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# Sewage spill at Santa Monica Pier sparks dispute over beach closure
- URL: https://www.smdp.com/a-fecal-matter/
- Published: 2007-10-17T15:00:00.000Z
- Updated: 2026-10-25T01:08:54.000Z
- Author: Kevin Herrera
- Tags: Opinion, Santa Monica, #archive-import

MARKETS ARE DRIVEN BY EXPECTATIONS. If expectations are not met, a market will retreat; however, if expectations are exceeded, that same market will rise. That said, it is usually fear, not fundamentals, that drives market volatility... eventually, however, fundamentals win out.

Economic fundamentals are about to be tested in the California real estate market. According to the California Association of Realtors or CAR, California will experience a 4-percent decline in median price to $553,000, compared with a projected median of $576,000.

Sure, this may be a bad time to buy a house or it may be the best time. As the old adage goes — buy when there is blood in the streets. Now, I am not suggesting going out and foolhardily purchasing a property, or several of them. What I am saying is if you are in the market for a property, make a reasonable offer and it may be accepted. As I said earlier, markets are driven by expectations. Right now, most sellers have unrealistic expectations, but those same sellers are beginning to realize that they may not be able to get the price they want. Therefore, it is up to buyers to make reasonable offers. Heck, why not make an unreasonable low offer — it does not cost you anything and you never know what the seller is willing to accept in these soon to be uncertain times.

With that said, it is important to remember the fundamentals behind a real estate market. It all breaks down to supply and demand. In California, we have a finite amount of real estate or supply. However, the demand for real estate, especially homes, is great, which as seen over the last 10 years, has led to higher prices increasing year after year. Nevertheless, if the demand recedes and the supply of houses increases, prices will inversely decrease. The issue at hand today actually does not have to do with demand as many people still want to own a house, but are unable to based on a new dilemma — financing.

First time homeowners, today, are finding the barrier to entrance monumental. Gone are the days of easy money, where a first time homebuyer could purchase a home with 100 percent financing. Without low down payment loan options, many would be first-time homeowners are finding it impossible to purchase a home. Lenders are cracking the whip, offering loan programs that require 10 percent, 15 percent or even 20 percent down for first-time homeowners. Although it does not sound like much, the difference between a 5-percent and 10-percent down payment on a $500,000 house is $25,000\. And for many buyers, that $25,000 is the difference between owning or not owning a home.

Ultimately, this means many would-be first time homeowners are stuck as renters until lenders come up with better loan options.

It is hard to say whether California will feel the effects of a declining real estate market for several months or several years. However, one thing is for sure — many Californians want a place to call their own. The demand for new homes is there once the financing becomes more buyer-friendly. In the end, if you are in the market for a home and the financing options work for you, now may be the best time to make that offer.

MIKE HEAYN is a Washington Mutual multi-family loan consultant. He (310) 428-1342 or

*Originally published in the Santa Monica Daily Press print edition on October 17, 2007.* [Read the original PDF.](https://s3.us-east-1.amazonaws.com/smdp%5Fbackissues/101707.pdf?ref=smdp.com)