Bargain Hunting In Force

There was an article on Reuters this morning talking about home prices in California, and the following quote jumped out which got me thinking.

"We're running out of foreclosed units in most places," said Alan Nevin of MarketPointe Realty Advisors in San Diego. "It looks like we're straightening things out."

We've been talking on this blog for a while now about how demand for these lower priced homes will eventually put pressure to stabilize the market and drive prices up in the higher tiers. I started thinking about my conversations with agents over the past few month who have told me how much of a pain it is to work with foreclosures. In addition, they keep telling me how the distressed properties are really hurting their non-distressed listings, specially in Chicago where I reside.

So what are the options? Ride this out (provided you have enough hang time), or embrace foreclosures and simply deal with the additional work?

I called an agent in Los Angeles who told me that they are seeing activity in certain pockets (just northeast of LA) like they did in 2005. Multiple offers are being placed as bargain hunters are trying to take advantage of the market.

So I walked away from my conversations thinking that the agents that will win when all this is said and done are the one's that embrace the current market and focus. Why not target these buyers? Listings are sitting for 10 months, while buyers can make 10 offers in a month. Put together a campaign to find these buyers. Use BIRDVIEW's Traffic Accelerator to find these buyers. They are out there.

Here is the full aticle:
http://www.reuters.com/article/lifestyleMolt/idUSTRE55B04720090612

Mortgage delinquencies may have peaked: Equifax

Here is a quote from an article on Reuters today.

"There is not a mortgage in the U.S. being underwritten without verification of income and employment," Adams said.

While this confirms all of our worst fears that inventory will simply sit there, it is actually good news. Here is why.

Homes that sell today are being sold to people who can afford them, which means, that any drive up in price or any stabilization of price in the market is based on a solid foundation. This will give people confidence to go ahead an make that purchase without having to fear another bubble created by artificial wealth.

Here is the full article:
http://www.reuters.com/article/newsOne/idUSN1139585720090611

U.S. pending home sales see biggest gain in 7 years

Last week we saw an increase in the transaction volume, and today we read about pending contracts being up. So is the drop over?

We're not sure if the recovery has begun, but we do know this. Homes are becoming more affordable once again for the first time home buyer. When we say affordable, we mean organically affordable. What is the difference?

Let's take the year 2005, home affordability was practically for everyone. It really didn't matter if someone had good income to debt ratios or any reserves in the bank. Credit was flowing and one could leverage the purchase of a house with practically no money down. So a household with 80K income could buy a $600K home.

Today, one must actually have income that can support a mortgage. Highly leveraged homes are a thing of the past. The same household of 80K can now purchase a home of around $240K. With the drop in home prices, people can actually afford their home once again.

Naturally, what follows now is that once the demand for these homes reaches a critical mass, it will drive up prices for the middle tier priced homes.

So are we at the bottom? Not sure, but we have some positive signs. In the age of instant gratification it is easy to dismiss this as a positive sign as it may take some time to fully recover. However, if one is selling real estate as a profession, they may want to start marketing homes in this lower tiered group. That is where the action will be for the rest of 2009.

http://www.reuters.com/article/newsOne/idUSN2754905920090602