Gary Wuestenberg's Blog

Are you nervous in this market? We are flooded these days with so many opinions from so many different directions that it not only causes us to be nervous but also to be confused. And I feel that confusion is where the nervousness comes from. We have prognosticators and naysayers, people that are saying that things are going to get worse. And then we have the more “upbeat”, positive people. It really is a case of  – is your glass half full or half empty?

Let’s talk about the media. First of all good news does not sell as well as bad news so the majority of what you read, whether it is in the newspaper or on the internet, is going to be negative. It just sells better and after all the companies that write and produce these messages are not in the business to inform as much as they are in the business to make money. When there are so much “negative” messages is it any wonder we are in a downward spiral? I am not saying it is the media’s fault that the economy is in the shape it’s in. I am just saying that what you focus on is what you get. If we continue to focus on the negative our chances are pretty good that is what we are going to get.

There is no crystal ball when it comes to real estate or the economy, but I think if you allow yourself to step back from your own circumstance and take a good look at it you will find calm and vision. First take a look at your long and short term goals. Are they the same goals you started out with? Goals can change and it is good to do an inventory of where you are and where you want to go. So if the goals you created 5 years, 1 year or 6 months ago don’t necessarily fit where you want to go now don’t be afraid to change them. But most importantly, we need to check our progress occasionally to make sure we are headed in the direction we want to be. By checking in on ourselves and being realistic about our own circumstances we can get “grounded”. When we are grounded we become calmer and see things more clearly and in the end lose that nervousness.

I will leave you with a few things to keep in mind about real estate that I hope will help. First of all be responsible with your money. Money is really cheap right now with interest rates hovering around 5%. It’s a great time to buy. But just because it’s a great time to buy doesn’t mean you should. If you are buying or considering buying make sure you know what your goals are and that you are comfortable with the payments (debt) you are getting into. In other words – don’t get in over your head.  My mother, who grew up in the depression always said “It’s not really a bargain unless you need it”.

Feel free to leave any comments. Thanks for reading!

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.