A snapshot of the economy can often be judged by the nature of the real estate market. If the market is booming, generally, it’s because people have jobs, the banks are lending, and money is flowing.
When the housing bubble burst, construction ground to a halt, shaky loans crumbled, leaving homeowners in the rubble of foreclosure, and banks became reluctant property owners, overloaded with shadow inventory.
That was then — so what does the snapshot look like today?
According to longtime Realtor Scott Abell, a man who has ridden many different housing market waves, the snapshot reveals an industry that remains in flux, but there’s hope on the horizon.
The good new is properties are selling. The bad news? Well, that’s easy. More than half the sales are comprised of short sales or foreclosures.
“The market is good. It’s not stellar pricing but there is a normal demand,” Abell said. “There’s a lot of investors with cash and people are buying. The prices are around what we were seeing in 1999.”
Less than 25 percent of the sales in Oakdale come from equity sellers, meaning they aren’t selling under stress or duress.
Short sales or “semi-long” sales, as they are jokingly referred to in Realtor circles, are taking four to five months to complete from start to finish and they represent a bit of headache to everyone involved because there are so many variables involved with the pricing and sale of the property.
One of the major issues facing Realtors with a short sale is determining who actually has the authority to sell the house.
“Sometimes the banks don’t know who owns the property. In other words, the bank foreclosed, but the bank can’t sell it and satisfy the new lender with proper title insurance guaranteeing the new homeowner, that they have free and equitable title. Time is not an ally. The longer things take, the less chance for success. The short sale success rate is improving but it’s a very complicated process,” Abell said.
On the other hand, Abell noted, investors hoping to short sale a property are having worse luck if they hoped to unload a property purchased solely for business.
“I wouldn’t say it’s impossible but it’s a four-leaf clover deal,” Abell said.
Builders are slowly returning to Oakdale but it’s a slow crawl compared to the frenetic pace set by builders in 2002. The days of McMansions are over, according to Abell.
“The days of the 4,000 square foot house and opulence…those days have left the building. We’re going to see more practical, modest housing, more of what we saw in 1990,” Abell said.
And the people who will be buying those homes are the same people who are going to help right the housing market again — first time homebuyers.
“We’re slowly getting out of this slump. It’s not going to happen overnight. But the cure to fixing the real estate market is simple: J-O-B-S. It’s the key to returning to a normal real estate market. It’s the key to returning to a normal everything,” Abell said. “We continue to live in the wild, wild West of real estate. The market is fragile, and easily affected by world events, the price of food, energy and oil. However, in confusion there is profit. There are great deals in the marketplace for those who have the patience and the cash. Returns on investment well out pace the bank CDs and the stock market mutual funds, with minimal risk. Homeowners who lost their homes in 2008 and 2009 are now returning to the market, buying the same type of home for half as much. The interest rates are still attractive, and lenders are lending. So, 2011 is already looking significantly better than 2010.”
That’s where the hope for a better tomorrow comes in, Abell said. People need to remember to make decisions that aren’t based on fear or greed. If the house you’re in is a good fit, don’t move. Stay, continue to build equity, Abell added.
“I always tell people, ‘if it ain’t broke, don’t fix it’,” Abell said.
For Oakdale, and the Central Valley, recovery is slow and painful, but it’s coming.
“There’s a lot more good things than bad. It’s still a community that’s doing a lot better than most and it’s a great place to grow kids,” Abell said of Oakdale. There’s no place in the Central Valley I’d rather live.”