Real estate goes through cycles, and the market needs to pause and catch its breath every so often to maintain a healthy balance. With the pendulum swing from a seller’s market to a more balanced one, there are greater opportunities for buyers in most neighborhoods.

According to the California Association of Realtor’s Housing Market Report:

Four out of five homes (80 percent) sold were discounted in 2008, an increase from 76 percent in 2007. The discount between sales price and list price increased from 4.3 percent in 2007 to a record setting 7.5 percent in 2008, more than double the long-run average of 2.8 percent.

One of five properties (20.3 percent) fell out of escrow in 2008. Primary reasons include: buyers could not secure a mortgage (33.3 percent); buyer changed mind and decided not to buy (33.3 percent); and buyer could not come up with the down payment (10.8 percent).

I understand buyers changing their mind; sometimes after the property inspection the buyer is overwhelmed. Occasionally there are big ticket items such as cracked chimneys, that the seller is unable or unwilling to make concessions for. BUT I don’t understand how buyers are working with Realtors, find a home they love, open escrow and then the buyer is not qualified or is short on their  down payment.  The listing agent should be checking the potential buyer's qualification. Home sellers, make certain your Realtor is experienced and is verifying the buyer’s qualifications prior to taking your home off the market and opening escrow.

Although the Los Angeles housing market has slowed along with the national market, our neighborhoods remain a highly desirable choice for home buyers. Properties that are in sought after locations, competitively priced, and presented well continue to sell.  Well priced homes often sell in multiple offer situations and sometimes over asking price.  Although buyers are more cautious, open houses still attract a steady flow of potential buyers.  We aren’t seeing the frenzy we saw in previous years.

Loans are readily available for buyers who have verifiable income, good credit and down payments;  FHA requires less than 5% of a down payment. 

So what’s in store for next year? No one can predict what 2009 will bring; some industry economists are expecting a continuation of these market conditions at least into the first half of the year.  Our region’s demand for housing, and overall attractive quality of life should provide a strong foundation for our ultimate rebound.

What does this mean if you have been thinking about buying? Home prices have become much more affordable, but no one knows where the bottom is until we are on our way back up.  Buyers have more properties to choose from and this may be your window of opportunity. The next year could be the right one for you to take advantage of low interest rates and competitive prices. 

Perhaps now is the time to buy that move-up home or investment property.  If you are interested in finding that special home, or have been thinking about selling the one you already own, please contact me.  In the meantime, I wish you  peace, health and prosperity throughout the coming year.

Sincerely,

Phyllis Harb