As the real estate market continues to twist and turn...
what is in hand for us ahead

March 10, 2010: The Market Condition Report (MCR) indicates a halt to the slowing trend of the last few months and stabilization at current levels.  While the MCR is a reflection of past indicators with The Market Commentary (MC) we attempt to discuss what is happening now and in the foreseeable future.  (Market Condition Report for the High Desert)

The depth and clarity of the High Desert real estate market continues to be murky.  March and April traditionally are ramp up months for the spring and summer selling season.  We like to see a 3 month trend in the MCR to establish a reliable direction in the market. 

We have discounted the national home sales drop in January 2010 of 7.2% from December sales levels primarily due to severe winter storms and the fact that sales, nationally, are still 11.5% higher than January 2009. 

Over the last few weeks there has been a slight increase in the number of REO properties entering the market for sale.  Last month we indicated “Our thinking was turning to April when the Fed’s most likely will have suspended or cancelled the purchasing of  toxic MBS’s (mortgage backed securities) from the banking and lending industry.  This may be the turning point that causes the banks to start releasing some or most of the REO inventory that is backing up”.  Some knowledgeable sources now are indicating that banks will not be releasing large amounts of foreclosure properties at one time in attempts to stabilize the market and not diminish the value of their REO assets any further.  The next few months should reveal the direction banks will be taking with regards to releasing REO properties for sale. 

There are signs of increased interest in the single family home price range over $250,000.  By May or June we should have some stronger indicators as to the direction of this price range. 

A major hurdle for buyers under the $100,000 level, which require financing, has been the diminishing inventory for sale and the direct competition from buyers and investors paying cash.  Many buyers that can afford a price adjustment up to 125,000 or even as much as $175,000 are finding a much larger selection of homes to choose from and sometimes without as much competition as the under $100,000 level.  The under $100,000 price level will most likely continue to be to be a piranha feed for most buyers. 

Buyers wishing to take advantage of the tax credit have only 52 days left to be in contract, by April 30^th, and close by the end of June 2010. 

Interest rates on 30 year fixed rate loans continue to be favorable as of 03-04-2010 with a decline from 02-25-2010 level.  Weekly Primary Mortgage Market Survey can be viewed at the Freddie Mac web site and is updated every Thursday. 

In our opinion the hard numbers in the MCR are showing that we have reached an equilibrium point and the short term direction of the market will most likely be decided over the next 2-3 months. Interest rates continue to look good for the near future and yet when you temper the soft improvement with the overwhelming unemployment picture, potential hoard of foreclosures not on the market, tightening of lender requirements for borrowers, in our opinion, there is reason to expect little improvement to minimal price erosion over the next couple of months. A more balanced set of market indicators exist today as compared to last month.