Even though we are into February, sales of high-end homes in the desert have remained very slow. There are some homes selling, but they are few and far between. And, in this difficult time, we are seeing several things coming back into the market.

Recently, it seems that half of the high end homes being sold are structured as ‘trades’ , where the seller of the more expensive home is willing to take a lower priced property as part of the sale price, or as in the car business, a ‘trade-in’. In the past slow markets, trades were a big part of the sales made, because there are buyers who will buy, if they can do so without ending up with 2 homes.

So, the Seller who is willing to consider a trade in today’s market increases the number of potential buyers for their property. And, taking a less expensive property in trade can actually benefit some sellers. They end up with a less expensive property that might be easier to sell or rent, or they may even be able to use it.

Of course, trades can be difficult. First, they require a Seller willing to consider a trade. Next, they require a Buyer who is realistic about values. Many Buyers expect to pay ‘wholesale’ and to get ‘retail value’ for their trade property. Over the years, the trades that I have done successfully required that both parties were willing to trade ‘wholesale for wholesale’ or ‘retail for retail’. With the right approach, a trade can be very effective for both parties.

Foreclosures are also starting to come into the high-end market. These are often homes that were built as spec houses that didn’t sell. The construction lenders are not willing to extend construction loans as they did in the past, because the bank regulators consider them ‘bad’ loans. This requires larger capital reserves that are difficult to provide, making foreclosure the lenders only option. I don’t expect to see this as a large part of the market, but when a bank owned property comes on the market, it will sell – especially in the high-end market.

Hopefully, the new stimulus plan will start to get the economy moving again. But, with consumer confidence at a very low level almost everyone has become very conservative, waiting to see where the economy is headed. As soon as there is some evidence of stabilization, the high-end real estate market will start to improve. And, the desert area will continue to be in demand due to the most important things we have to offer, the weather and the lifestyle.

This month I have included the following items:

•	This Inman News article describes some of the real estate related items in the next TARP stimulus bill.
•	From Forbes.com, here is an interesting view on why the economy can’t maintain this slow pace for too long.
•	’Housing Remains the Way to Build Wealth’  This link will take you to a report from Harvard University’s Joint Center for Housing Studies, concluding that housing’s dominant role in the wealth of households and the overall strength of the economy WILL continue long after this painful correction has ended. A long report, but powerful.
•	From ‘The Happiness Project’ 10 tips for being happier. We can all use positive input!
•	The 10 Most Expensive Homes Sold in the Desert in January 2009, according to the Desert Area MLS. An $11 million home sold at Bighorn! But, the numbers go down quickly from there: 2 homes at The Hideaway (LQ) Sold, and 1 each at The Quarry (LQ), Thunderbird Heights (RM), Waterford (RM), Artisan (RM), Cahuilla Hills (PD), La Quinta CC and Griffin Ranch (LQ). Two lender owned properties are on this list.
•	Mortgage rates as of 2/15/09. There are new low-interest, Jumbo loan programs becoming available again.

Thank you for taking the time to read my Newsletter. I try to be candid and realistic with my comments and the information brought to you. If you have any real estate related questions or needs, please give me a call, or send me an email at Bruce@BruceBlomgren.com.

Sincerely,
Bruce