Barry Noble's Blog

Reality isn’t pleasant for many Home Owners. It is even harder for some who bought within the past 18 months, believing they were joining a wave of ever rising property values. In actuality, they were getting into the Market as it was reaching its Current Market Cycle high zenith, and it was already showing signs of slowing, ready to head down for the normal Cyclical Downturn.

It further hurts to realize this downturn is being made more uncomfortable, fueled by the rising number of foreclosures from unhealthy loans and those strange programs that allowed (basically) unqualified buyers to sign on for homes way out of their financial means. Start-out, “teaser” short term fixed rates that were hard to keep up, but in many instances bearable with dual salaries. The promises were bandied about of 2, 3 or 5 years of “low” rates or interest only payments, before the adjustable rates were to kick in, seeming plenty of time for the homes to increase – even maybe “double in value” some lenders and RE agents promised. Believing they’d be able to sell the homes before the conversion to adjustable rates, and make amazing profits, home buyers for the most part were not aware or didn’t want to think about “years’ down the road”, when they first purchased the homes.

There remain, if reports are correct, some 2,000,000 mortgage loans out there with teaser rates, or interest only rates or other strange limited monthly loan payments – ready to convert in the next 18 months. Many of those will have to sell or lose the homes. The Market Values are already dropping – what will local Market Values be in 8, 12, 18 or 24 months from now? With a glut of properties for sale, the “normal Downturn of the Current Market Cycle portends to be more severe than that of 1990-1995, and the early 1980’s.

Some Lenders are working on plans to assist home owners convert to fixed loans, if they will be qualified to pay the higher rate – and if you are in that group – NOW is the time to be talking to your lender, and not necessarily the one that put you in the problem mortgage in the first place. There are some very decent lenders and loan brokers out there, ready to help, but they won’t be able to point you in the right direction, if you wait until AFTER you’re in trouble.

If you are currently trying to sell your home, don’t look around to neighbors who’ve been on the market for months at high asking prices, and copy them. The time is NOW to get a real handle on the Current Market Value of your home, then put it out at a competitive price against what it will be in 3 months – because values are dropping. Today’s current Market may be several percent less in three months in many of the local markets. Today’s Sellers in Escrow now are for the most part in escrow up to 6% or more, below what their original listing prices were.

If you really need to sell – a listing appraisal may be your best advice – with an opinion of where the Market will be in the coming months. If you are enjoying an interest only or low interest teaser rate and low payments – but the fixed will convert to an adjustable in the next 18 months – get some good advice now – don’t wait until it is too late. I’d be pleased to help in both ways – help you realize the current Market Value, and see where your neighborhood is going, with Market Values, or refer you to a lender I trust to give you the best advice for refinancing – if that is feasible for you, but whatever you do, who ever you consult – don’t stick your head in the desert sand and hope this will all go away or change overnight. It is Cyclical and the Values Cycle is declining, inventories of available properties, in most value ranges, are rising and more and more foreclosures are forecast. One major new homes builder has just declared the Market is not going to adjust for the better until at least 2010, and many developers are closing off sales at major reductions and not completing final phases of their tracts, ready to hunker down until (probably 2010 +) . There is a good side to this. If you have a good fixed rate mortgage, are not planning to move any time soon, the Market TYPICALLY bottoms out then rises again, and in all probaility - the next rise should take you significantly higher than the last high-value point, back in the third quarter of 2006. Something to look forward to. Barry@PalmSpringsCA.net And check out and sign on to my on-going Market and appraisal value blog, for timely comments at www.fastappraisalvalue.com