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By now it
won't be news to you that the Real Estate market has
changed and Fresno area home prices have dropped. What
may not be so obvious is that these same homes have
been and continue to be one of the best investments in
the world. True, in comparison with 2006 the average
sales price in 2007 has slipped by approximately 15%,
however, over the past five years that same home
has also appreciated 192%. The net gain of
173% over five years still makes owning your home one of
the best things you could have done, and there's
more good news.
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In the
past 40 years we've experienced 3 or 4 other down
turns in home values. Every one of those has been
temporary and
home values have bounced back with a vengeance.
Historically, in these temporary periods of decline,
prices have dropped a maximum of 5-15%. Our current
decrease now puts us equal with any price reductions
we've experienced in the past 15 years. We expect to
see
home prices setting new all time highs faster
than most people may currently think. I believe,
looking back three years from now, today's market
will look like an opportunity of a lifetime.
Many folks will be asking why didn't I buy in 2008?
As a serious real estate investor I can honestly say
the only money I have ever lost in real estate was
the homes I didn't buy. Don't make that mistake.
If you are thinking about a new home in your future
— you may want to buy now
while prices are low-they won't last.
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Much like
the stock market, over long periods of time Real
Estate values will always fluctuate up and down.
Like the market, the long-term trend has always
been up.
Look at the Dow Jones Industrial Average in 1997
($7,600) compared to today's ($13,500). That is a
gain of 80% - not bad. Now compare Fresno's average
home price in 1997 of $116,000 in December to
$319,000 in 2007, that's an overall gain of 275%
or over 27% per year. Like the stock market,
smart Real Estate owners buy on the dips. They
buy when the herds are selling. In other words, they
buy low and sell high.
That's why they make the most profit. Never
forget, we all make our money in real estate when
we buy it, and not when we sell it. We can't
make money buying when everyone else is buying
(think '05-'06). Now may be the chance of a
lifetime.
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We see
inflation on the horizon. When that occurs, building
products move up dramatically, which will increase
the cost of new homes, which in turn, always pushes
up the values of all existing homes. Property
values have always shot up in an inflating economy
partly because it is the only major investment that
is real, tangible and physical. Unlike stocks, homes
are not just paper, they are made of real bricks and
mortar. We can use them while they are appreciating.
Once inflation sets in and the market starts moving
the other direction it's too late to make big
profits. Now may be the best time we'll see in
the next 20 years to buy.
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Today's
interest rates are some of the lowest we've
experienced in the past 20 years. They won't stay
there. With threats of inflation on the horizon,
we expect rates to be much higher by this time next
year. The smart homeowner who makes a move now can
lock in low 6% financing for the next thirty years,
saving literally hundreds of thousands over the life
of his loan. We still have some of the best
home financing programs in history. Most buyers
can get into the home of their dreams with little or
no down payment, but these programs are getting
harder to find every day. They are going away. Down
payments are going up. It may be smart to buy
now before these opportunities are lost.
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With the
unbelievable combination of low prices and low
interest, buyers can qualify for more and bigger
homes than ever. Once this market corrects with
higher prices and higher interest, you may never
again have such an opportunity to buy the home of
your dreams. Do it now before it's too late.
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(Click For Larger Graph)
(Click For Larger Graph)
(Click For Larger Graph)
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Fresno
MLS inventory reached an all time high in August. It
has been decreasing every month since, which means
though buyers may have one of the biggest
selection of homes in history, there is less every
day. The selection also won't last forever. The
inventory doubled in one year and could drop by half
in another year. There are some really great homes
on the market at prices you may never see again.
Remember, the home you looked at today and want to
"think about" may be the same home someone else
looked at yesterday and bought today.
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Today's
lower prices mean lower property taxes and lower
insurance costs for all the years to come, but
only if you buy now and lock in the savings for all
the years to come.
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Don't
believe everything you read. Our "News" is sometimes
"sensationalized." The headlines are true,
foreclosure rates may have increased 100%, but it's
also true they rose from 1% of all homes to 2%.
We never hear about the 98% of homeowners who are
not in financial difficulty simply because good
news doesn't sell papers. This Real Estate market
actually remains strong and healthy.
Fresno area homes are, in fact, selling everyday.
Over 6,000 have been sold in 2007.
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Real
Estate is bought and sold locally. Here in
Fresno. Large price drops in other areas may be
sensational news but they are simply not relevant to
us here. Should Sacramento or Los Angeles prices
drop 50%, there would be no relationship to values
in Fresno. Many parts of the country are actually
still experiencing price increases and so are
certain neighborhoods in Fresno and Clovis. In
fact, the Fresno, Clovis metropolitan area remains
one of the country's relative bright spots and still
provides more home for the money than any major
city in California. In other words, homes are a
better buy here, so don't let sensational news
reporting about other unrelated areas and their
problems affect your decisions. The fact that it is
raining in Portland doesn't make us wet in Fresno.
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We also see
good news in this market for our sellers.
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Selling your home for less is not a loss.
Everything is relative; you'll buy your next home
for the same amount less. If you would have
gotten $20,000 more, you would have paid $20,000
more for the next one — what's changed?
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Change
is good! Like the seasons of the year, all
markets change and all changes bring
opportunities.
However, we need to change to take advantage
of them. Darwin was right; those who don't adapt
to change die. Change is an opportunity, not a
threat.
Get going — change your price! Sell your home and
become a buyer.
For sellers
that are having an emotional challenge adapting to this
changing market, here are a few additional thoughts:
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Just
because your listing is priced $50,000 less than all
the other comparable properties does not mean
it's priced to sell. It's just $50,000 less
overpriced than the other overpriced homes
flapping in the wind. Get it sold and move on.
You will make it up on your next home.
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Sellers never have, and never will control the price
their home will sell for, they only control how
long their home stays on the market. Just like the
stock market, you have to sell for today's price,
not yesterday's. If sellers want their homes
sold, they have to reduce the price until the market
finds it acceptable. But don't worry, you'll make up
more on the next one. Think of the stock market.
If you want to sell your stock at $50 and the market
is only paying $40, you will have to sell at $40 or
keep the stock. You can't control the price, but
remember, if you paid $30 you still made over 30%
and besides you may now have an opportunity to buy
something even lower!
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If you
don't really want to sell at today's values — Don't!
Take your home off the market and wait. The time
will come when you can get your price. But,
remember, at that time you'll also pay much more
for your next home.
It's hard to have your cake and eat it too.
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We
make our money in Real Estate when we buy it, not
when we sell it. The sooner your home sells, the
sooner you
too become a Buyer and can make money.
One final
thought for all of us. Be thankful. We live in
the most wonderful land in the world. We enjoy the most
freedom. We have the best housing in the world and
the world's highest percentage of home ownership. We are
free to buy and sell any time we want. It's your
choice. Happy holidays, and happy buying and selling to
all.
With over 500
Sales Associates in the Central Valley, London
Properties is ranked as one of the largest, most
productive Real Estate companies in America. In
recent years, our annual sales have exceeded $1 Billion
per annum. In 2006, we once again provided our customers
with more top-producing sales agents than any other Real
Estate firm in the Metro area and, of course, sold
more homes over the $1 Million price market than anyone
else.
2008 is our
37th year of setting the standards for Quality,
Integrity and Productivity in Real Estate sales. If
you would like more detailed information regarding
either the market or our services, please give us a
call.
Patrick
Conner
President
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