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What can we expect from the real estate market in Orange County for the remainder of the year and the beginning of 2008?

We are realizing a bit of an increase in demand as more and more jumbo loan buyers reemerge in the market. As rates for jumbo loans start dropping, we can expect this trend to continue. Demand really cannot drop much from its current levels; it is what can be referred to as inherent demand, those buyers who simply will buy regardless of the market because they want to own a home and just don’t want to rent: newlyweds, relocation buyers, empty nesters, etc. Rates are starting to fall as Wall Street has been nervously and negatively reacting to recent economic and earning reports. It appears as if Bernanke and the Federal Reserve are poised to drop rates again. As rates drop, it will become more enticing for buyers to make the plunge. The Autumn market is nearly behind us, but it did not really amount to much since all of the typical cycles were not able to play out, with the financial crunch dominating the market instead. Typically, we would have seen a bit more demand, a ton of sellers pulling their homes off of the market and the active inventory dropping. Instead, we experienced minimal demand, but since few homes were coming off of the market due to being placed into escrow and instead just sat on the market, the inventory did not really drop. For the remainder of the year, the Holiday market, Halloween through the first few weeks of the New Year, we can expect demand to rise a little, a number of sellers to pull their homes off of the market for the holidays and a decrease in the active inventory. With a delay in the reduction of the active inventory, it appears as if we are going to start the New Year off at a very high level, around the 14,000 home level. That’s a lot of homes to start the 2008 market. We started 2007 with a little over 11,000 homes and built up to nearly the 18,000 home mark. Starting the year at 14,000 increases the likelihood of eclipsing the 20,000 inventory mark as many homeowners will opt to place their homes on the market in what is cyclically the best time to sell, the Spring market.