“Historic low interest rates and a myriad of loan programs to entice buyers have little effect as long as unemployment continues to stall the economy,” mentioned Mark Alston, CEO of Alston Mortgage and Realty as well as the president of the Consolidated Board of Realtists, a renowned trade association representing real estate professionals in the Los Angeles area.
News is Welcomed by Realtors
Today, the National Association of Realtors published its scheduled report on the housing market. The report highlighted that housing prices continue to drop and the trend is very favorable for the upcoming months. Ever since 2007 the market has been like trying to crank a stalled car! Many professionals have voiced surprise it has lasted nearly five years. Every month or whenever housing and economic stats are published; they as well as consumers have been sitting on the edge of their seats waiting for a solid indication that a legitimate recovery is the reality.
Alston commented the news is a positive indicator however he did voice caution on the specific market his member’s service. “They service the urban market and the last several years have been extremely challenging, however during the past several months we have reason to be more optimistic.”
Unemployment is Nagging Problem
NAR’s data represent the broader national market. Los Angeles has been harder hit due to the glut of foreclosures and nagging unemployment. Right now, pricing bodes very well for those in a position to buy. “Los Angeles is a huge melting pot and traditional minority populations are just as vibrant as the mainstream. However minority populations see unemployment nearly twice the rates and that presents a problem with being in a position to participate in any economy,” Alston lamented.
In addition to the unemployment piece, Alston’s other concern is trying to deal with the equity position his area has been dealt with. The housing crisis has blazed through all parts of the city crippling many neighborhoods. Equity in housing has been the biggest asset most people have used in creating wealth or financial stability. The housing crisis dealt a severe blow to millions whose equity was wiped out “overnight.” Most will never recover and those who are able to weather the storm are facing homes with a mortgage worth more than the value of the property.
Owner Occupied vs Non Owner Occupied
“A typical housing market will show data where approximately 70% of buyers are owner occupied. Even though prices are down, the most legitimate candidate who can take advantage of the low prices are investors or those who have the available cash on hand,” stressed Alston in voicing concern that communities are still going through an economic correction. The low rates, the huge foreclosure inventory and the more stringent underwriting guidelines have created a new dynamic. Communities are not currently being developed organically where people buy homes with the sole intention to take up residence and weave into the fabric of the community. Investors are dominating the buying scene and while the news is good for volume of units sold, thus rebuilding the housing market; it presents a reality that neighborhoods and communities lose the character of regular people associating with a vested interest.
Making Lemonade out of Lemons
As the market improves, Alston counsels his members to stay prepared and keep marketing their properties to those who may have thought home ownership was an illusion. A case in point is becoming laser-focused on how the foreclosure process works. Up until several months ago, foreclosures which were owned by Fannie Mae, Freddie Mac, GSE’s (Government Sponsored Enterprises) and other lenders and servicers were marketed by professionals outside of the Los Angeles market. Rather than complain, Alston took the perspective to make lemonade out of lemons. He realized that discrimination is not as overt as you might expect. Oftentimes, it rears its ugly head out of ignorance. He pulled his leadership team together at Consolidated and mapped out a strategy to educate the leaders of all the foreclosed stock. He knew his members had a better feel of the pulse of market they have served for years. He mapped out a strategy for survival and knew the best ammunition was solid research and documentation. Partnering with a key ally, he pulled in Congresswoman Maxine Waters, known as a true housing advocate to help educate decision makers it was in their best interest to utilize members of Consolidated versus the way they were doing business. This was critical because many servicers and lenders rely on taxpayer dollars to subsidize their operations.
“The move has paid off handsomely,” echoed Alston. It was like a shot in the arm to many in the association. The bottom-line result has allowed Consolidated and other realty groups in the area to position themselves for a housing market which is bound to bounce back.
Professionals and consumers alike, applaud the drop in housing prices. At the same time, they realize housing is such a critical sector in the Los Angeles market, they are betting unemployment will be stabilized so they can help balance the scale of taking advantage of lower prices to legitimate owner-occupied home buyers versus non-owner occupied investors.
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