Friday, March 6, 2009

Modesto Real Estate Market

Today's post will be brief. I am in the process of downsizing my office so I have not had much time to research. But I did look at Yahoo Real Estate site for information on the Modesto market. Wow is it amazing. Here are the numbers:

Listing Type ---------------Number -----------Median Price ----------Price Change from Feb

Homes for Sale: ----------- 414-------------------$164,900------------------ (-1.8%)
New Homes: ---------------- 5 --------------------$352,000 -------------------0.0%
Foreclosures ------------3,972 --------------- $194,000 ------------------(-3.0%)

If you want to see the website here's the link: Modesto Real Estate Is there anyone who thinks we are near a bottom. I believe the median price (for foreclosures) is so much higher than "Homes for Sale" is the banks have been holding the properties 1) because they have cash from the first bail out and do not have to liquidate their inventory (at least until the regulators show up) 2) they are holding out hope that another government program will help them with their inventory. Well we are seeing that the program will help homeowners who can not make the payments by lowering their payments. But it will not affect people with loans larger than their property value. We should start to see the banks lower the price of the properties so they can get them off the books. When that happens you will see the price of the property drop again. Even if that was not the case, we are still seeing property values drop almost 2% in one month, wow 24% a year. It is no wonder that the median price in Modesto, CA is $164K down from $369,000 at it high.

So get your private lenders ready and make your offers as if you are selling several months in the future (i.e. 4-6 months x 2% (drop per month)). The bottom will come but I do not believe it will be from the cash flow (rents - expenses) from the properties. There are just too many of them. We continue to work with people who want to own a home and can make a rental payment( for a period of 3 to 5 years). That is how we will stabilize this make.

I guess I was not that brief. Have a great weekend.

See Ya,
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