Happy New Year! I hope everyone had a safe and sane New Year’s Eve, and I hope that as I type this on January 2nd, most of you are taking the day off to spend on vacation, or with friends and family. We’ll all get back to the grindstone soon enough, but I think that after all the chaos and tumult of 2008, everyone deserves a four-day weekend to start off the new year.
Can you feel it? I’m feelin’ it. I am, of course, referring to the angst surrounding the real estate market. There are a lot of people out there who would like to buy a home in Santa Cruz in 2009. There’s also a lot of people who would like to sell a home in Santa Cruz this year, too, but feel they cannot or should not because they now owe more than their homes are worth.
Thanks to the likes of Google, many of you can easily find the predictions for the 2009 real estate market. I’ll give you a summary of what they’re saying: prices are expected to continue dropping through much of 2009 (probably all of it, if you ask me) but not by much. Interest rates should remain low at least for the first half of the year. We may start to see a rebound in prices in 2010, but it will be moderate.
The much-loved California Association of Realtors has put out a report titled State of the California Housing Market 2008-2009. Unfortunately, they want you to pay $29.95 to download the PDF, but the press release for the report’s availability does give some juicy nuggets:
- Approximately 1 in 5 home sales is due to foreclosure, short sale, or default
- Home sales will increase 12.5% in 2009 compared to 2008
- California Median Home Price to decline by 6% in 2009 to $358,000
From where I’m sitting, 2009 is looking like it is going to be the year to buy a house in Santa Cruz. I have been telling people all throughout 2008 that it’s OK to buy a house in 2008, but if you can wait, 2009 will be better. The question then arises – is it good to buy in January 2009, or would it be better to wait until, say, December?
Given that home prices are likely to keep dropping throughout the year, in many cases it will make sense to wait as long as you can before you buy a house. However, one thing that’s known for sure is that right now, interest rates are very low, and you might want to buy now to lock in a really low interest rate.
One thing that we don’t know right now is what effect the recession will have on the job market locally. Rising unemployment will add fuel to the foreclosure fire, and that will certainly increase downward pressure on prices. If the job market gets really bad and stays bad, prices could decrease by a lot more than the 6% the California Association of Realtors predicts.
Even if the recession is longer and more protracted that most fear, I still feel you’ll probably do OK buying property in Santa Cruz in 2009 – provided you are making a long-term investment.