I’m confused.   Is it 2008?  Or 1998?

Here’s why I am confused…you see, Orange County filed for bankruptcy in December, 1994 and emerged from the same in December 1996.  The OC real estate market bottomed out about the third quarter of 1996, and was s-l-o-w-l-y creeping up by year’s end.  During 1997, the creep upward continued…and if memory serves me, there ended up being about a .5% appreciation over the course of the year.

And then came 1998.   And lo, things did change!

Once winter started to wane and Spring was knocking at the door, our market started to heat up along with the ambient air temperature.   

And did it ever!

I mean, things really took off!

I would constantly monitor the MLS for new listings and as soon as a new property that was a match for one of my clients would hit the system, I would call them, say “meet me there” and arrive, offer in hand for them to sign on the spot!  And, we would still lose out to one of the many other offers than materialized virtually instantaneously!

It was madness!  Frustrating!  Unbelievable!

And it continued for some 6 ½+ years!  Madness I say!

But the Spring of 1998 was where the OC market got it’s running start as the pent-up buyer demand broke free of the shackles of fear and reservation and apathy and it took flight…supersonic flight.

After half a decade of decline, (due in great part to OC getting together with unscrupulous businessmen who lead us into bankruptcy, and the Berlin Wall coming down, resulting in massive cuts in defense contracts--resulting in massive job loss which resulted in an exodus out of homeownership and the entry into the foreclosure arena), buyers were tired of being scared and tentative.  So they rebelled and revolted and reversed their course, and thus, reversed the course of the market at the same time.

The vast amounts of foreclosures at that time were the kindling that fueled the fire that set the rest of the market, nay, the entire market ablaze. 

I remember all of the HUD Homes.  I used to go to the HUD office on Hutton Centre every Friday and pick up the new list of HUD Homes for sale.  I would take this list and paste my logo and contact info on it.  Then, I would fax it out to the hundreds of individuals who were on my fax list, hungry for the HUDs.  And why not?  HUD frequently ran specials where you could buy a condo for $100 down and closing costs were paid for you.  Houses were only FIVE HUNDRED DOLLARS down!  And costs paid. 

The Veteran’s administration had REPOs too.  Their list was printed in the LA Times every Friday.  I would get the paper, cut out the list, scan it into my computer and again, add my logo and contact info and fax out to everyone.  HUD and VA homes were not listed with Realtors.  But we loved HUDs because you got the full 6% commission if your bid was the winning bid.  All the HUD homes were on master keys and some agents, when they showed their clients a hot property, would break off  the key in the lock so that no one else could get in to see it.   By the time HUD could send someone out to fix it, it would be past the bidding period and the property was sold!  Where the population is dense, the rats will breed…

Also, Fannie Mae and Freddie Mac had foreclosures too.  They did list with Realtors, so we could find them in the MLS.   Fannie Mae offered 3% down financing and Freddie Macs were 5% down.  Freddie’s frequent-seller program was /is called Homesteps and if you sold a certain number in a year, you started earning bonuses. 

Some of these homes were gems, some were dogs.  My wife and I bought two of the gems, two condos in Tustin Ranch in 1996 and 1997.     We lived in both but have since sold them…but I wish we hadn’t of!!

And what do I see happening now, in 2008?  Well, the foreclosures, which I do not see as vast as back then, are seemingly acting as kindling…again.  On Sunday, January 6, I wrote an offer on a foreclosure in Irvine, a 2 bedroom, 2.5 bath townhouse under $400,000.  That home got nine offers …in this market! (whatever this market is!)  NINE offers!

Another property, a short sale listed for $418,000, has multiple offers up to $425,000 on it! 

Agents from San Diego to Riverside are telling me the same thing…things are picking up.   Activity is up.   That includes showings, offers and offer price to list price ratios, as well as multiple offer scenarios.

So, can you see the cause of my confusion over what year it is?   Right now is very reminiscent of early 1998.

So, here’s my dilemma…I have a number of buyers who want to wait for the “bottom.”  The problem is, we don’t know we’ve hit bottom until it has passed.  And since there are thousands of buyers waiting for the bottom, as soon as all these buyers see that the bottom has passed, all will jump into the market at the same time, resulting in increased activity-- more viewings, multiple offers, offers over list price…there will be competition for homes again…oh wait, that’s what I am experiencing now!

What does this mean?  It means that now is a good time to buy.  Rates are low…in fact, it was reported on OCRegsiter.com (see here ) that our mortgage rates have dropped to the lowest point in a year.  And with all the sellers out there knowing that it is a buyer’s market, they are willing to do whatever they can to get you buyers off the fence and into a home.  They are taking lower offers, paying closing costs, throwing in appliances that don’t typically get included, making improvements and just plain playing nice.  They are asking “what will it take to get you into my home today?”

Now people, I am not saying that what’s going on now is indicating that 1998 is about to happen again.   But, it sure is bugging me….

And since it is bugging me, I have to now go and ask all of my buyers….”what will it take to get you into a home today?”