In our weekly sales meetings at South Bay Brokers, we are definitely seeing a market improvement.  Well priced homes in good locations are selling VERY quickly, often within 3 or 4 days of listing and quite often with at least 3 to 4 offers.  We saw, in our office, a 45 percent improvement in dollars in sales for February of 2007 over February of 2006, and there were more total  numbers of houses as well as more expensive houses making up that increase.  While I don't think that all these market economists who are on the NBC Nightly News and CNN are a bunch of dummies, I think that we all have to realize that they are talking about Real Estate in the nation as a whole, not the lovely little micro-economic-climate that is the (dare I say it) Fabulous South Bay. (couldn't help it -- see me at www.FabulousSouthBay.com !) We have a very unique combination of circumstances here that are acting together to keep our prices strong and our market moving along despite what all those PhD's say.  First, we have an extremely desirable location.  Mother Nature isn't making any more perfect weather, with the cleanest air in the Los Angeles Basin, ocean views (or at least ocean breezes), and so many outdoor things to do.  Second, we have an extremely strong local economy, with jobs coming from big defense contractors like Northrop, Boeing, and Raytheon, high-tech firms like Accenture, CSC, and Oracle, the entertainment industry, with Raleigh Studios and lots of screenwriters, producers, agents, entertainment lawyers, etc, choosing to live here, and finally international trade with the Pacific Rim, driving lots of business in the downtown Financial District.  The South Bay is an easy commute downtown on the 105 Freeway from most locations, is close to LAX for those "road warrior" consultant types, isn't TOO far from Hollywood and Burbank for the entertainment moguls, etc.  And let's not forget some of the finest public schools in California.  For example, Mira Costa High School and Peninsula High School are ranked in the top 20 high schools in the United States!  So when you add all these factors together, the dreaded "real estate bubble bust" just isn't coming here -- at least, that's what  I think.  The market seems to be proving me right.  When the homes are well priced and well staged, they are going FAST!

Today I saw more evidence of the catastrophe that is the sub-prime market lending collapse and how it affects all of us, even the deals with non-subprime people. I have a client with an error on his credit report. Now we got the bank that made the error to admit it and we have a letter in our hot little hands admitting their mistake, but waiting for the FICO scores to correct themselves via the normal cycle will take several months. Having the credit report “rapid rescored” will give him the higher FICO score he deserves right away and allow him to get a lower interest rate and get the loan he deserves so we can close escrow on the property he and his wife want to buy. Before this sub-prime problem, a rapid-rescore would take no more than a day — sometimes only a few hours. When we submitted it today, we were told it would take at least three days and could possibly take more!! That’s because the rescore people are so backed up with people who normally wouldn’t have bothered with a rescore but now just have to do it because it is the only way they can get a loan due to the collapse of the sub-prime lenders.

It is very frustrating right now to be caught in the middle like this. As a Realtor, I want to provide my clients with excellent service, and I also want to provide very timely communication and professional results to my fellow Realtors on the other side of the transaction. But with more time than usual of these transactions being tied up in the lending cycle because of this weird abberation in the lending side, it is very hard to keep calm and cool about all of it. I’ve already had one deal fall apart two days before escrow was to close when the Buyer’s lender rejected the loan after they had already previously approved it (I represented the Sellers) because the lender decided to get out of the sub-prime market on a moment’s notice. How can they do that? They just do it and let the chips fall wherever they will.

Unfortunately, in most cases, the people affected are people like the prospective Buyers of my client’s property — a nice family who were eagerly looking forward to their new home, who had already given up their apartment and were living with friends in order to save money for the closing costs, and who could afford the mortgage but were turned down because the husband was self-employed as a contractor and the bank was therefore worried about “stated income” instead of his having a payroll stub. Does the lender care? Not a whit.

And of course, the other people affected were my clients, who had already moved out into another place expecting that theirs would be sold and now they are stuck with two housing payments and are worried that they will lose their home. (Don’t worry, A&A, I’ll sell it again!) I understand that the Fed’s thought that they were trying to protect the “little people” from big, bad business by saying that they needed to tighten up on the sub-prime loans so that they weren’t encouraging people to get in debt over their heads, but by doing it all at once in “one fell swoop” they’ve simply made it even harder on lots of “little people” like my clients and the prospective buyers (and the people in the first part of my rant who are trying to get rescored, etc, etc.). Not to mention the thousands of people at companies like Fremont and the other big sub-prime lenders who are getting laid off right and left. Sometimes I think the Feds just really DON’T understand the housing market at all!!!