When we do look back and consider the cyclical nature of the housing market we’ll see that the peaks and valleys are very predictable.

So when I came across this presentation I was impressed.  I began thinking: “Let’s see, how can I buy another home?”

A contrarian, by definition, buys when the masses say not to and sells when others are buying.  It is not coincidental that successful investors march to their own trend-studies and, not do follow the mass media’s reactionary reporting.

So. What do you think?  Ready to brave the storm and buy a home?  Everyone else is selling.  I know just the expert who can help you.

We all know home values have dropped over the last 3 years.  Will that slide continue?

Single family home values in Hollister dropped by 41.6% from 2007 to 2008.  In 2009 they fell another 17.4% . Townhomes values have likewise dropped: 54.3% from 2007 to 2008 and 25.5% from 2008 to 2009. 

The average sales price of Hollister homes in 2007 was $548,562.  In 2008 it was $320,419, and $264,601 the average sales price for 2009.

Townhome sales show a similar pattern: their average sales price was $339,780 in 2007, $155,354 in 2008, and $115,725 in 2009.

However, it appears that the value slide has hit bottom.  A closer look at 2009 average values suggests that we may have bottomed out in 9/09 and are beginning to see a rebound in both single family residence and townhome values.

Morgan Hill & Gilroy home and townhomes reflect a similar trend in values although the downward adjustments in value are more dramatic as you go south to Hollister.

(Data: MLSListings)

Ah man! I’m getting

That was the approach some agents were taking earlier this year.  Many are still.  Finally, however, the banks have gotten wise to this ‘blue sky’ approach. 

I made an offer for a prospective buyer on a nice Ridgemark home in Hollister.  The listing agent informed me there were 4 other offers and 2 were considerably higher offers than ours.  Reluctantly the buyers did not want to try again on this home. 

What was fascinating however, was the bank countered that the offerees had to agree to pay for the amount over and above the appraised value when it came in.  I like that!  Finally, some intelligent approaches to this frenzy we’re seeing in the starter-priced homes.  If the accepted offer was, say, $350,000, but the appraisal came in at $325,000 the buyer would have to pay $25,000 over and above the appraisal.  Of course their loan amount is computed from the appraised value or sales price, whichever is lower. They would pay their down payment PLUS the amount over value.

Hopefully, more banks will begin handling the question of value up front in this manner rather than 3 weeks later when the other prospective buyers have moved on and the appraisal comes in low.

So, what do you think?  Will this smooth out the ‘offering’ process some?