Every day I cull through all the major California newspapers, electronically, to get a feel for the economy, construction, housing etc. While all markets in California are different, there is some connection between statewide conditions.  As an example the major urban areas of Southern California and the Bay Area have a real and direct material impact on North County Real Estate.  Our inbound market is still dominated by urban refugees from these aforementioned areas.

 The media was no more responsible for this cycle then Centex or Greenspan.  A combination of excess cheap money, low lending standards and overbuilding in many areas created this situation.  Years ago the media began to promulgate bubble fear and once demand psychology dampened we had a cessation of buying activity.  Supply is omnipotent. 

 We know, in our office, the true supply picture.  Building at a standstill with little entitled land available now or in the immediate future.  Foreclosure product selling as fast as it comes on line.  Much of the available listed product is grossly overpriced.  Some of this over priced product will get real but the process is usually cumbersome and lengthy.  There is no short term remedy for increasing the supply of product once demand increases.  Not in North County.

 While the media does not cause cycles, the effect of the media promulgating fear certainly exacerbates the situation.  Modern day television media came of age in the gulf war.  CNN made their bones.  The early nineties housing debacle was devoid of cable madness and bloggers.  Our current cycle has experienced the full weight of cable and electronic reporting.  There is fierce competition to “call the story”, “break the news” and create situations.  An emerging national media of cable and bloggers took the most local of businesses, Real Estate, and tried to nationalize the story.  No harm in this attempt but substance is marginal.  Realize, however, the reverse will be true.  In fact, it will be exaggerated by pundits desperate to “call the bottom!”  Many places have already bottomed out.  Never had a bottom.  Some of the overbuilt areas have supply situations that will take a few more years to work through.  Be that as it may there will be a drumbeat of housing recovery pundits desperate to make their mark.  And they will all be right sooner or later.

 Back to the beginning and what this means for our Clients.  Most of you heard the phrase or concept that San Diego was ground zero in this most recent cycle.  We are beginning to see articles and statistics coming out of San Diego that talk about affordability, reasonable inventory and a bottom.  Certainly we see this happening but it is the major media outlets that are beginning to spread the word.  Supply in San Diego is certainly thinner then supply in San Bernardino or Stockton.  We will see a quicker recovery in the coastal areas, the areas of importance to North County, and then we will see the inland empire recover.  The media is going to jump on the bottom and “call the recovery” quicker then it actually is happening!

 The stimulus package which provide $700K+ mortgages at competive rates are going to hit the market quickly.  Many people blame the tight credit standards for the cycle.  Credit is loosening up.  Now ask yourself the following question.  Is there any segment of our market that is overbuilt?  Perhaps the 20 odd, and I mean odd, Million Dollar spec homes would qualify as overbuilt.  Other than these homes, we would qualify as under built!  A vibrant coastal community with no new spec product?  Hotels, Wineries and big time tourism.  A parking crisis because of too many people trying to buy things downtown!  The down cycle is on thin ice and it’s warming up quickly.  By the way, the mortgage increase will help the million dollar stuff clean up over the next 12-24 months.  This high dollar market has a bit more to go.

 These are the facts.  Buyers and sellers understand the power of the media.  Get these articles and facts in front of them so the buyer can understand the future.  Buyers understand supply and demand.  Keep your buyers up to date on product closing and going under contract.  The lack of entitled land is a harder concept to grasp, but your institutional, developer and investor Clients need to be ready. Opportunistic values will emerge.  Money is not going to get any cheaper.  Don’t forget the interest rate situation.

 There is absolutely no reason to wait if you are a buyer of residential single family homes.  None.  Every buyer has been waiting for a bottom.  It’s here and very soon the media will be jumping on the bandwagon.  Get ahead of the curve.  You have such a restricted supply in North County.  Within a short period of time your upper end buyers will be able to seize high end product significantly less then list price today.  The best and cheapest million dollar deals will be in the beginning to middle of the million dollar correction.  Now is the time to go at these sellers.  It’s take it now or take it later.

 We have a great chance to put buyers into discounted product with cheap long term money.  Ask the veterans in our office the following question.  Have you ever seen these prices with these interest rates and loan limits?  Don’t let the moment pass.

 A big hurdle we have in educating our buyers is the reluctance of Clients to take actionable buying advice from a commissioned agent.  The perceived conflict is inevitable.  We are in an industry that is dominated by part time self absorbed agents.  It’s all about them or the next Ponzi scheme.  We can help our Clients see the market.  Use statistics to paint the picture.  How many homes are really in the hunt?  Clients need our help.  It’s a great time to be a buyer.  An almost unbelievable time to be a buyer.