Revealing Real Estate Market Secrets

How fantastic would it be if you could predict the upcoming rise and fall of real estate in your area?Want to find out when to buy? When to sell?By the time you’re finished reading this you, will be changed. After all, a home is your biggest expense and investment, so let’s begin!Like any other product, real estate markets are based on inventory, supply and demand. I’ve spent a lot of time studying the mechanisms of our local real estate market, and I can share with my clients what to expect in the upcoming months. Home prices fluctuate constantly, from one square mile to the next.We often hear people talking about cycles. They can go either way, from low-end to the highest-end homes. I do research specific to each city: Ultimately, the cycles relate to the size and price of the area.In our area, the Monterey Peninsula, home prices vary from city to city. Depending on the area, the average home sale ranges from $150,000 to $17 million. So it gets very tricky to predict the future of today’s market.At the low end, we have homes selling in foreclosure at one-fifth of their value. So now the question becomes, will we see the same price drop with the highest-end homes?How should you find out about your local home inventory?The first step is to select a local realtor and ask him or her to send you a monthly report of active homes for sale, and also pending homes, in your area. I strongly suggest searching by city and price range. At the low end of the market, home prices are below $350,000.A couple of years ago we had a large inventory in Seaside: More than 200 homes were for sale in the summertime. Now we are down to an average of 74 homes, and I expect around 130 for the upcoming summer. Here in Seaside, I feel we have hit the bottom.I am now expanding to the higher-end home market where I would expect some nice price drops, with good bargain homes coming into the market.I recently did a search for homes over $1 million, first for a specific area and then for multiple cities in the Monterey Peninsula.Here is where I want TO GET YOUR ATTENTION. For the area called “Highway 68, Salinas,” close to the Pasadera Golf course designed by Jack Nicklaus and all the way to Las Palmas, I found 92 homes for sale for over $1 million and only ONE pending (under a purchase contract).I have clients who are looking for homes in this area, but when only 1 sale is pending, I say HOLD ON! Be patient: A better time to buy is coming.If low-end home prices have dropped from 80 percent to 20 percent of their value–for example, a foreclosed home that was sold three years ago at $350,000 selling at $75,000–I would expect a price drop at the high end, too, but not as dramatic.How much will the highest-end market fall? It’s hard to predict. Once again, inventory, supply and demand dictate the upcoming market. It’s very important to look at specific areas.A lot of homes prices were inflated in the past based on speculation, not income. You are probably asking yourself, “Why not look at sold homes?”"Sold” is in the past. Those deals were made months before the actual sale was recorded. You’re better to live the moment. The upcoming market is unpredictable, but looking at the pending home sales will give you a glimpse into the future.Technology is making real estate predictions in your area very easy, but PLEASE go to the right place to get the right information: Find a trusted realtor.The Multiple Listing Service that I have as a realtor is very precise. We have access to a lot of information that is not released to the public.If you want to speculate on real estate, get serious, and follow these tips:* Find a local realtor.
* Ask for a list of the active and pending homes in the specific area that you are interested in.
* Depending on the market, you may be able to search by price range.
* Ask what the inventory and average home sale were 12 and 24 months ago.Looking at the last 24 months will tell you if your market has hit the bottom or if a tsunami is headed your way. Realtors might be reluctant to provide you with this information without any commitments on your side. But you can encourage your realtor to become the expert in his or her area by providing this information to you and the public.Now, do you think you can forecast your local real estate market? This article is not intended to make you a real estate expert, but it encourages you to be careful and pay the right price for a home in today’s market.I’ll say it one more time: Team up with good local realtor, and both of you will be better equipped to make the right decision about when to buy.

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