The content of this newsletter was obtained from press releases from Realogy Corporation
and Coldwell Banker Residential Brokerage in recent weeks
The past few weeks have been an economic roller coaster. We have watched the market dip and climb as fear, frustration and questions in the stock and real estate markets mount.
What we are experiencing is the results of combining over-inflated pricing with unsound lending practices and greed. How many of you really believe that a home valued at $150,000 in 2001 should really be worth $447,000 in 2005? As a result of borrowing based on inflated prices, we began to see the foreclosures soar and by the end of summer the results took their toll bringing down major investment firms and banks.
As this situation took years to emerge, so may the recovery. However, we now see economic, political and business leaders work together to plan a recover strategy rather than attempting to individually fix this enormous problem. This lays the foundation for a solution instead of hoping that the problem fixes itself.
On the positive side, we now have prices approaching that 2001 value level. We also still have very attractive interest rates in the 6% range. (In 2001 interest rates were in the 7% range) There is a positive up-tick in the market as smart investors and home-buyers are snapping up those bargains. As a result, the inventory in the greater Sacramento market decreased from an 11+ month supply in July to a 5-1/2 month supply in September. We have seen an increase in units and conversely as decrease in price of the distressed properties, but they are selling. In many cases, we have seen the return of multiple offers and steady open house attendees starting as well.
There is no doubt that the state of the markets has much to do with consumer confidence and trust in the financial sectors. The credit crisis weighs heavily on everyone