December 2009 Menifee Real Estate Update

Ho, ho, ho - Merry Christmas to Menifee! I love this time of year and also can actually bring good tidings to the Menifee real estate community. Things are changing! Truthfully, we have been in a constant state of change and upcoming 2010 doesn't look the alter that.

First, we are seeing huge amounts of sales. I didn't pull stats ups but let me see what I can do on the fly..gimme a second....entering password....wow that actually took longer than expected. Right now there are 487 homes advertised for sale in Menifee that are either active or pending. More than half or 286 to be exact are pending, leaving only 201 actives.

I know that sounds like a lot, but only 31 of those 201 are actually Menifee bank-owned homes. And only one of those homes has been on the market for more than 30 days - one. What does that mean? It means that just about every bank owned home on the market is now getting multiple offers and usually going over asking price. The other actives are long-term or mishandled Menifee short sales that may or may not actually be available. Yes, there are A LOT of agents that mishandled short sales.

When I say these Menifee homes may not be available, I mean that often agents leave short sales in an active status even though they already have one or more offers. Because short sales can take awhile, they often confuse the market. With 58% of the market pending and only 15% of the available market being bank-owned homes, we have a real tight supply for buyers right now which is driving UP prices quite a bit. Bottomline - being an agent and finding clients a home can be a challenge right now.

Menifee foreclosure homes are going very fast! Buyers with VA and FHA loans who need closing costs are having the most trouble. That's the downside. The upside is values are rising and interest rates are at an all time low. On top of that, they just extended AND expanded the home buyer incentive opening it up to even more buyers.

More buyers + tight supply of homes + low interest rates + extended home buyers incentive + annoying banks (had to toss that one in there) = increasing property values!

Do you realize that if you buy a $200,000 home in Menifee right now with an FHA loan you will get about a 5% interest rate? Also, with the tax incentive you will get back between $6,500 - $8,000 from the government. FHA loans are 3.5% down so $200,000 x 3.5% = $7,000. You will actually buy a home for nothing down, get an amazing tax write off, and lock in a long term interest rate - no interest only or 5 year arm stuff here. If you even consider an ARM loan in this market, I want you to immediately call my loan guy Mark Woelky at 951-536-2288 and tell him to kick you!

So the news is merry and the Menifee real estate market is stablizing and moving upward. I can't find homes for my buyers for the prices of two months ago. If you are considering buying a home, now is the time to strike!

Merry Christmas Menifee! I hope you all have a wonderful Christmas this year! And thanks Steve for hosting and maintaining such a wonderful blog!

Sincerely,

Stefan West, Broker
West Realty
Menifee CA Real Estate, Temecula CA Real Estate

Menifee Real Estate is not a Buyer's Market or Seller's Market, it's a Banker's Market

Ah it is nice to be back in Menifee real estate blogland! I have been gone for the last couple months because the market has been all over the map. After diligent research, a complete lack of days off, and crazy marketing gyrations, I am back here to report to the citizens of Menifee, Temecula, Murrieta, and Wildomar on real estate.

To start off, my headline says it all. So..um...see you guys next update report!

Ok, I am feeling a little silly today but you really have to have a sense of humor for this market because there is a lot of misconceptions floating around with Menifee real estate buyers and sellers alike. The biggest one is that this is a buyer's market. It was as buyer's market at the early part of the year. There were homes that actually were available and went at or under asking price.

That has changed quite a bit. For instance, this weekend I wrote 6 offers for 3 different couples trying to buy Menifee or Murrieta real estate. Each couple has already been burned at least once on trying to buy a home. This is happening for several reasons:

1) Pricing is artificially low - Banks have changed from an incremental, "lower the price until it sells", to an immediate "price it cheap and get multiple offers" strategy. This is painful because it creates a false sense of the real value of properties on the market. How do I explain to a buyer that the incredible pool home at $350,000 already has 7 offers on it and is really going for around $400,000?

Often buyers refuse to believe that because they can look online and see more properties priced the same. However, those properties also have multiple offers but are left active which is very deceptive. Once they close, you will see that they go for much higher. The banks love it because they get to pick the best candidate (all cash or big down) over a 3% FHA buyer. Trust me it happens. One offer I wrote this weekend was refused for being a VA loan. And the end result is all this artificial pricing creates a trust gap between agents and buyers.

2) Competition is hit or miss - the only competition for the bank properties are other bank properties and short sales. While short sales are a lot more work than Murrieta REO (otherwise known as bank-owned) properties, they are still getting multiple offers. Five of the six offers I wrote this weekend were on short sales. These are more often than not the buyer's heartbreakers. Personally, we need to do something with how agents are marketing the properties. The downside is it is really the banks that are dictating agent marketing strategies.

But the major rub is that very few tradional Menifee sellers can actually compete at these prices. So by default finding an actual "real" seller is a rarity. So it definately isn't a seller's market.

3) Banks just don't care and really can't afford to - Now, I sometimes really don't like banks. But that is because my expectation is that they care at times-which is my own flaw. They don't care about buyer's at all, they care about the bottom-line. They want multiple offers so they can pick the best horse so to speak. The people working at the bank are employees who have never owned or seen that home. At the end of the day they go home and live their life while buyers bite their fingernails about getting the perfect Menifee home.

It isn't really the banks fault, it is the economy. However, if you have a market where the main sellers could care less about buyers, you really can't refer to that as a buyer's market. And honestly, the banks are just about 90% responsible for the current woes in the housing sectors no matter how you slice it.

To sum up, a true buyer's market is when sellers are baking cookies to make the house smell delicious for the one buyer they have viewing their Menifee property on a Saturday. Yes, that really did happen at one point.

Those three points are my way of presenting the Menifee real estate market as it appears to me. Buyers are often misinformed on price, real sellers can't compete on price, and 98% of the market is bank-owned or short sale properties. So if it walks like a duck, talks like a duck, it's a duck and we are definately in a banker's market right now.

This is all bad news Stefan, you are bringing me down! Not so, says I! There is plenty of opprotunity but you have to be able to see it and make it work for you....

The biggest battle in Menifee's real estate market today is both buyer and sellers need to understand the current market conditions and players and use that knowledge for their success.

If you don't know the game or the rules, it is very hard to play. But some smart investors, young couples, and large families have all played it well recently and will benefit significantly in the long run as interest rates start to climb.

I hope that this post was informative for you and I will try my utmost to give informative updates each month.

Sincerely,

Stefan West
Diversified Realty
951-894-6199
Temecula, Murrieta, Menifee, and Wildomar Real Estate

Menifee CA Real Estate and Foreclosure Update

Happy Holidays to all the wonderful people of Menifee!

It has been a busy month for all of us and this is my first chance to post in a bit. While the Menifee real estate market has been tough, there are a lot of things to be grateful for. I am grateful for my two wonderful boys, my fantastic wife, and have been blessed with incredible clients over the years! So Merry Xmas if any of you happen to read this!

Whenever I do an update of any sort, I try to show a market trend via some actually meaniful "end result" real estate statistics and then cross check that with my personal level of business. Usually, my business level is more indictive of the market then the statistics since they follow the cycle.

Statistically, in Menifee real estate there have been the following closes in the 4th Quarter:

Oct. 2007 - 34
Nov. 2007 - 45
Dec. 2007 - 30 (so far through the 28th)

I imagine that we will end up closing 35-40+ homes in December since there are over 50 deals currently pending. There is a lot of pressure on Menifee bank owned homes to close by year end, although many will spill over into the new year.

So the level of production has been pretty consistent from that statistic. However, my business has been climbing aggressively over the last month. Many of the Menifee bank owned homes are dropping to all time lows, pricing them on the same level as rentals. If you can rent or buy, people tend to buy.

So, there is quite a bit of activity going on right now, believe it or not. There is also a hot zone in pricing. For instance, the $250k price point in Murrieta and Temecula real estate is interesting. When a property hits that level and is even remotely decent (1300+ square feet, 3 bed, 2 bath, etc) it goes in a matter of days, usually with multiple offers coming in.

The banks are behind many aspects of this Menifee real estate market. From failed loans to foreclosure properties to generating eligible buyers. Now that the banks have gotten more aggressive with house pricing, things are starting pick up.

However, in contrast to attractive pricing, the banks are making it harder and harder for Menifee real estate buyers to qualify. I just had a buyer ready to go, in escrow and the bank changed the program days before his close, ruining the deal and making us start all over.

In many respects the Menifee real estate market is in the hands of the banks. They control a majority of properties (and thus pricing) on the market in terms of Menifee foreclosures and short sales. So when they lower prices it redefines the market. And by restricting more and more buyers, they control both the supply and demand. The average homeowner is going to be a spectator for a while unless they are in a short sale or foreclosure situation.

Many of you have heard the Federal Reserve is working on different methods to get things improved. The main one is the lowering of interest rates which has helped. Another is them pouring more money into the system to give banks more to work with. However, until the banks are willing to loosen up it is simply a hose turned on full but kinked by the bank's foot shutting down the flow.

I think that things will be tighter in terms of lending for the next couple months and pricing will go a tad lower as the banks completely liquidate holdings. The new legistlation will help reduce future Menifee foreclosures and once the banks lighten up on Menifee real estate they can start relaxing a little more in lending. In many ways, they are continuing to shoot themselves in the foot and will figure that out sooner than later.

The Menifee real estate market will probably begin to see more properties moved as the price lowers enough that people can qualify for loans and buy instead of rent. Depending on the banks, we could start to see pricing holding water in the Spring.

So going into the new year, I believe we are nearing a bottom from what my own business is seeing. I deal with dozens of clients each month and there are certain patterns that seem to click. I think Menifee real estate has a little way to go but we are finally getting there. I don't like the price drops but I do like seeing a light at the end of the tunnel.

I hope this information is useful to you. If you know anyone that is considering buying, please have them speak with a broker knowledgible in the Menifee real estate market. There are some great opportunities right now. And please, if they are considering buying from a builder, they absolutely must talk with a experienced broker first! There are way too many mistakes being made on this front lately!

Happy Holidays and New Year - May 2008 bring you and your family the very best!

Sincerely,

Stefan West
Diversified Realty, Broker
951-894-6199