At last, some local real estate news, or is it?
I’ve expressed my frustration at the quality of headlines and articles on the Press Telegram. Apparently, I’m not the only one. I heard someone at the gym use much stronger words than I do. Nonetheless, Thursday’s front page title had: “Home Prices To Fall 4% In ’08“.
My initial reaction was: “Here we go again, the PT is up to grab attention.” But now I wonder if all was bad with the article. As usual PT over-sensationalizes the headline but the article was OK. Our fearless real estate reporter Don Jergler basically quotes CAR and NAR. Aouch.
So it begins with the inevitable median home price index: “The state’s median home price will incur the biggest drop in 15 years, as sales slide to their lowest point in more than 20 years, a forecast issued Wednesday shows.” We all know by now median price reflects poorly on the current situation. Check the history of this blog or any of the other blog recommendations I have.
“The last time sales fell below 2008′s forecast of 334,500 units was in 1985, when the volume reached 328,270 units, according to CAR.
The statewide median home price last fell in 1996 with a 0.5 percent decline, and the most recent statewide median decline greater than 4 percent was a 4.5 percent drop in 1993.” Those numbers are normal especially after the exurberance we went through these last few years.
The really scary numbers are these: “Recent polls show that more than 40 percent of first-time home buyers obtained a loan with no money down, and that puts the state’s most vulnerable homeowners in a dangerous situation, she said.
“They can’t sell or they can’t refinance,” Appleton-Young said.
As a result, notices of default have risen 158 percent year to date, she added. “
I can only imagine what this spell for California the next few years as rates fluctuates. Can you imagine 40% of homes bought state wide were sub prime? Almost half the residential housing market is at the mercy of the Fed‘s rate changes! Talk about putting a lot of power in an organization that is not part of the government.
Sadly, Don ends on a cheery note from NAR, how everything will be well soon. Remember NAR? You know the folks who predict things are going to be better and that we are at the bottom of the wave, for the last 8 months now.
I go back and forth on what I think of this article. On the one hand, I feel we desperately need to see more article like that to reach sellers and make them see yesterday’s optimistic prices are gone. On another hand, I would like to see more down to Earth headline not fueling more FUD. All in all, it is good to see articles like these, even if they sensationalize something normal, a market balancing out its excesses.
Basically, there are fundamental truths in life, or Universal principles if you wish, the swing to the left will be accompanied by a swing to the right, and vice versa. The proportional energy of the swing to the right will effect the swing to the left. This is basic 8,000 year old philosophies that have influenced religions and philosophy throughout the ages. It is still true today as it was then and will be tomorrow. The vulgarization of this would be: “What comes up, must come down.” Check out this link to the Kybalion, a book that has greatly effected my life.