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Happy New Year to everyone of you. I hope that this new year brings you health, peace and prosperity. Because this is an “8″ year, the Chinese believe that this, the year of the Rat, will be an especially good one for good fortune. It must mean that this is a good time for Real Estate in Northwest Glendale.

The entire industry takes off over the Christmas and New Year week, so there are no new listings to really talk about. So, let’s talk about home values in our little neck of the woods, shall we?

The LA Times and common sense tells us that there has been a huge drop in property values as the sub prime market collapse and the large numbers of “for sale” signs seem to impact every aspect of our lives. Well, my life. Your life undoubtably contains much more than real estate.

The numbers, however, do not lie. First I took a 12 month average of statistics comparing all of ‘06 with ‘07. The average price actually went UP from $792,000 to $798,000. It took longer to sell, but the price was higher. Same thing happens with median price and time.

I then filtered for size, reasoning that differnt things could be happening to the everyman category and the luxery market. Again, prices were actually UP in both categories with the luxery market rising from an average of $987,000 to $1,046,000.

Lastly I filtered for second half of the year to second half, reasoning that the most dramatic perceived drop has been in the last 6 months. At last I found some empirical proof for our perception, but not much. Average price dropped from $796,000 in the June- December period of 2006 to $786,000. That is less than a 1% drop in actual value.

What the heck is going on?!!! These numbers fly in the face of what everyone is thinking!

Here’s the truth and it is one that I’ve been preaching for some time, now. The market is not bad! The buyers that need to buy are buying. This is very different from the collapse of the ’90’s when buyers didn’t have jobs or even the ’80’s where a great buyer couldn’t get financing.

The market feels bad for 2 reasons. For many years houses have sold for way more than you thought they would. This perception of value lingered for far longer than the actual appreciation - so your perception of a house that might sell for $600,000 in ‘05 should sell for $700,000 in ‘06 and $850,000 in ‘07. In reality, however, appreciation slowed considerably in the later half of “05 and there was very little appreciation at all in ‘06. When this same house sells in 2007 for $720,000 the public thinks there was a huge drop in value when in fact the house simply had not kept up with perceived appreciation. Appreciation that had nothing to do with actual sales prices.

The second reason is more obvious. Although buyers are buying, they are darned picky. They are only buying the best homes - the best floor plans, condition, location and lot. So, even though the average price has remained the same, the quality of that home is far better than before. Inferior homes, more often than not, are simply not selling.

The market has changed, that is for sure. But the real story is not that the sky is falling, it is that home seller needs to be smarter and better prepared. If you are the best in the market you sell - if you aren’t you don’t. It is that simple.


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