A Look At Our Local Market

As real estate agents a large part of our responsibility is guiding clients with a realistic evaluation of property value, and the appropriate process is identical to that used by appraisers, looking at the sales of comparable properties. (For the record, appraisers have a more rigid framework since their estimate can only be based on history and is entirely designed to protect the investing lender. Real estate agents have a modest amount of latitude in that we can inject some forward looking subjective elements). Be that as it may, the job of evaluating always assumes the sales are between informed buyers and informed sellers, and in this market, that is clearly not the case. Of the only 7 homes closed since Jan 1 in the greater Chico market, one was an REO (foreclosure sale), one was a "short sale" (negotiated mortgage with seller's lender). In Glenn County of 8 sales since Jan 1, one was a short sale, four were REO's. December 2008, Chico 58 sales, 5 short sales, 16 REO's. Glenn County, 24 sales, no short sales, but 19 REO's. Of the homes currently listed in Chico, 370, 79 are either short sales or REO's, 21% Glenn listings, 170, 75 either short sale or REO's, 44%. It's fair to say that many of these sales reflect distress circumstances and have not been representative negotiations between informed parties. Worse, in the case of the foreclosed properties it may well be the case that the lender collected a substantial payment from mortgage insurance and can afford to drop the price and still mitigate their loss. The sales stand as comparables even though the lender may have priced for their reasons and not been driven to hold for the top dollar. The government can not leave anything alone, and with their promises of help with modification schemes, bail-out money to banks, the promise of help for borrowers, and the economic fact of a very weak economy, now and for a considerable time into the future, the real estate market is chaotic. What all this boils down to is that we are not very confident about valuations, and it takes a lot more work than usual to come up with what we hope are realistic numbers. Some things are true. There is money available at some of the best rates in decades, there are some really nice homes for sale. If a person is looking for a home to buy to live in for some period of time, this is a pretty good time to be looking. If a person is looking for a shorter term investment opportunity, residential real estate in not the place for it in California. Home values have declined considerably, but unless you must sell for some reason it doesn't matter much. The loss is nothing compared to what has happened to your GM or Ford stock, should you have some in your portfolio.
Our mission is to be as helpful as possible to people in matters of real estate and real estate finance, reducing costs and eliminating anxiety. Saving money is just smart business. If we can't help you we'll try to get you pointed in the right direction.
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