I received an email today from a prospective buyer stating how he and his family are looking for a home in Los Angeles. He also mentioned how there are ‘bargains' to be found here. Is it because of the headlines of "Mortgage Meltdown" and "Record Foreclosures" spell discounts for home buyers? Not necessarily. The areas where homeowners are currently receiving a Notice of Default, (Palmdale, Riverside,etc.) are the areas that have seen price declines. Every time there is a foreclosure in these areas, a home is sold for less than it would otherwise, so it then becomes a "comp", ultimately affecting the value of the neighborhood. At the moment, there are very few foreclosures in desirable areas of Los Angeles, therefore prices have remained stable in these areas. The current sentiment reminds me of the cocktail party anecdote; when a stockbroker is surrounded by partygoers offering their opinion of the market, he will take a contrarian approach and do the opposite. So what does a prudent buyer do now? wait for prices to go lower, or admit they are probably not savvy enough to pick the market bottom and buy a home now, in the slow season while interest rates are still historically low? what would you do?
