My New Blog

As the government takeover of mortgage giants Fannie Mae and Freddie Mac hits the newswire, interest rates take a plunge and Wall Street responds favorably. The decline in rate doesn’t apply to loans over $730,000 but with the recent decline in the housing market, your dream home may be attainable with a great fixed rate. The average rate of a 30-year fixed loan is nearing 6% making a mortgage easier to obtain for a borrower, however, a 90% loan is no longer desirable to the lender.

Bloomberg reports on the takeover: http://www.bloomberg.com/apps/news?pid=20601087&sid=aFL16l3QSSIY&refer=home

Posted by Nicolle Beimer, Vice President, Freedom First Properties

It’s the multi-billion dollar question that on one can truly answer. But much like economist look to certain indicators to figure out which way the economy is heading, real estate professionals can read indicators to see which way the real estate market is headed.

I’m not talking about a detailed look at complicated calculations regarding consumer confidence. I’m talking about the basics. So let me make a disclaimer. Although I studied economics in college, I’m not an economist. I am just an active North Orange County broker/agent, wife and mother of 3, but I think what I have seen out there in the last few weeks could be very telling.

So, here are my rudimentary indexes….

Sign 1: The Phone Index

There is almost not enough time in the day for my assistant and I to return or take the phone calls on my listings. I went to lunch earlier this week, came back and had about 29 messages to return. Agents wanting to know the status of my listings, do I have offers, where are those offers, how solid are those offers and tell me about their clients. If I only paid attention to the phone, I might think we were in a selling frenzy—agents selling their clients as the best buyers for the property. I have to remind myself we are in a declining market, right?

And its not just my phone. I got off the phone with another agent who said she couldn’t return all the calls she was getting on her listing. She had 12 offers in on the property in question and it had been on the market for only 6 days. My client opted not to be the 13^th offer. And, I can not seem to get many agents to call me back—even with eager buyers in the wings. Something is up.

Sign 2: The Multiple Offer Index

On my listings we are receiving multiple offers. These are not the “throw an offer out and see if it sticks offer”. They are legitimate, sometimes significantly above asking price offers. I’m seeing the same thing on offers where I represent the buyers. Collectively my clients have made offers on over a dozen properties in the past couple of weeks—and with one exception we were at a minimum 1 of 3 offers in (and usually, one of a much higher number—1 of 6 or 1 of 9 or……). It helps me understand why I am getting calls from agents who are “selling” their clients as the best buyers.

Sign 3: The Offer to Asking Price Index

As I mentioned above, many of the offers I am recieiving and submitting are above the asking price. Admittedly part of this is impacted by some of the low end pricing of short sales (pricing often designed to track in a bunch of “bid it up” buyers) but I do not see that as the whole story. Some buyers need in. Some want in. Together they make up demand. And given the increase in the number of pending (in escrow) sales lately, they are definitely out there. If you want a premium piece of real estate, its likely priced lower than it has been in 4 to 5 years, but you may not be able to just walk in and scoop it up. You may have some competition.

Recently one client was referred to me. At our first meeting she complained that she was so weary of competing with these “all cash” investors out there (I had to confess, some of them are my clients). The consolation I offered her was the advice I put out here—one thing is for sure. If there are a bunch of investors out there, it could be a sign that at least they think the market is low enough to jump in.

Well, I’m off to a soccer game. Call me if you have questions, want more info or are ready to jump in.

Anyone?

Melinda Johnson
Freedom First Properties

(714) 863-5485