Cynics Don’t Ask Why

Is it just me, or is every report on the economy and housing extra negative lately?
The truth is, the real estate market has been catching much flack lately for it’s “poor” signs of recovery since last year, and rightly so.

Looking at California Stats for May of 2011 vs last year we see a 14.4% decrease in existing home sales, a 10.9% decrease in the median home price, a 20% increase in the number of homes on the market, and homes are taking 37% longer to sell. Wow, when you look at all that, it’s very easy to see this market as all doom and gloom.

But let’s look at what’s caused this decline.
A year ago, the Federal Government as well as the State of California had offered several tax incentives for First-Time buyers to become homeowners at an attempt to stabilize the plunge in home values experienced since late 2008.
These incentives created such a frenzy in the housing market, inflating values and reducing the amount of unsold properties available.

Fast track to today, the mini bubble the Government incentives had created has long since burst and the decline in home prices continues, arguably at a much slower rate thanks to the government’s intervention but none the less.
It was unrealistic to think that an $8,000 incentive would create a bottom for the market to build upon.
Instead, it served as a pit stop for values on their way down.

It’s no surprise that year over year numbers look terrible. After all when you take away any type of incentive in any industry you are sure to see a significant drop in activity. Remember “Cash For Clunckers”? That worked… I guess.
Following the program aimed at saving struggling auto makers, sales virtually stopped, falling 41%. It’s inevitable.

So as we hear all the reports surfacing about the real estate industry, it’s important to take them with a grain of salt, understanding where we’ve come from and where we’re going to make better decisions.

Regardless of what you hear in the media, nothing beats the ear to the ground of a local real estate professional to guide you and your family in reach your goals.
Why you decide to buy should not be influenced by fear but by objective information.