Let me share some insights to you before I meet with everyone in August.

I actually Broker property in multiple markets.   My clients still have holdings in Sacramento, Stockton and across America.  The Theme of my August Meeting will be Changing Market conditions.  As anyone who has tried to buy real estate will know, getting a loan is now very difficult.

The Credit Market is still frozen as far as real estate goes and the changes in the Appraisal process only magnify the problem.   What the Banks do not want is more Bad Loans. But the Inventory is piling up and there will be a tipping point very quickly.

For Example sales are off in some regions 33% and inventory is up 25%. That is occurring, while interest rates are dropping.   Where are sales headed?  Probably lower and that is a problem with the inventory of foreclosed homes.

Home foreclosures are so much more corrosive than I ever imagined. By the way this month the FNMA number rose back up on delinquencies.

If Americans no longer trust homes hold value, then you will experience the Tampa, Florida market.  In some areas prices have dropped 90%.  Tampa is an actual city with jobs and running water. Vegas has a higher default rate than Tampa.

Should you jump back under your bed?

No in certain Markets, the re bound is happening just the way it did in Stockton and Sacramento.  Now the Golden markets are San Diego and Phoenix.  Be very careful is my prediction. Once Americans lose faith with the “American Dream” it will be hard to rebuild the faith.

Houses are like paper money, part fiction and part fact.

I sold Houses in Santa Cruz County at $35,000 and watched them go to Million. Given it was the same house, that is Fiction and Belief. The problem right now is Lending which is almost impossible to get a loan on anything. This will trigger more people to walk away from their homes. If lenders make lending so difficult that homes do not sell, values will fall. This is what I am describing as Phase 2 or the Double Dip provided by Lenders. Because credit is so tight, the Banks will possibly create their own 2nd crash of values.

A potential shift in attitude is occurring in America back toward Renting. Rents have stabilized in many markets and demand is strong. I have changed my buy direction towards Multi Family. In certain markets (Phoenix) it is under priced and rents are stable. Values have come down 75% into 1982 prices and that is below their real value.

Next Month we will talk about Phoenix and Vegas. Prices, Jobs, future, and past. Real Estate still makes more sense than the stock market.  The key is studying where to go and why.

Plan on attending August  for more specifics on various markets in the U.S. and why they make more sense than Santa Cruz.

4 Plex in Santa Clara  $650,000
4 Plex in Phoenix that is newer and better condition $105,000  (was $400,000 two years ago)

I look forward to meeting you all with more data and facts.  See you in August.

Jeb