East Bay Blog

If you’ve been keeping up with the news lately, you’ve heard about all of the doom and gloom in the Financial Markets especially in regards to Real Estate. The last couple of weeks have been especially harsh with the big stock market drops of last week, the cloudy comments regarding the credit markets by Bear Sterns executives last Friday, and then this week with the bankruptcy of American Home Mortgage. We also saw Wells Fargo raise their Jumbo Mortgage Loan rates from 6.75% to 8% overnight. Although this might not affect a lot of the country, we know that in the East Bay, most homes are a lot more expensive then the conforming loan limit of $417,000 which means most of our mortgages are Jumbo Loans. Wells Fargo is basically telling the market they want no more Jumbo Loans for now, read more about this at: http://money.cnn.com/2007/08/07/real_estate/jumbo_jam/?postversion=2007080710 With all of this bad news we see there are a lot of people who had plans to buy/sell but have put those plans on hold. Their hope is that if they wait for the Real Estate Market to change they can get a “better deal”.

What people have missed are the signs of stabilization in the market. When you click on the news tonight I’ll bet 90% of what you see will be bad news. Why is that? It’s because it gets your attention. People tend to be more interested in bad news then good. It’s the same with financial news. For Real Estate in particular we have had some good news lately that has not been publicized very well. First was the news early last week that pending home sales jumped 5% in June. Economists had forecast a drop. This was the biggest increase in 3 years. I’m sure many of you did not hear about that. This is good news for the real estate market because pending home sales are a leading indicator. If more homes go “sale pending” you’re sure to see more homes sold and that will show as an increase in activity when the home sales report comes out next month. Today we also saw that mortgage demand jumped for the first time in 3 weeks. That jump puts mortgage demand at the highest level since early June. Another report today showed that although U.S. homes sales will fall further this year than expected, prices will drop less sharply than previously thought. I did see the headline about homes sale falling, but I had to dig into the article on CNN before I read about the price drop being less than expected. Once again, the headline shows bad news to get our attention. Any other news gets buried deep within the news article, or left out completely.

You don’t have to take my word for it. Go online and see how easy it is to find bad news about any topic, then look for some good news. I’m certain the bad news is a lot easier to find. So my take away for today is this, if you are one of those buyers waiting on the sidelines for prices to drop in order to get a “better deal”, when will you know that time has come? No one can time the market. If all you see if bad news, you will feel comfortable in your decision to sit out the Real Estate Market for now, however a better strategy would be to start looking for signs of stabilization. Those signs are starting to appear. If you are waiting to see good news in the headlines, you may be waiting an awful long time. Until next time…