No Simple Answer

Are we out of the woods yet or is the worst still to come? There is only so much conjecture that this question can create........Right? Well, it seems since our proverbial collapse in March this question has loomed in both whispers and screams on wall street. Here we are entering November and it seems we are still digesting data to determine whether this question can finally be put to bed or whether it will continue on into the better part of 2010. The problem? A majority of the positive earnings and data from the banks was either manipulated by the government's cash infusion and tax modifications that changed the way in which they realize income and thus pay taxes. As well as, the non banking US companies that have fueled the rally laid off employees and implemented cost cutting techniques to improve their bottom line. Now this is definitely not a bad thing as most of these companies have increased productivity and profitability by improving their efficiency. However, the problem is that there is only so much fat you can trim. You can't keep downsizing and cost cutting to manipulate earnings and keep your stockholders happy.........eventually even the biggest companies run out of employees to fire. So the million dollar question is...........Now that a majority of the manipulation and smoke and mirrors are used up, are earnings next quarter going to plunge and unveil the true catastrophic environment we are in? Or did we buy ourselves just enough time to actually crawl out of the recession and realize "true" growth, albeit probably very small, without the "growth by subtraction" technique or growth by taxpayer infusion? Until then, welcome to life on the fence.........and here's to hoping we get off on solid footing and don't fall off.

What do you mean I can't buy?

As home inventory continues to erode..........eager buyers are left home-less. With rates dropping to new historic levels thanks to the mortgage backed security market finally thawing out a little bit, affordability for housing in Southern California is the highest it has been in years. However, don't think that means that you can just run out and get your pick of the litter. Right now, it is common for buyer's to submit multiple offers before they get one accepted. The local media has not given it much attention so many home buyers are getting blindsided with this information by their agents or the constant rejection of their offers. Like 2005 when buyers were getting into bidding wars and throwing all but the kitchen sink at sellers to get them to take their offer........we are once again in a position of extremely high demand at the first time home buyer level. Homes above 500K are still seeing normal marketing times, but the market under 500K and more specifically under 400K are going like they are the prize pig at the fair. Sometimes the bank or seller have multiple offers within 48 hours of listing the property. Often times Agents are setting a date a week or less from the initial listings as a cut-off for offers. With the first time home buyer credit set to expire Dec. 1st this could just be thousands of tax payers fighting to get free money from the government. Regardless of the cause.........the effect is once again a colossal battle of wills as buyer's struggle to reach the American dream despite being qualified, ready, and able to purchase.

With rates inevitably set to rise, temporary loan limits set to expire, and the first time homebuyer credit set to disappear as well.......time will tell how long the demand will last and who will still qualify to buy after the dust has settled.....