Is The Sky Falling…If Not Now, When?

There is a lot of speculation about real estate in Southern California, and especially in Orange Country. As of February 17th, there were just over 1,376 properties listed for all of OC; that is a less than one month supply, 0.68 to be exact. This has NEVER before happened, since this particular statistic has been tracked. Never has, “days on market,” average been this low. Since anything under 6 months DOM is considered a sellers’ market, you begin to understand why properties are selling for anywhere from $50,000 to $250,000 or more over list price for an offer to be accepted. The question is, will anyone be caught holding the bag? No fortunes are told here or futures predicted in this column, but let’s point out some pluses to make us feel a little better: 

  1. There are no stated income loans unlike the 2007 crash. 
  2. No adjustable or negative amortization loans with low teaser rates and then big adjustments. 
  3. There are lots of all cash purchases or all cash for the overages on accepted offers, as lenders did not allow appraisals to just dummy up into the market.
  4. An incredibly stable job market, with employment scarcity. 
  5. Buyers who have settled into their properties, are paying on very low interest with thirty year fixed rate loans. 

Finally, while we don’t know yet what this year will bring, those who bought in the frenzy of the last 24 months, are already sitting on double digit appreciation from those years. 

In other words, plenty of equity to weather a downturn. Throw in the fact that foreclosures are so low, it’s not even worth mentioning, and an expert would likely say that a bubble bursting on a scale of 1-5, is a 2. A slow leak or eventual price adjustment, 1-5…give it a 3.5…but who knows?

Please call us at Premier Funding Network with any questions you may have, 714-283-9900