BUYERS SLOW TO TAKE ADVANTAGE OF BUYERS MARKET

Great Deals Being Made by Experienced Buyers

By Ray Perry

LAKE COUNTY- What has been bad for sellers has been great for  buyers. As the Lake County real estate market softens, more savvy buyers are entering the market and making deals.  While most buyers tend to sit on the sidelines in a soft market and jump in when prices are going up and availability is low, the most experienced and successful buyers see the current market as a bonanza.  "Most buyers are watching and not acting. It's counter intuitive," according to Phil Smoley, broker/owner of CPS Country Air Properties.  "This is the best buyers market in nearly a decade, and yet there are very few buyers, and many of them are seasoned investors taking advantage of what's happening."  Smoley believes that patient buyers stand to make small fortunes buying property right now way under market, and when things pick up again, their equity will skyrocket. "Very few people see the opportunity, and it's slowing down the recovery. Once the market turns and all of the procrastinators jump in, these early investors will be able to flip the properties for a tidy profit, and late comers will end up paying far more.  In a few years we will be hearing from people saying ‘we should have bought in '07 when prices were so low'," according to Smoley.

How good is it for buyers right now?  Consider: Home sales decreased 2.6 percent in July in Lake County compared with the same period a year ago, and the median price of a home decreased 10 percent, according to data pulled from the LAKE COUNTY MULTIPLE LISTING SERVICE (MLS) in mid-August.

Closed escrow sales of homes in Lake County totaled 76 in July according to information collected from the MLS. Countywide home resale activity decreased 2.6 percent from the 78 sales pace recorded in July 2006.

The median price of a home in Lake County during July 2007 was $270,000, a 10 percent decrease from the $300,000 median for July 2006, the MLS reported. The July 2007 median price increased 0.4 percent compared with June's $269,000 median price.

"With just over a 18-month supply of homes for sale on the market, there could be some further softness in prices in the coming months," said Smoley. "Inventory continues to rise so sellers by necessity are lowering prices to attract what buyers we have out there.  There has not been a better time for buyers to enter the market a long time."

"Unlike the downturn we experienced in the early 1990s, the sales decline is not driven by weakening economic conditions," he said. "Both the California and U.S. economies continue to expand."

Highlights of Lake County's resale housing figures for July 2007:

Lake County's Unsold Inventory Index for homes in July 2007 was 18.5 months, compared with 17.5 months for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

Thirty-year fixed-mortgage interest rates averaged 6.69 percent during July 2007, compared with 6.68 percent in July 2006, according to Freddie Mac. Adjustable-mortgage interest rates averaged 6.37 percent in July 2007 compared with 5.71 percent in July 2006.

The median number of days it took to sell a single-family home was 167 days in July 2007, compared with 135 days for the same period a year ago.

Statewide, the same situation exists with buyers not taking advantage of a fantastic buyers market. "The focus on foreclosures and subprime lending is ongoing and, coupled with higher inventories of homes for sale, is prompting many would-be buyers to play a ‘wait-and-see' role," said CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) President Colleen Badagliacco. "However, well-maintained homes with curb appeal that are priced for today's market continue to sell. It's often a matter of counseling buyers and sellers to set realistic expectations on both sides of the transaction."

"First-time buyers continue to be impacted by tighter mortgage underwriting standards and the affordability challenge, which has not improved significantly despite price declines in most regions of the state," she said.

Even with the tighter loan criteria, Smoley believes that most potential buyers can still get good financing. "The mortgage situation has blown some buyers out of the market, but has had little impact on most qualified buyers," Smoley said. " If you want to make a great deal and have some money and/or good credit, we can get you into a house. Don't wait for prices to go up 20 percent because on a $300,000 house, that will add $60,000 to the sales price!" Smoley added.

What's the best advice for a buyer on the sidelines?  "Get pre-approved by a reputable lender and go find an experienced Realtor, preferably one who works at CPS Country Air Properties," Smoley suggested. "Then start making offers."

Ray Perry is a Realtor with CPS Country Air Properties.  He can be reached at (707) 277-9255 or at ray@rayperry.com .