Real Estate Outlook

The truth is, unless your realtor is a practicing economist, he or she is not going to know more than anyone else. The house I just sold does not tell me if the next house is going to sell or if there will be any qualified buyers looking to buy in the  near future. The crystal ball A crystal ball approach is heavily used by people, going on a hunch or a feeling. Sadly, many realtors fall into this trap, although I don’t believe deliberately so. Our experiences with tens of people is not statistically valid against a market of millions – and I am just talking about Southern California, which is made up of markets as different and diverse as Long Beach, Glendale, Moreno Valley, South Central and Palos Verdes. Who can predict? When the market started its downward trend, it was the lower priced homes that were hit first. But in 4th quarter of 2010 it was nearly the opposite, with 1 in 12 homes in financial trouble (in default or foreclosure) under the $1 million mark and 1 in 7 suffering the same problems costing more than $1 million. In fact there is even a form which realtors are encouraged to have their clients read and sign: the MCA or “Market Conditions Advisory.” This document informs buyers that their realtor cannot predict what will happen with prices. Homes were never meant to be a short-term investment, although that is exactly what happened from 2003 through 2007 and beyond, due to artificial increases in the prices of a home. What I had learned is that in Southern California, as a rule of thumb, no house was worth less than it was paid for in any 10-year period. That holds true even now. We’ll have to see if that will still hold true in 2015, and it may. Now that it is clear that we don’t know, what are the opinions of the experts? Those opinions are varied, and they vary by the type of work the experts do. If you flip homes, buying low and selling high, you are a type of expert, but your perspective will be different than an economist or someone in the state government. The Los Angeles Times put out an article on the 1st that seems to represent a spectrum of expert opinion on real estate in 2011.
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