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A crude, but apt description for one facet of our real estate market that’s changing. Ever since the go-go years (2002 – 2005) when almost 90% of entry level buyers got priced out of buying a home, real estate’s been dysfunctional. Plugged up. Why? Because it priced the entry level buyer out of the market. For a healthy real estate market, we need the constant inflow of those first buyers buying that 2+1 condo, so those sellers can buy the bigger 3+2 condo, so those sellers can buy that first small single family 3+2, so those sellers can buy that bigger 4+2.5 and so on. Now there’s figurative blood running down the streets of America’s real estate. Billions of dollars lost. The credit market is in shambles. The media drums a constant barrage of falling home prices, the “R” word, foreclosures, oil at $100 a barrel and so on. But for all the negative, there’s a positive. Prices are coming down, and that’s good. Painful, but good. As a homeowner and landlord, I really want property values to scream up like they did earlier. Makes me feel “rich”. But on a macro level, it messed things up badly. The market got plugged up and now it’s painful as it trys to correct itself. The ton of REOs (Real Estate Owned, ie, bank foreclosures) on the market have severely affected neighborhood prices in Ventura, Oxnard and Camarillo. But this has had the effect of allowing the entry level buyer back into the market. In Ventura, McKeon condos were selling for $350k at the height of the market. Now, REOs there are selling in the low $200s. With financing still “cheap” (6% plus or minus) people can make that jump from renter to homeowner much easier now. Am I upset values have dropped? As an owner and individual – you bet. Leslie and I have “lost” hundreds of thousands of dollars. But as a Realtor, on a macro level, I’m glad to see the market correcting itself and hopefully getting itself back into balance.
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