Large Amounts of Equity Available even with Price Drops

With all of the doom and gloom in the real estate market it appears that when the media trys to demonstrate some of the positive aspects of the market it often gets missed. Kenneth R. Harvey, of the Washington Post Writers Group was recently published in the LA times with his article, "Price drops are sobering, but the big picture is still rosy".

Here he accurately covers that although there have certainly been price declines, there is substantial liquidity in the market. This is evident in the fact that there is still a large equity position that the many owners have. Here some some of the facts from his artcile:

• Federal Reserve calculated that U.S Homeowners equity accounts total 10.9 Trillion
• In areas like Fort Myers of Florida where they have experienced a 130% jump in the last 5 years, where prices have recently dropped almost 14% still means they are up 116% in the same time period
• Home Builders in Los Angeles state prices fell 5.7% in the last 12 months, but that still means they are up a net 88.9% since 2002

Data like this is often hard to find....why? Does the mainstream media like to sell ads so badly that they instill panic when it isn't well founded? Let's hear your thoughts.

How did May finish in Long Beach, CA for Real Estate?

You know the old saying "It doesn't matter where you start it matters where you finish."? Well that is what hopefully everyone will think by the time 2007 ends in regards to real estate in Long Beach CA. So where did things finish? Well let's take a look at the numbers and see!

All data below comes from the realtor multiple listing service that covers the Long Beach area which is the SoCalMLS. The numbers below will not include any owners that sold their homes without going onto the MLS system.

Activity for May 2007

• Number of Properties that went into a Sold status - 239
• Number of Sold last May - 374
• Number of Properties that went into a Pending status - 221
• Number of Properties that entered into a Backup Status - 90
• Number of Active Properties at the endof the Month - 1,769
• Active as of today is 1,939
• Number of Active Properties at the begining of May - 1,231

So what does this all mean? Well if you take number of properties that are currently available in means Long Beach has a 7.4 months supply of inventory. This is a great thing! Now I am not recommending all sellers in long beach ca increase the prices of their homes but it is certainly not as bad as some media outlets would lead us to believe. Now some might say well 36% fewer properties were sold in May this year as compared to last. I would say you are right! Now last year was a record year. This year isn't necessarily a bad year just not a record year. So we can read into it there are less homes being sold so make sure to price accordingly. Let's here what everyone else has to say!

Where is the Long Bech Real Estate market in 2007? - Part I

The $1 million question in real estate today is where is the residential market in 2007 going to finish. You could say that it is the $525,000 question which is the median price in Los Angeles county. The article we are discussing today is good and I think deserves a two part blog so this is going to be part 1 of 2.

A great article entitled "Market experts tell the real story" in the Press Telegram by Don Jergler which can be found at http://www.presstelegram.com/outlook/ci_5290043 tells a side of what will come in Long Beach.

First, the good news is that more jobs were added in the southern california area. In fact there were 63,400 new jobs added last year. I would like to believe that because jobs are being added that we will continue to have demand for housing. It just means what kind of demand. We will have purchase or rental demand. The article makes it appear that this number will hold it all together. I am not sure about that. What I know is that having jobs never hurt.

Now we get into the core of the article where they talk to some real estate experts locally. Now our goal is always to make sure to get to the heart of issues and to make sure to let you know what is going on. I believe some of the individuals quoted in the article do and others are just talking about the numbers their company is doing which I don't think benefits Long Beach home owners in understanding where the market is going. So here we go.

The first expert quoted is Bruce Mulhearn. So ignore ignore the commercial that is done by Bruce Mulhearn. He only bothers to tout his companies numbers which of course does nothing to tell readers what is going on. No offense to Bruce but home owners in Long Beach don't care if your company did $133 million in a month or $150 million in a month. That just means he made a huge chunk of change.

What does this mean for you? The market did appreciate in 2006 which is great news for all local home owners. Condos and are still going to be in demand because they exist far below the median price.

The rest of Bruce Hulhearn's points such as the demand for luxury homes has of 6 homes has just about nothing to do with the overall market as a whole. 6 homes and the demand for those is no indication on where the market is headed considering homes over 1 million are a fraction of the overall market.

At the end Bruce is predicting that appreciation will be at 6 to 8 percent a year. So let's look at this. We have had record appreciation year over year at over 20% and now Bruce thinks that we are going to go at 6 to 8%. I don't really believe this is feasible. This would mean that homes would continue to outpace the growth of wages and destroying inflation. If homes continue at Bruce's rate we will only increase the affordability problem that we currently have here in California which is that less than 24% of the population can afford to purchase. This is of course based on a 30year fixed mortgage.

So that is the conclusion of Part I. Look for part II to follow-up shortly.

As usual, you decide the truth!

You be the judge of the real estate market!

Is the worse over? - for the housing market

Well as you know we always try and bring the latest information to light. A great article in the Long Beach Business journal appeared in the Real Estate section by Thyda Duong. The article is entitled "The Worst is Over" As Housing Market Begins to Stabilize.

So how are things in Long Beach, CA. Well I can tell you that our average price in December was $514,000 for a single family home. That is up 5% from 2006! Those who don't think 5% isn't a great return please not that the 5% was on rouhgly $500,000 which means the average Long Beach, CA homeowner made $25,000 in appreciation. I am not sure about everyone else but I know these two bloggers think that $25,000 is quite a bit of money!

That also means that at $514,000 we are still below the Los Angeles County Average of $525,000. We believe that this puts Long Beach in a nice position to continue to rise or at the very least maintain value. It is still the most centrally located city for those commuters who have a family where one goes to Orange County and the other to Downtown Los Angeles.

In all the outlook for 2007 looks to maintain at where we were for 2006. The interest rates are still extremely low considering history and there are still quite a few things for buyers to buy.

Let us know what you think!

Your 10% matters!

The debate over valuation of homes. Zillow has grown to be an extremely popular website. Although the Zestimate of value that they show can have a wide margin of error. By the admittance of their own website, the Zestimate "Our data shows us that the vast majority of Zestimates are within 10 percent of the selling price of the home.". Most people can't afford to be off by 10%!!!

If you are interested in seeing a debate between Zillow president, Lloyd Frink, and RISMEDIA CEO Allan Dalton in regards to the issues facing valuation and the use of real estate professionals, I encourage you to visit the California Association of Realtors to see their debate.