Gary Wuestenberg's Blog

This week I would like to address the current market conditions. So far the previous discussion hve been about REO (bank owned) properties. With the number of REO properties that have come on the market and sold in the last 2 years it has changed the landscape of the market. Some would say for the better and others would say for the worse. It depends on your situation. If you are a home owner you have seen the value drop significantly. If you didn’t or don’t own a home than the market is starting to look pretty good. It has become a buyers market like we haven’t seen in some time.

With the value of homes dropping it has opened up home ownership possibilities to some that never thought they would own a home in California, especially the Bay Area. No matter which part of the Bay Area you are in we haven’t seen prices like this in some time. That combined with truly historically low interest rates it is almost like a perfect storm.

Between the beginning of 2007 and the end of 2008 the number of REO properties has grown on a monthly basis. But somethings have happened lately that have changed that. First of all the banks were asked by the government to stop foreclosing on houses for 3 months. On top of that, with the mergers between the large banks and the banks that got into trouble, there was an additional 3 month moritorium. The result of that has lead to a lower than normal inventory. When inventory gets low it becomes a sellers market. So what I am currently seeing is multiple offers on a lot of properties. The competition between first time home buyers and investors is strong. So strong in fact that with the multiple offers the prices appear to be moving up for the first time since 2005. Most of this activity is taking place in the lower priced homes but that will eventually push into the homes price above that.

I am afraid that this will not last very long. The reason for this is that the banks are still sitting on a large amount of foreclosed homes that they have not released to the market. Once this happens the inventory will move higher and we should see the market swing back to the buyers favor.

So if you have been thinking about buying your first home or investing I believe the time is right. Interest rates will have to move up sooner or later. My recommnedation is to take advantage of this perfect storm.