Southern California Market Forecast

This is simply a prediction of where the california real estate market looks to be heading and why. Some cities in california may be better off than others. I suggest you talk to a Realtor in your area for details on your specific market.

Currently in our market the prices seem to be slowly but surely dropping. Plain and simple the prices were and in some places still are overinflated. Due to this overinflation and what I like to call the loans of funk, it looks as if the prices will be slowly falling for some time.

I won't get into the loans to much because I am not a lender/mortgage broker and simply do not have the expetise in this field to appropriately explain them.

Lets start with what signs are pointing to the prices dropping. Well there are a couple things that I believe will have the biggest impact and may make this drop in value last longer than some expect.

• New Construction - The builders are still building and their inventory is higher than they would like it to be. Meaning, they are getting extremely competitive. They are lowering their prices, paying closing costs and offering numerous other incentives.

• Foreclosures - There are unbelievable amounts of homes in California that are going into foreclosure. One of the big reasons for this is, adjustable rate mortgages are starting to adjust. People are having trouble paying their mortgage when it adjust to a higher monthly payment. They fall behind on payments and need to find a way out. So they try a short sale .

Short sales are better on your credit than a foreclosure so it is a likely method. Also, short sales generlly have about 3 or 4 months before the bank forecloses. So, they lower the price to generate an offer. Then, it goes to bank and they decide if it is acceptable loss. Is so, the offer is accepted, escrow is opened and it goes from there.

Now this wouldn't be such a bad thing if there weren' t so many foreclosures coming up. But, since there are so many foreclosures popping up it is a very bad thing. Now, the short sale are dropping prices because they need to sell fast and the builders are dropping prices for the same reason. Other people have to move also. Job transfers, loss of a job, pay decreases, whatever the reason may be some people just have to move. If they have a good amount of equity they will leave with something but will still have to set there price competitively with the short sales and builders.

If you don't have to move and you don't have enough equity to come out with what you will settle for than I would just stay where I'm at. If you want to move and have a lot of equity then your in a better position than the lot. The decision is yours to make and if you have the equity go for it, price your house to sell in the timeframe you would like it to and move. But, Becareful not to overprice, for you may end up having to take less in 3 months than if you priced it right to begin with.

Getting a little to carried away here. That's all for now folks.