If you are looking for a property in the $1 million plus range then you are going to need 25%-35% down along with high FICO scores and cash reserves in the bank. Imagine actually having to qualify and be qualified.. how will anyone ever buy a home? How could this happen… the entire Beach Cities market will be in shambles.. prices will drop 50%… the end is near! But wait.. something is wrong…people are buying homes. There are buyers who have.. gasp.. not just good credit but excellent credit. There are buyers who have enough money in the bank to have a 20% or more down payment and still have excess funds. There are buyers who are purchasing homes they can afford at payments that are not subject to some weird bank come-on. Yikes… there are people actually buying homes just like people did 10-15 years ago.

I am being a bit facetious for a reason. No… the market hasn’t begun an upswing. It looks as if home prices are going to remain soft to flat for the next few years. However there are some happenings that are pointing to a moderation of the current real estate market. There was an interesting article in last week’s WSJ about the housing market. The Daily Breeze had an article in the Business section about possible changes in the credit markets that may be good news for mortgages. Even the FED is seeing a little improvement although as Bernanke notes we are still not out of the woods. Lower rates by the FED have pushed down the prime rate. Many adjustable rate home loans are tied to the prime. Consumers who have one of these loans that is re-setting will be seeing rate increases that are significantly less then anticipated.

 None of these items taken individually mean much but if we continue to see more small signs of an improving market buyers need to be watching closely. Everyone wants to time the market. A lot of buyers are waiting for the bottom of the market before they buy a home. Most buyers never know when the market has reached the bottom until long after it has happened. The reason is that buyers think there will be a big headline that says… home prices have reached the bottom… buy now. It doesn’t happen that way. Investors know this and begin buying long before most consumers even have a clue. They see the bottom coming because they pay attention to the little signs that begin appearing in the market. Consumers want big signs, so they usually miss the small signs.

I think we have a bit longer to wait for the market to reach bottom but the little signs are beginning to appear. If I were thinking of buying I would pay attention to what the market is saying.. instead of what my friends say. I would also find a good lender and find out just what I should do to be ready to buy when the time is right.