Advice for Buyers & Sellers

Buyers: Inventory levels throughout most of our county are beginning to increase again with sellers deciding to put their property on the market now that the holidays are behind us. You have the advantage in this market, but waiting until the “summer buyers” join you may hurt your ability to negotiate the best deal. View all homes for sale, including bank owned homes, online at SanDiegobythesea.com If you know anyone who is thinking about buying, please let me know how I may be of assistance.

Sellers: Within our current real estate market, it’s no surprise that not all properties are being sold by conventional sellers like you. In the last couple months about 25% of sold properties in our county have been bank owned. A prudent and thoughtful marketing strategy in necessary to make your property stand out from the rest. Homes do not sell by happenstance. Visit SanDiegobythesea.com to see how we can sell your property. If you know anyone who is thinking about selling, please let me know how I may be of assistance.

Gradual home price drop good: Yale’s Shiller

- NEW YORK (Reuters) - Feb. 21, 2008
Robert Shiller, Yale finance professor and author of the highly touted "Irrational Exuberance" book on asset bubbles, said gradually falling home prices are nothing to fear.

It's the more swift and sharp slide that can undermine housing, and thus consumer confidence and the economy, he said here at a Reuters Housing Summit.

"There's nothing troubling about a gradual correction of home prices. If we keep our incomes at the current level and home prices go down we are richer, we can buy more housing," Shiller said.

"On the other hand, if they fall suddenly and fast then that can bring on recession and that is the worry right now."

A housing boom that lasted nine years is now unraveling.

The economy is "probably on the brink of recession," Shiller said.

The most recent Standard & Poor's/Case-Shiller 20-city home price index released in late January showed an annual 7.7 percent price drop in November.

Still, that slide pales in comparison with the surge registered in the nine years of the housing boom.

From December 1997 to December 2006, home prices spiked up 147 percent, an S&P spokesman said in a telephone interview.

The value of U.S. homes has eroded by about $1 trillion from the peak through the third quarter, Shiller estimated.

Without forecasting the ultimate drop during this cycle, Shiller said there is a tendency for momentum in house prices.

But a slow price descent could put the market and the economy back on the right path.

"We want a gradually declining market, we don't want a collapse in our institutions," Shiller said.

"The purpose of this should be to try to maintain confidence, which is a dangerous thing to lose, and we want to also maintain a sense of fair dealing, that we're a society that cares about its people," he added.

The subprime mortgage meltdown spawned a much broader housing downturn, but it has hurt many low-income people, many of whom were taken advantage of by lenders.

"We can't have millions of low-income people be thrown on the streets because of some financial dealings. That would be disastrous to our sense of fairness and cause damage for years to come."

Years of double-digit price gains put homes out of the reach of many consumers, and a correction is necessary.

"In major cities, we see often the service people can't live there any more, the firemen, school teachers. This is not the way we want our society. We want affordable housing," he said.

Shiller said it can't be all or nothing, and that there has been a big misperception that houses will constantly appreciate.

"Some times people will try to imagine that we can have both high home prices and affordable housing. But I can tell you that doesn't add up," he said.

"You either have high home prices or lower home prices and lower home prices are what we want, and people shouldn't be afraid of that," said Shiller. "Most of us care about our children and grandchildren, and these people have to buy houses so why would we want high home prices. We want economic growth, we don't want high home prices."