September 2008 home sales in our neighborhood!

 I was expecting home prices to fall since the Summer of 2005, what I was not expecting was the financial crises which hit our country in August of 2008. This financial crises has changed the playing field for home owners and investors. Since August, it has become very difficult to borrow money, even if you have a good credit and a decent down payment! A friend, who is trying to buy a second home in Studio City has been told by the lender that he needs to put down 55%. How many investors can come up with such a huge down payment? We are noticing that homes sale are up year over year, but the prices are down anywhere from 25% to 50%. Home owners who are pricing their homes ranging from 300K to 700K do not have any difficulty finding a buyer, however…. if your home is priced over 800K, the chances are that it might sit on the market for sometime before you can attract any interest. Latest numbers for the month of September indicate that year over year, the home values are down in Studio City 91604, by -34.4%, Valley Village 91607, -29.8%, Sherman Oaks 91403, -14.9%, and Beverly Hills 90210, -61.4%. Condo Prices are also down from 25% to 41% in the same neighborhoods. Well… this is old news, these numbers are already out, what about going forward? If history is any guidance, the decline and stabilization of home prices in Southern California should last about 5 years, which means the prices should start to rebound in 2010, however… could this time be any different? This time, home prices over shut to the upside like never before, and worldwide liquidity has dried up like never before, which brings me to this conclusion….. This time the 5 year downturn may extend a few more years and the prices may have to fall even more. I am going out on a limb and predict that home values may not bounce until 2012, and they may drop 17% to 25% more nationwide. Where does that leave you? Should you wait until 2012 before you buy your home? Should you wait until 2012 before you sell your home? Of course NOT, It’s always a good time to buy or sell Real Estate. Whether you should sit on your hands or not, has to do with your motivation and personal situation. After all, home values will always go up on the long term basis, and no one can catch the top or the bottom of the market. Before you decide whether you should buy, sell or sit on your hands, consult a qualified Real Estate professional. This is your biggest investment, choose your agent carefully.        


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