Happy Days are Here Again!

Did you know that over 99.5% of all prime (well-qualified buyers) home loans are not in
foreclosure? That’s right, over 99.5% of home borrowers who actually qualified for a
prime home loan are doing swell. So what’s all this big foreclosure crisis news about?
It’s the result of government-mandated pressure on Fannie and Freddie, et al to make
more loans to “Subprime” (poorly qualified) borrowers. Millions of loans were made that
shouldn’t have been and frankly, until pressure from Congress, would never have been. A
large number of these buyers, of course, have now defaulted (over 20%). Even with these
Subprime loans included, the average of all mortgage delinquencies have still topped out
at just under 7%. That still means 93% of all home loans are being paid as agreed.

So what’s really happening in today’s Real Estate Market?

• Locally, the number of homes for sale has dropped substantially in recent months. In
fact, as of December 9th, the current inventory of 5,563 homes in the Fresno MLS is 17%
less than the 6,674 that were for sale a year ago.

• Sales have been increasing all year. Fresno MLS reported 1,229 sales in September,
October, and November of 2007, compared to 2,550 in the same quarter of 2008. That’s a
108% increase in sales!

• According to our experience, the decrease in inventory, together with the increase in
sales, means that prices are going to be increasing soon.

• Government spending always seems to lead to increases in inflation. Though not good
news for the cost of living, inflation does increase building costs, and it also drives
increases in home values.

• Even some of the hardest hit states like Arizona and Florida are now seeing individual
counties with price increases. We’ve seen the same phenomenon here. In fact, in the past
months, we’ve experienced a number of investors once again “flipping foreclosure homes”
for a substantial immediate profit.

We’re not saying the market is in complete recovery, but we are saying there’s light at
the end of the tunnel and we’re on our way to happier days.