Light At The End of The Tunnel...Or Really An Oncoming Train!

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by John Alesi, Mission Viejo REALTOR®
Mission Viejo CA Real Estate

On Monday, Oct 10th, local Orange County real estate prognosticator, Gary Watts, presented a seminar "The New Financial World and Its Impact on Real Estate." After explaining the reasons for the current slump in financial markets and the resulting overflow into real estate, Watts ended with a few points that may be the light at the end of the tunnel. Hopefully, it's not an oncoming train!

-Credit conditions should greatly improve, bringing more buyers into the market place.
-Demand for properties will continue to be higher than the past three years.
-American households have $7.4 trillion in checking, savings, and money market funds.
-Americans have $4.1 trillion stashed in Treasury bills and other bonds.
-This total of $11.5 trillion could pay off every home mortgage in America!
-Investors have “parked” $3.5 trillion dollars in money market funds and it has to eventually move someplace. Hopefully, a large chunk goes into real estate lending.
-Most lenders will recover 70% of their outstanding loan balances through repossessing homes and then reselling them. If not, they can sell them off to the Treasury at auction.
-Price declines have allowed first-time buyers back into the real estate market.
-Pent-up demand from buyers, who have been “fence-sitting” for the past couple of years and are now re-entering the housing market, should help reduce our current housing supply.
-The U.S. income this year will be $14 trillion, while global income will be $53 trillion.
-The U.S. economy earns $26 billion every day and, even with loan write-downs in the hundreds of billions, it will represent less than ½ of 1% of the combined assets of all U.S. households and non-financial corporations.

So there is a bit of cautious optimism on the horizon. Most importantly, there is an unique window of opportunity for first-time buyers to get into the housing market while prices are much lower than in the past several years. If you are contemplating a purchase, consult with a professional Realtor® and/or trusted loan advisor. Now is not the time to be listening to the sage advice of your third cousin's hair dresser's trainer's boyfriend who heard some financial advice on a late night radio talk show.

If you are interested in more information or are thinking about purchasing or selling your home in Orange County, feel free to contact me.

This post is copyrighted by John Alesi and may not be used without permission.