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10-10-08 Here's a special comment to my clients -- past, present, and future: Lots of gloom and doom out there. Chicken Little is running rampant! Is he (or she?) right? Fear and panic pervades all sectors of the economy. Real estate has been appropriately identified as the principal precipitator of the current financial crisis. The excesses of the recent past have come home to roost, abetted by lenders willing and even eager to loan to unqualified buyers (if they even bothered to check). And let’s not forget the buyers who bought knowing that they would not able to afford the payments. Astonishingly, statistics show that many of the bank foreclosures are houses where the buyers didn’t even make the first payment! Buying a house and taking on a mortgage is a responsibility and an obligation. I am so happy that I have always screened my buyers and made certain they are fully aware of what they are taking on and are comfortable doing so. Unfortunately, too many lenders and buyers nationwide did not pay attention. All of us are now paying the price. What impact does this financial chaos have on East Bay real estate? First, let me say that in our area, volume and prices are down, but buyers are buying and sellers are selling. In my office, we are busy. For sellers, in most cities and neighborhoods, if the price is right the house sells. Realistic pricing is critical. It may take a bit longer, and the price won’t be what it was three years ago. But the house will sell. Many homes priced right are receiving multiple offers. If you subscribe to my on-line list of monthly sales, you will see many properties selling above their asking price – usually an indication of multiple offers. For buyers, let me say flat out that this is the best opportunity I’ve seen in the three decades I’ve been in the business. Not only are prices lower, interest rates remain historically low, and competition is down. Buyers are negotiating and in many instances coming out with some very good deals. Good financing is available for qualified buyers with sufficient down payment. I’ve been asked for my view of the future value of East Bay real estate. Is real estate as good an investment as it has been in the past? Here is my response. “Under all is the land.” That is the first sentence of the preamble to the Code of Ethics and Standards of Practice of the National Association of REALTORS®. People need homes to live in. They always will. The East Bay as well as the entire Bay Area is one of the most desirable locations on the planet. No more land is being created, and the land that exists is nearly 100% built up. Viewed from a supply and demand perspective, over the long term there is no question in my mind that East Bay real estate is a solid investment. Assisted with the leverage of low interest financing and generous tax benefits for home owners, East Bay real estate remains one of the best investments available anywhere. As in any investment, there will be ups and downs, and one must consider the long term. Today we’re seeing the down. Tomorrow we will see the ups. “Under all is the land.” Last time I checked, a stock certificate didn’t have much dirt under it. I like real estate precisely because it is just that – “real”. You can see it, touch it, and live in it. So if you own property, sit tight and be patient. You’re going to be just fine. |
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Bob Blumberg
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