Not long, waiting hawk; 12-15 months at most – That would be the end of next year’s spring/summer selling season.
I’ve been watching the local market pretty closely and here’s my take on the progression of the slow motion train wreck:
In 2006, homes sat on the market longer and there were a lot of choices for buyers, sellers had to pay closing costs, etc. volumes were way down, but houses priced right did sell (like mine).
In 2007, there are almost no resales at all except short sales and foreclosures and some suspicious looking flips and inflated prices. The builders are selling some houses but at lower prices and even they are struggling, getting desperate with 100K price cuts in some cases and still sales are S L O W. We’re just now seeing huge price reductions in bank repos and they’re not selling either. Resales are now competing with bank repos and they’re both in a death spiral – I’ve just noticed this in the last couple of weeks.
By this time next year, total panic will have set in among sellers, inventory will have piled up even more, more bank repos will come on the market, and it will be the Sacramento of the South down here in Temecula. Maybe it will happen sooner than 12-15 months but things are deteriorating so quickly that it’s hard to see it going on much longer than that.
Things are much much worse than most people could imagine. Another thing is that all these houses being rented out at a loss or where the “investors” have neg-am loans (like the one I’m living in right now) are going to crash and burn over the next few years so that will prolong the crash even longer. I don’t think many people are aware of just how many of the tract homes around here are rentals. On my street I think 6 out of 6 houses will foreclose within the next few years:
4 out of 6 are rentals at huge losses
1 is a failed flip that has relatives living in it
1 is owned by a R/E “investor” that lives in the house but owns 4 other houses in Riverside and San Bernardino counties
