Beware of National Real Estate News Reports…They Mean Nothing in Riverside

Westcoe Realtors, Riverside California…There is an old saying in national politics: “All politics are local.”  In essence, this saying refers to the fact that whatever is happening nationally is fine, but what voters really care about is what is happening to them locally.  Well, in the real estate world, we operate the same way.  National news is fine, but if you really want to know what is happening in the fast changing world of real estate, you have got to ignore the national news and focus on the local.  Here’s what we mean.

In the business section of today’s Riverside Press Enterprise, there is a headline on the front page that reads “Home sales sluggish as supply soars.”  This is an article written by Jack Healy from the New York Times News Service.  The gist of the article is as the headline reads…nationally home sales are lagging as banks continue to put their foreclosed homes on the market.  In some areas, it is simply a case of too much supply, and not enough demand as buyers struggle with jobs, money, etc.  There is no reason to doubt the information presented in the article, and it is well written.

However, with regards to our Riverside area, this article could not be more wrong or misleading if it tried.  No offense to Mr. Haley, but his statements about the national picture have absolutely nothing to do with what is happening here in Riverside.

In our market area, when dealing with the price range where approximately 95% of our sales occur (below the $400,000 price level), the heading of any real estate article should read: “Home sales soar as supply dwindles.”  In Riverside, we have more buyers than we can handle, not enough property to sell to them, and the norm for the purchase of a bank repo property is approximately 10 offers for each home available for sale.  As a matter of fact, we currently have one property in our office, a bank repo, in which there are 63 offers pending on the property in about 1 week on the market for sale. 

In this price range, our market is frenzied, paced, active, busy, escalating, and just down right frustrating for all those buyers who continue to write offers on properties only to be on the losing end of an eventual bidding war.  But…the process is worth it because home prices have fallen so far so fast that all the buyers who could not afford a home 3 years ago can now easily afford a home today.  The result….a whole lot of buyers and not enough for them to pick from.

But why is there so little homes for sale if the foreclosure rates continue to climb?

Well, welcome to Politics 101.  Without wanting to appear too cynical, our State politicians are more interested in “TV news sound bites” than in actually curing the problem.  So, California now has a 90 day moratorium on the banks so that they cannot foreclose on any properties, effective June 1, 2009.  This allows all the politicians to say they are “fighting for the little guy”, when in reality they are killing the market place and making this horrible economic situation simply last longer.

The bottom line here is that the housing market cannot recover until the banks sell all their distressed and foreclosed properties…and arbitrarily delaying that process just prolongs our economic misery.  The dye has been cast and we need to let it runs its course so we can get better sooner.

But, such is life in the real estate world of 2009.  So, for the next few months anyway, we are left with thousands of buyers who want to buy, and thousands of homes that will just sit on the shelf waiting, neatly wrapped for some future date.  An insane way to do business, but that’s what we’ve got for now.

In the meantime, just beware of any real estate news items you may be reading.  Whether it be on the Internet, TV, newspaper, or magazine…keep one thing in mind.  Is this a national story, or a local story?  The answer to that will let you what to believe, and what to discard.