DO NUMBERS LIE? WHAT IS TRULY HAPPENING IN CALIFORNIA REAL ESTATE?

 Everyone gets numbers to lie about something sometime.  Are economists any different?  Is the desire to get numbers to match their predictions so important as to exclude reality?  The short answer... Maybe.  Here are some interesting food stats for thought.  All of the headlines have proclaimed a possible double dip.  This column disagrees, and rather thinks we are bouncing along the bottom, represented by slight upticks in certain areas and size of homes and downticks in others.  If you look at just closings, it would appear to be true.  But if you take a look at pending activity, that is sales posted through the Multiple Listing Service and in the real estate offices, you would find that activity is about par with 2010.  Steve Thomas, a real estate analyst, did precisely that.   The number of new sales, according to Steve, declined by just 47 for the past month when compared with a year ago.  In fact there were 3,060 pending homes this past month and 3,107 at this time a year ago, so demand was almost identical.  So where does the Voodoo Math come from?  The closings themselves.  No one in real estate right now will argue the point of how incredibly difficult it is to close transactions.  Title companies report healthy openings, given the market, in fact numbers month over month, all year, that are exceedingly close to those of 2010.  And yet revenue, is low.  Why?  Two really good reasons; first of all, short sales can take 6 to 10 months to close.  So even if your pending sales are at a solid number, the trickle-down effect takes a lot of momentum away.  It is excruciatingly slow to close transactions for other reasons, such as the loan.  Ask any lender, you can have a fully qualified buyer and the process is still long and arduous.  Washington, in its infinite wisdom has placed all kinds of "safeguards" that do nothing more than muck the waters and make it virtually impossible for honest loan officers to do their jobs.  Once again, it's too much, too late.  The offending "lenders" responsible for the sub-prime meltdown, left the business 3 years ago.  Now it is seriously hobbled, by Washington's bureaucracy.  Don't believe it?  Talk to any loan officer with any bank or mortgage company.
 
The other big fallacy?  There are only distressed sales.  Not true.  Are their foreclosed properties being offered by the banks as REO listings (real estate owned)?  Yes, of course.  Are there short sales?  Yes, of course.   But not as many as the papers would have you think.   See the next column for exact numbers.  But there are an increasingly high number of "equity" or "full" sales.  There are plenty of buyers who will pay a premium for the opportunity to buy a turnkey property with no deferred maintenance and no 6 to 10 month escrow, that needs bank approval.  Another fallacy is that the REO comparables ruin it for the equity seller.  Every area is different of course, but numbers show that for the most part, equity sellers maintain a much higher price per square foot than distressed properties.  The point is, consult a Realtor.  Talk to an expert.  The papers want to sell papers.  That's fine.  But we the general public, owe it to ourselves to do our own investigating.  Because, real estate is a great deal right now, prices are the lowest we may see in our lifetime, and interest rates are lower than they were in the 1950's and they won't stay low forever either. What is your situation?  Only you know, but you owe it to yourself to check it out and not just from the papers.