The news came out recently that Countrywide Financial, the leading lender of home mortgages in recent years, will plan to lay off 12,000 employees over the next quarter. Ouch. According to the Dow Jones Market Watch article the slash in staff is due to the fact that ” total origination volumes will fall about 25% in 2008 from 2007.” So from the leading lender 25% fewer loans will be generated. Hmm that equals fewer buyers.
Most areas in the San Jose area are sitting on about 6-9 months worth of housing inventory. That means at the current rate of sales, it will take 6-9 months to sell the homes that are currently listed. I don’t think I am going out on a limb here when I say that I think that number is going to increase. I also hate to be one of the few Realtors who may be brave enough to tell you that prices are going to go down.
Sure, there always seem to be pockets that do well. Cupertino continues to amaze local agents with multiple bids and higher prices. Los Altos is not hurting on price but is taking longer to sell their million dollar + homes. But the reality for most of San Jose and in particular Blossom Valley, Santa Teresa, and the South Valley toward Morgan Hill, is that 2008 is looking like a very tough market year.
I have spoken with a lot of sellers over the last couple of months that plan to wait until next spring to sell because, “that is when prices are highest”. Unfortunately, spring 2006 was probably the last great spring we’ll see in awhile. If you don’t have to sell, plan to sit tight for 2-7 years and all will be ok. But if you have to sell, my advice is: DON’T WAIT.
I am sure many that will read this and think, “She’s a real estate agent, of course she’s going to tell you to sell now.” That is only partially right. If you bought your home after 2005 I would encourage you to stay put. Ride it out, pay your mortgage and wait for the next upswing. Very few homes purchased since 2005 will turn a meaningful profit in this market.
If you know you have to move in 2008 for whatever reason, get your home ready for market ASAP. Yep. ASAP. Be prepared to sell your home during the holidays. Hopefully, those that do not have to sell their house will pull theirs off the market by November 1st and that will reduce inventory and therefore decrease pricing competition for those that do have to sell.
Also, don’t plan to spend big bucks on remodeling. Clean it up, reduce the clutter, stage it as best you can but now is the time for “as-is” sales. If you invest in upgrading or remodeling you may or may not get your money back in this changing market.
I always tell clients that I do not have a crystal ball. I said that when the market was going up and I repeat it now. I do know that my responsibility to my sellers is to do my very best to sell their home for top dollar. To do that, I must advise to sell sooner than later if you plan to sell at all in 2008.