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Buyers market is back
March 5, 2008 | posted by: Andrew C Maleski

Spring sun is out again and the Hollywood writers are back at work. The primary election campaign is in full swing and usually the economy does well in the election year.

Well, this year feels very different. The economy is stalling. The unemployment is climbing. Credit crisis and the mortgage losses are affecting other areas of the economy. The building activity fell to lowest level in 14 years. The foreclosures are spreading and affecting even prime areas. The real estate sales are down to its lowest level since the last recession. The government stimulus package and various offers of relief to struggling homeowners can not by itself correct major imbalances in our economy.

The 2003-2006 loose monetary policy created unprecedented boom in real estate fueled by cheap money and easy credit. Millions of borrowers overextended themselves either by purchasing properties they could not afford or spending too much. The country savings rate went into negative territory. The reconciliation period started last summer during first credit crisis. Since then lenders become uneasy to extend credit to less qualified borrowers. Suddenly easy money dried up.

In June of last year in my blog "More trouble in the store" I wrote about imminent liquidity crisis. Real estate became out of reach for many potential buyers. Till mid of last year a first time buyer could buy a house with almost no money down. These days are gone. Without exotic loan offers and easy money many potential buyers can no longer qualify for loans. No wonder demand fell dramatically last year so were the real estate sales. At first the prices held steady but in the second half of the year they started to fall fast. Most speculators are gone now and we are back to buyers market now.

Below listed is the sales activity complied from CLAW MLS for our area for the month of February. The transactions which closed in February were negotiated in December of 2007 or January 2008. No wonder that sales pace was very anemic.

February 2008

Single Family homes
Silver Lake/ Echo Park
Active 130
Pending 32
Sold 10
Los Feliz /Atwater Village
Active 91
Pending 15
Sold 8
Income properties
Silver Lake/ Echo Park
Active 86
Pending 9
Sold 0
Los Feliz /Atwater Village
Active 17
Pending 5
Sold 1

Copyright Andrew C Maleski 2008. All rights reserved.

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