, the American Dream of home ownership.
