Homebuyers and Real Estate Market Trends

I interact with a lot of homebuyers, and while many feel that now is a good time to buy or at least a good time to start looking for a home, there are still some who feel that things may get worse in the South Orange County real estate market. They think that unemployment will stay the same or get worse and inflation will take hold next year and this will depress the market. They also feel that there are still a lot of distressed properties to cycle through the market.

While I agree that we still need to work through the remaining distressed properties for another year or two, and there is no big housing rebound that is imminent, I truly feel and know that there is a LOT of pent-up demand for real estate in this area. Many qualified buyers have been waiting for ideal conditions and have been afraid to pull the trigger. But they have been jumping in since Spring of 2009 in ever-increasing numbers due to lower prices, low inventory of homes and low interest rates. This has caused prices to increase slightly(5% to 7%) since then. Sellers have responded by putting their homes on the market and increasing the inventory of regular equity sales. But inventory is still far below the levels it was at two years ago.

Buyers are still holding back, especially since late summer 2010. At the same time, interest rates have dropped even LOWER. UCLA forecasts that prices will increase in 2011 even more than they did last year, and sales will increase 27%. I agree that conditions are creating a perfect storm for buyers early next year in the form of super-low interest rates, low home prices, a better inventory of homes and huge pent-up demand. Once the snow ball of buying begins (I predict this January), it will continue to roll and gain in momentum and size, not to the magnitude UCLA predcits, but a 6% increase in home prices and a 15% increase in sales similar to last year is a reasonable expectation and what I expect will happen.

Want to see what the market conditions are in your neighborhood? Call me for a free market analysis 949.525.5905.

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