Latest Analysis

The problem with analyzing the real estate market is “IO” – not input/output, but “information overload.”

The real estate market is not uniformly terrible, and the future is not uniformly bad – but the “good news” is equally spotty.

Foreclosures are up 25% between August 2009 and August 2010. We are looking at a rate of foreclosures this year that we will end the year with 1.2 million foreclosures – a new record. Banks are sitting on thousands of homes in San Diego they have in their inventory that they have not yet placed on the market because it would further depress the value of all homes – including the homes the banks already own!

And yet, homes continue to sell, and in San Diego County they sold (what few did sell) at increasingly higher prices. (Admittedly, the increases were minimal, and those dropped last month.)

My analysis is that the market will continue bad for a MINIMUM of two years and will be nothing to rave about for at least three years beyond that.

We have great interest rates, terrible lending policies, and nothing but higher inventories to look forward to in the foreseeable future. Our supply side is bleak, and the demand side is dependent upon the general economy recovering, and while there are internal pressures in every recession to do that just because of the dynamics of the market, this administration is doing everything wrong and suppressing the natural recovery pressures.

Everyone always thinks that when things are good they will go on good forever, and likewise when they are bad…but…

We will recover but there is more economic pain to endure between now and then. I believe that some of that pain is unnecessary and self-inflicted by our government but we will get through it, chalk it up to a “lesson Learned” and promptly forget it and have to learn it again.

I know from experience, that I can do nothing to turn around the real estate market and that even after the basics of the economy are sound that real estate will still suffer for many years with a built-up inventory it must eat through, so I am sanguine to enjoy my involuntary retirement and do a few transactions where they fall into my lap.

Others are not so fortunate…and it is not just real estate brokers and agents – but loan companies, and title insurance companies, and furniture companies and nurseries and landscapers and patio companies and pool companies and….

The “real estate” industry has many primary and secondary people – and they will all hurt until this economy recovers, and for years thereafter.