Friday, April 10, 2009

Has the Market Bottomed Yet? Yes & No!

It's becoming an all too familiar question. Any time I talk to someone about the economy, it always brings the question, "When will the real estate market hit bottom?"

Based on what I have seen during the past 10 months, the lower end of the housing market did bottom out in the 4th quarter of '08. What this means is that homes priced between $250,000 to $400,000 have bottomed out and the number of buyers looking to purchase homes in this price range far outstrip supply. Multiple offers and overbidding are the norm in this price range for the Valley. Bank homes are selling within days and short sales have multiple offers.

BTW, it's not uncommon to now see cash buyers. Yes, that's people who are paying all cash.

Homes priced above $400,000 to $600,000 are starting to bottom-out as more buyers are entering the marketplace. If you fall into this price range, you better hurry-up and buy a home now as the number of buyers will increase greatly. Interest rates are around 4.75% with 20% down.

I believe homes priced above $950,000 to $2Million will probably decline in value another 10-20% before bottoming out at the end of the year or 1st quarter of '10. If you fall into this price range, I suggest starting to look for a home around Thanksgiving and purchasing by the end of the year. You can view these San Fernando Valley luxury homes here.

Overall, the San Fernando Valley real estate market seems to be in a lot better shape than last year. We have an excellent tax credit for first time buyers, low interest rates, and only 3.5% down needed to purchase a home with an FHA loan.

As always, don't believe everything you read or hear. Real estate markets are local and comparing all of Los Angeles or California will not help you to understand what is happening in the local market (Sherman Oaks, Encino, Tarzana, etc...).

Written by: Richard Johnston, Rodeo Realty

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