Brent Bruce's Mortgage Insights

One thing that is difficult to understand is that when you listen to the national media, such as CNBC or CNN you are hearing national figures. Recently I heard CNBC note that real estate is down over 10%. I wish that were true here. Southern California Real Estate has dropped in most cases by about 40% from the peak in early 2006. This has left many people upside down in their home and wondering when the bottom will hit.

As you can see with the stock market, and the overall economy as well, no one can really answer this question. Normal fundamental factors are out the window and even the Federal Reserve is just trying to keep up with the day to day changes in the economy. However, there are some simple factors that I feel will give us an indication on when we might settle down here is Southern Cal.

It is really not that hard to have a good idea of when things will change. First, home prices have to come down to a point that first time homebuyers and people with average incomes can qualify for the mortgages. Keep in mind I said “qualify”. This means they are going to have to provide documentation and the bank is going to have to agree that thy can afford the house. Once that happens, the first time homebuyers and all of the people who thought they were never going to be able to buy when houses were $500K will come out of the wood work to take advantage of the discounted homes. Foreclosures will have to subside so that more homes are being bought than foreclosed on each month. This will slowly lower the inventory of home for sale. As inventory gets back to normal levels, prices will stabilize and then, over time begin to rise again.

The good new is that in Southern California I think all of these things are beginning to happen. Prices have come down to the point that people are jumping on them. Sales volume is up! Banks and the Government are putting together plans to slow foreclosures and they will get it right eventually.

Basically I feel that we are very near or at the bottom of the real estate market in Southern California. I think now is the time to buy, and that 2009 will be a better year for us all.

I guess we will see soon enough!

 - Brent C. Bruce