Rarely have I been so torn in two directions over reporting the good and bad news about the market. The $1,200,000 median priced home is down over 5% from the $1,275,000 value it had last year – that’s a decline of $6,000 per month. And, there are numerous examples of 2005 $1, 275,000 homes that will only bring $1,050,000 today. Median condo prices declined 2.2% in the last year. And, there are examples of 2005 $760,000 condos that will only fetch $660,000 today. This is such a depressing trend when drawn as a straight line of depreciation into the bleak future.
      Before I pull out of this funk, let’s get the “bad” news off my desk. Miami and Las Vegas prices are down 9% and Los Angeles median prices are down over 7%. Housing starts nationally are down 13% and continue slowing, and 19,000 California homes are in some stage of foreclosure; that is triple the number from a year ago. It is depressing, because people are losing a bundle. For more about this pain, see Real Estate at a Glance on page two of this newsletter.
     Who is getting hurt? It is a very small group. It is the people who bought with little or no down payment, or refinanced their home to the sky, in early 2005. And, they aren’t hurt unless they have to re-sell today. So, only a few percent of all homeowners are candidates to suffer a loss, and only a few hundred people will ever toy with real financial pain. There are a few thousand borrowers whose low interest loans are switching to adjustable rates, but re-financing fees aren’t in the same category of pain. If your home is where you live, where you plan to stay living, almost nothing changes. The down real estate market has nearly no effect on your life!
     In fact, the real estate market has some excellent news. Interest rates are low and will likely remain stable.