Housing Insanity Definition!

Albert Einstein once said  “The definition of insanity is doing the same thing over and over again and expecting different results”.  Now I will allow you to pick the politicians, you think are likely to act insanely and those who wont, but for those people who want to sell their homes in today’s market and are expecting to sell at yesterday’s prices are insane.  In fact, except for a very few reasons, you should not be attempting to sell your home for some time.  Granted if you are dead, getting divorced or relocating for work these are good reasons to sell.  But in today’s market, especially in most of California, we have had a huge drop in prices over the past couple of years.  As an example using Livermore statistics from our local MLS BayEast, prices have dropped from $771,420 in August of 2007 to $534,688 this past August, a stunning 30.7%.  OMG!!!! But wait what if these numbers are just numbers?  Back in August of 2007, 76 unique single family homes were sold with 8 of them priced above $1,000,000, and 5 that were in foreclosure about 6.5% of all sold.  This August 72 single family homes were sold, but only 2 were priced over $1,000,000 and 19 were in foreclosure plus 11 were short sales, representing 41% of all those sold.  Now there was a 19% drop in single family homes year over year, which would make it a more balanced market in a normal housing climate, but as you might be aware, the number of distressed homes is a huge downward pressure on prices.  Sellers, who are not in trouble with their loans are still competing with these distressed homes.  We are also seeing a real struggle for people to move up, because they can’t get the prices they need on their current homes as evidenced by the drop in sales of million dollar properties.

So, unless you are a seller, who is downsizing with a good house, in a popular neighborhood, in a top school district and priced correctly,  take a step back and see if you can stay where you are for another year or two.  Or consider renting or leasing your home, if it makes financial sense, if you are moving out of the area with the thought that you might move back or just want your house to be sold in a more stable market.

Here’s  my best (worst) case scenario.  Currently we have a declining housing inventory, a growing population, a huge drop in new house construction, a group of buyers, who have sitting on the sidelines for the past few years and an unknown bailout/rescue financial plan that may unfreeze the credit market, which could turn a troubled market into a red hot housing market.  But we do we want to get back on the housing see-saw of the past 10 years.  Maybe slow and steady is the best answer which includes the implementation of rational and sane lending standards that protect everyone.