Southern California Post Card

[Mike McKinzie]

I just received a postcard from a Realtor in the Riverside area of Southern California. This Realtor used to work for me and even managed one of my offices for a few years. Here is the post card:

What a crazy real estate world we live in. In the price range of $350,000 and below, 68% of all closed escrows in Riverside occur at a price equal to or greater than the original list price. Why? Supply and demand...lots of buyers, and few sellers (the State moratorium on foreclosures is still in effect.)

This should lead to rising home prices, but it's not. Again, why? Because for the past 12-18 months the appraisal industry has been handcuffed by new requirements (Federal and State laws intended to "help") that have effectively made it impossible for prices to rise in red-line markets like ours in Riverside. Hopefully, common sense will prevail soon. Until then, we will continue to do the best we can with whatever regulations we have.
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So my question to the BP members is this, "Is it good that banks are releasing foreclosures slowly or should they flood the market and let the market settle where it may?" My personal feeling is that the sooner houses get into the hands of owners and investors, the better all around for everyone. The banks may gain a few bucks, but the risk of damage and destruction of the asset increases the longer it sits vacant and unmonitored. It takes longer for neighborhoods to recover if the vacancies are filled over years instead of months. Artificial market manipulations seem to cause more problems than they solve.