Is it so wrong to enjoy the fact that the sun peaked out from behind the clouds today and gave us all a much-needed respite from the rain? Coming off of a tw0-year drought and acknowledging that California desperately needs to refill its near-empty reservoirs, the rain has been an incredibly welcome sight (except during Sunday Opens). Still, I lost NO time taking advantage of the clear skies to get out and stretch my legs a bit and walk my black Lab, Buck, who was even happier than me to bounce along the road - his tail (not mine) wagging along at top speed.
Most of the headlines these days seem to be a lot like the storm clouds of late. None of them have been good and ALL of them have played into the fear of the consumer and the homeowner - even those on solid ground. Consume a steady diet of the mainstream media and like Chicken Little, you're bound to think the sky is falling! Gather your information from national news or Internet sites alone and you are sure to be misled as to the reality of your specific neighborhood.
To hear national media reports, one might think that every home in America has lost 25-50% of its value and that's just not true. As I have repeatedly said, real estate values are largely dependent on their geographical location. In our East Bay Market, home values are further defined neighborhood to neighborhood and block to block. Moreover, our market has remained more stable than most!
According to GRUBB Broker and co-owner, John Karnay (who tracks our local sales statistics religiously) "our market is in remarkably good shape." John compared The GRUBB Co's market share - which account for sales above $500,000 - from July-Dec. 2007 to July-Dec. 2008 - in El Cerrito, Kensington, Albany, Berkeley, Oakland and Piedmont and here's what he found : the average sales price has dropped 5%, the median sales prices is down 2.2% and the average price per square foot is off by 6.5%. So while we're not exactly in the positive column just yet, it's positive news in light of national reports that would have you believe an entirely different story.
Which isn't to say that I'm not sensitive to the headlines. Of course I am. REALTORS are working on the front lines. Like many of you, I have kids to put through college and retirement to plan for as well, so I hear you and understand your concerns.
Nor could I responsibly and effectively guide you in your most important financial decision, without reading, watching and absorbing everything that affects my profession, our market and your outcome. BUT I try to balance out the mainstream news by forming opinions on what is truly relevant to our community and to our experience. Your particular experience may be entirely unique but in general, here's the skinny . . .
For those of you who bought real estate within the last five years, chances are you bought in competition and paid for your appreciation up front. Having now lost that appreciation, there may not be a soft landing for you at this time. Stay put if possible.
For homeowners who bought prior to 2004, you are quite likely, in fine form. Even if your home lost some appreciation during the last few years, you bought before prices really took off and while you may have lost some additional gain in the last few years, you haven't really lost intrinsic value.
Finally, more affordable housing stock represents real opportunity. While buying down may be less advantageous, buying UP makes a whole lot of sense (and cents) in this market. While some are selling at a loss, others are expanding their income property portfolios. While some are leaving the area, others are flocking in to take advantage of the public schools and more attractive pricing.
There are two sides to every coin. In the meantime, try not to obsess about the headlines and turn off the news! The sky isn't falling - it's just raining a bit - and we need the rain! (Remember, the sun often follows the clouds.)
In the meantime, can I offer you an umbrella?
Julie Gardner, has been writing The Perspective for 18 years and has published more than 725 humorous but always informative, essays on life and real estate.