At first it was called "The Subprime Meltdown" or "The Credit Crisis" and after months of denial by the Bush Administration, they formally announced that our country is in a recession in midst of the presidential campaign.
Now many of our politicians and economists agree "we are in the worst economic downturn since the Great Depression," and according to President Obama, "it's likely to get worse before it gets better."
So where does that leave us with our current real estate market?
Well unless you've spent the last 6 months under a rock in South East Asia (wow, that sounds like so much fun), you've probably noticed that prices are coming down...
EXPECT PRICES TO CONTINUE TO FALL!- NINJA (No Income No Job or Asset) loans, yes they actually called them that, are just beginning to go into default. These loans were mostly prevalent in vacation/2nd home or investment purchases in areas like Miami Beach or Las Vegas and subsequently have destroyed those markets.
- According to another source, 70% of all foreclosed properties in Los Angeles are yet to hit the market.
- Group that with mounting unemployment, the lowest consumer confidence in history and the fact that over 11 million homeowners (roughly 1/7) no longer have equity in their homes. It is safe to say that prices are likely to come down even more.
But wait, there is good news too...
Especially for first time home buyers who are looking to stay at their current residence for at least 3-5 years and can ride out the wave.
- First time home buyers can access a $7,500 credit from the federal government (that must be paid back over 15 years) to be used for a downpayment. Plus, you can withdraw money from your 401k with NO penalty charge, though tax implications still apply (Be sure to consult with a tax professional for all details).
- According to the National Association of Realtors (NAR), existing home sales during the month of December increased 6%.
- Interest rates are at a record low: Conforming Loans (under $417,000) can be found at 4.375%.
So for those still on the fence, who have stable jobs and good credit, save your money for that downpayment and give us a call when you're ready to buy that house! Once the LA real estate market bounces back, you'll most likely never be able to buy a house at these prices again...
