Orange County Housing Market
For the last 31 months, people across Orange County have wondered "What is happening with the Orange County housing market? when is the time to enter the real estate market". Buyers like many of my friends have been waiting on the sidelines trying to decide if now is the time to buy. I have cautioned them over the last two and a half years to be patient. I have asked them to wait. "Even if the market has bottomed out" I say, "it certainly is not headed up anytime soon".
However, the time has come. About three weeks ago I contacted all of my friends and family members interested in purchasing a home and said "it is time to buy, the turn around is here". Let me explain why:
It is a simple case of supply and demand. In Orange County, the supply of houses is not really growing. Perhaps the number of house for sales can change, but the number of houses can not grow much. There are very few places left to build here. What can change drastically is the demand. Currently, home sales are not growing very rapidly, but that is about to change. You see, as I work with buyers across Orange County, I am constantly faced with the same situation. Almost every decent house on the market has at least one offer on it! How can this be? if most of the homes already have offers on them, why is the unsold housing inventory still so high?
The answer is lending.
Many of the people who are putting offers on homes are not able to qualify for a loan. They may have a pre-approval, but when it comes time to closing, the lender always seems to find something they don't like. In toady's market, the majority of new loans are FHA loans. These are great loans that offer good rates and very small down payments. The problem is, FHA has very tight guidelines for qualification and one glitch can disqualify a borrower. For example, self employed people have a very difficult time qualifying for FHA loans. They may make plenty of money and have documentation to back up their pay, but if it is not in the form that FHA accepts, the borrower is out of luck. I have spoken with numerous people that should be able to qualify for a loan, but can't. This is the problem with the current market. Not foreclosures, not short sales, not a lack of buyers, but a lack of buyers who can currently qualify for a loan.
Luckily , I am not the only one to have noticed this. Currently, the federal government is creating numerous incentive packages to loosen the credit markets for home buyers. Now, they will not allow the irresponsible lending that got us in this house mess in the first place, but they are aware that many qualified buyers are currently not able to get a loan without a huge down payment. They are in the process of reallocating resources. They are shifting the focus away from renegotiating loan terms with people upside down on their homes and putting the resources on stimulating the housing market. As the credit market loosens, more qualified buyers will close on the homes they are trying to purchase. This will reduce the inventory and drive the prices upward. Now, don't expect the pre-recession home prices any time soon, but I expect to see a 5%-6% increase in 2010. Thus signifying the turn around
Comments(2)