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Santa Clarita Real Estate Update
November, 2006 - Issue #25
If you've ventured outside on weekends lately, you've seen them - a growing herd of open house signs on street corners all over the Santa Clarita Valley.

Just driving through your neighborhood these days, you can't miss the expanding number of for sale signs.

Gone for now, it would seem, are the days of quick house sales and slim pickings for SCV homebuyers.

Gone too are the days of beyond-the-asking-price bids and over-the-top profits for sellers.

SCV home prices are coming down, but the question remains: How low will they go?

"You won't see a crash," says Pam Ingram, an SCV realtor with Remax. "Things should level off soon."

But until they do, the nagging uncertainty is causing tension in the housing market. Homeowners who have been waiting for the market to peak are suddenly anxious to sell, but who is buying? Shoppers are reticent. Afraid to buy a house today that's worth less tomorrow, they are holding back.

You can guess the results.

"There's a tremendous amount of inventory because buyers are squeamish," says local realtor Evelyn Taibi of Realty Executives. "Right now we have six to eight months of inventory and that makes it harder for everybody to sell."

Most realtors agree that the glut will drive prices even further down - all it takes is one homeowner who absolutely must sell to lower his or her price to set a precedent.

As to whether lower prices will necessarily translate to savings for homebuyers, that depends.

"If interest rates get too high, that may inch buyers out of the market," Ingram says.

As of July, the median price for a home in California was $567,360, according to the California Association of Realtors. Prices have come down from that, but if the Federal Reserve raises interest rates again, as most expect it to do, will buyers really feel the lower home prices?

"SCV home prices are coming down, but the question remains: How low will they go?"
Not as much as they should, say most realtors. The key here is balance. Can you find the right home at a good price and still secure a decent loan?

Another key is timing. To buy or not to buy depends on your plans for the property.

"There are good opportunities to buy, but with caution," says Bob Lieffring of Coldwell Banker. "The market is more to the advantage of buyers. They can negotiate for substantial discounts. The caution is for people thinking short term. They may want to wait. But if you're looking [to keep your home] more than a year or two, this is a good time."

So what's the bottom line for buyers? Don't wait too long. If you find your dream home, even if it seems out of reach, make an offer. There's no telling how motivated the seller could be in a market so crowded with inventory.

Keep the price of your loan in mind, too. By waiting for the market to drop another one percent, you could cost yourself more on the other end if the Fed gets antsy about inflation and raises interest rates.

And don't discount the power of creativity.

"Banks are starting to offer 40- and even 50-year loans," Ingram says. "I think we're going to see more and more of that over the next few years."

Incidentally, Japan now offers mortgages of 100 years, but don't hold your breath. US banks prefer that someone eventually own the homes they help purchase.

For sellers, navigating a crowded market requires, above all, patience and flexibility.

Expect to wait six, seven, even eight months for your home to sell. And don't be discouraged by fickle buyers. If you can afford to stay where you are, set a fair price and follow the market. Be prepared to accept an offer that's lower than you expected, but don't reach for the panic button.

For both parties, the advice most realtors are giving is don't get caught up in the hype. The market is never as good as the media says. Nor is it ever as bad. What we are seeing in the SCV reflects a nationwide leveling-off from the boom market of the past several years.

California real estate has always been a good investment. If you're looking to get into the market at a discount, now may be your time.

"Overall this is a great time to buy if you are going to hold onto the home," says Lou Fricke of SCV Homes. "Rates are low and there are some great values out there. It's like buying a house on sale."
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