Throughout this recession most cities have seen home values drop dramatically. Along with values we have seen sales drop dramatically as well. In Sacramento, my hometown, we have seen a 90% drop in sales from 2005 to 2010. The San Francisco metro area has seen its home values drop by 25% to 35% or more in some neighborhoods and these two cities still have some pain to work through along with many others throughout the country.
Going beyond this and looking for the big picture, I am predicting that in the not so near future we should prepare ourselves for the market to make a roaring comeback. There are three compelling reasons why I think this comeback will be upon us soon.
First, we are starting to receive predictions for gains in 2011. There are predictions of a 10-14% gain between June 2010 and June 2011 for San Francisco. So at least we are headed in the right direction.
Secondly, let’s talk about inventory. Resale inventory is practically gone. There is hardly any decent resale that doesn’t have a short sale attached to it and let’s face it, short sales are messy. Most Realtors are steering clear of short sales as they prove to be a waste of time. Inventory is always a predictor in real estate markets and when it is lacking, it can drive a market from a buyers’ market to a sellers’ market. Builders slowed production across the country when our sales dropped so drastically, so the inventory we do have will be snapped up immediately as soon as the market turns even slightly. It’s already dropped by nearly in half over the past year.
Pent Up Demand
Don’t get me wrong we need to weed through the rest of our foreclosure debacle but speaking of foreclosures…can we talk about all of the people that have been involved in foreclosures and short sales, millions right? This is the most important part of my comeback prediction.
We started this recession 3-4 years ago. That’s the time you have to wait to age a foreclosure or short sale in order to buy again. You have a large amount of people out there who are waiting patiently for their foreclosures to age so they can take advantage of this buyers’ market. This process is happening now. Ask any lender and they will tell you that these pent up buyers are jamming the phone lines checking to see when they have aged their credit enough to go out and purchase again. We are talking about a huge amount of potential buyers out there who will be streaming into the buying market again over the next 3 years, starting now.
Great Mortgage Rates
Oh and let’s not forget our last ingredient…the great, low mortgage interest rates we now have. With predictions of a better market in 2011, inventory low, an abundance of willing buyers and great rates, it’s a perfect storm to turn our real estate market around very quickly.
The Selling Solution
The smart Builder and even smarter Sales Person will be marketing heavily to these potential buyers right now. We should be building relationships with these pent up buyers by figuring out ways to assist them in credit repair and pre-approvals. If a Builder were to spend marketing dollars in this arena and leverage their lending capacities to convert these pent up buyers of the 2010, I would imagine they will be greatly rewarded in the very near future.
Just something very important to think about…My job is to make you great at what you do! Happy Sales!