Indian Ridge CC 2007 Annual Report
Dear Indian Ridge Resident,
In September I was invited to a national Real Estate meeting where the Top Producers in the industry met to discuss what was happening in the real estate market throughout the United States and Canada and what steps were being taken to increase sales in their area. In some communities such as Modesto and Stockton, the reports were 25% foreclosures with agents in other areas of the country saying their numbers were even higher. The very volatile credit and mortgage market along with the slump in the housing market has created a drop in consumer confidence and a rightful concern about a possible recession. Ninety percent of the loans originated today are sold to Fanny Mae and Freddie Mac who are not able to purchase jumbo loans (those loans over $417,000). As of March 1, 2008, Fanny Mae and Freddie Mac will implement a new risk-based pricing adjustment on all loans they buy with a loan to value over 70% for those buyers with credit scores under 680. This will more than likely raise interest rates. The next stage is the $362 Billion in adjustable loans that originated in 2005 and will become due with monthly payments increasing.
Just a quick note with regards to sub prime Loans and its effect on the market. It is difficult to watch the short sales and foreclosures taking place which in a large part was driven by investor buyers who raced to get into the market at its peak. The reality is, the median net wealth nearly doubled from 1995 through 2005 and 47% of this increase in net wealth was directly due to real estate ownership. While, 70% of this new real estate ownership was due to sub prime loans being offered, the good news is, only 20% of the sub prime loans are in trouble, leaving 80% still in good shape. Thus, foreclosure rates at this time of 1.2% are still lower than those of 1992-1997 which were at 1.5% to 2%.
It is expected the cycle will bottom in the first quarter of 2008 and slowly begin to recover. I believe the real estate market in the Coachella Valley started making a positive move in October with the high number of Canadians purchasing homes while the US dollar remains weak internationally.
In the national real estate market, especially in California, the lack of availability for ‘jumbo' real estate loans has slowed sales in the higher priced markets. Currently there is a 10.8 month supply. We can see this in Indian Ridge as sales of the larger more expensive homes remain on the market, even those homes with significant upgrades and the best views and locations.
According to the LA Times, despite all the scary statistics, sales of existing and new homes in 2007 totaled an estimated 6.5 million which would make the past year the 5th largest sales year in US real estate history. Prices were flat or up in 204 of the 287 metropolitan markets surveyed. So as consumer psychology begins to change and affordable housing and low interest rates continue, buyers will re-enter the market. There truly is no better time to purchase a new home. If you compute the sale of an existing home to purchase a larger home, at the current prices, the appreciation of the more expensive home will be greater and will have cost less than it would to purchase the same home in the next few years.
If you review the 2007 Annual Report spreadsheet, note the average home price in the HOA and PUD sections of Indian Ridge and how they have increased since 2004. Even today, those who purchased in 2004 or earlier have seen excellent appreciation in their homes. For some who purchased in 2006, there may have been a decline in the value of their home and the choice for them would be to either remain in the home until the market begins moving upwards again, or selling now to make it possible to purchase a larger more expensive home for less now rather than pay more later.
It is important to note as you read through this report, that not all homes are created equal in that the upgrades and location make a tremendous difference in what a buyer is willing to pay to obtain the home of their choice. With more homes on the market and buyers more selective and willing to take their time in finding the right home, it is important to make sure your home competes either in upgrades or in value.
This year has been another banner one for me. With over $40,000,000 in sales in the Coachella Valley, I represent 29% of market share in homes sold in Indian Ridge: the highest of any agent selling Indian Ridge real estate followed by 25.8% and 14.0% for two other top producing agents. Of the homes sold in the 4th quarter, I represent 38% of the homes sold and of those in escrow, 50%. There are 9 resident agents living behind the gates of Indian Ridge who have sold properties in Indian Ridge. These 9 represent 75% of all buyer and seller sales for 2007.
As we begin a new year, I want to extend my sincere appreciation to those who have allowed me to be of service to them and their continued referrals of friends, family and acquaintances.
I wish you all a wonderful new year.
Diane R. Williams
Associate Broker/Premier Director
Windermere Real Estate