For anyone interested in why interest rates on property are still going up, here’s a great chart courtesy of Paul Krugman’s Opinion column today:
I’m predicting whatever lift we saw this summer from decent rates (muting the crash underway), will disappear and the next leg down of prices will continue. This dead cat bounce is dead!
I will be officially revising my 2008 Socal Real Estate estimates based on recent action.
How much is your home worth? Well, it all depends where you live.
The real estate market is still shaking. New data suggests that home prices have hit a new record low. In every new study that comes out, homeowners from Miami, to Las Vegas, Phoenix and Los Angeles, have seen their home value go lower every time.
Is that disappointing? Of course it is.
Should we sell? Is not a good time.
Should we stick to it? Yes, if you can.
Have we hit bottom? Nobody knows.
Banks are facing their worst foreclosure crisis.
Don’t take me wrong, it’s good if you are in the market to buy a home for yourself or if you are an investor, but if you are not, and you own a home, most likely the value of your property is down at least 15 %.
Why do banks care if you are loosing your home? By having to sell repossessed homes, banks have to literally slash their prices down. It gets very costly for them, after all, they have to pay property taxes, maintenance costs, and whatever utilities that need to be paid, all of this expenses for a house that it’s just sitting there, vacant, and the bank is getting nothing in return.
The latest study by the S&P/Case-Shiller Home Price Index of 20 cities, revealed the news that for 22 consecutive months home prices dropped. Only from April to May, 2009 the decline was of 0.9 %
The devastation isn’t only in the residential sector, it’s commercial too. I recently attended a seminar in which ICSC rep’s stated that development companies are in “survival of the fittest mode.”
My company, The Tritan Group aka Tritan Construction has weathered the storm so far. Our Asset Manager, Scott Theeringer has managed to navigate his way through the poor performing residential market into the more lucrative commericial and has now begun “fee building” for commercial clients. We have also developed a maintenance side of the company to service established clients and their needs.
This move while questionable at first has proven to be most wise seeing as it eliminated all of the risk to the owner of the company and generates a form of “mailbox money” that we were previously not collecting.
Whether or not the real estate market has “hit bottom” is unclear, but it’s obvious to me that it takes creative and out of the box thinking to ensure that we’re all around to talk about it.