It Was a Week of Surprises…And Best of All, Spring Has Sprung!

First, CNNMoney.com reported a sudden, unexpected surge in U.S. housing starts. According to the Commerce Department, housing starts rose to a seasonally adjusted annual rate of 583,000 last month, up 22% from a revised 477,000 in January. The big surprise: Economists were expecting starts to decline to 450,000, according to consensus estimates by Briefing.com.

Furthermore, applications for building permits, considered a reliable sign of future construction activity, rose 3% to a seasonally adjusted annual rate of 547,000 last month. The other big surprise: Economists were expecting permits to fall to 500,000.

Also interesting this week, retail sales figures fell much less than expected in February, and surprisingly strong January sales were revised even higher. According to CNNMoney.com, “U.S. store sales showed a smaller-than-expected decline in February after an unexpected surge in January that was bigger than originally reported…The Commerce Department said total retail sales fell 0.1% last month, compared with January’s revised increase of 1.8%. Economists surveyed by Briefing.com had been expecting a decrease of 0.5% for February.”

So, is it safe to call this a trend? Are we out of the woods yet? It’s tough to say. In all honesty, you don’t know whether or not you’ve hit bottom until you’re on your way back up but it seems some of the critical signs are starting to show signs of life which is welcome relief for our wounded economy.

Also in the news this week, the Federal Reserve announced plans to purchase up to $750 billion in mortgage-backed securities and up to $300 billion in longer term Treasury securities. Our representatives at the National Association of Realtors applauded the plans noting “This is great news for American home buyers and homeowners because mortgage interest rates will continue at historic lows.”

What this means for Americans is that a greater number of home buyers will be able to purchase a home and homeowners facing challenges will be able to refinance into better terms. As NAR noted, “We already are experiencing a great improvement in housing affordability due to historically low interest rates and the Fed’s move will push affordability conditions to the best levels in 40 years. In addition, continued low rates will lessen foreclosure pressure and help stabilize home prices sooner, as more Americans buy homes and draw down inventory.”

Along the lines of mortgage relief, the Treasury Department this week launched a new website for consumers seeking information about the Obama Administration’s Making Home Affordable loan modification and refinancing program. The site, www.MakingHomeAffordable.gov, offers features including interactive self-assessment tools that will empower borrowers to determine if they are eligible to participate and calculate the monthly mortgage payment reductions they could stand to realize under the Making Home Affordable program.

This is a helpful site that we should all be sharing with our friends, families and clients alike.

Finally, on Friday, Jim Gillespie, president and CEO of Coldwell Banker Real Estate LLC, will participate in a discussion about the state of the housing market, live from the New York Stock Exchange on CNBC. This will occur on Friday at approximately 4:30 p.m. (Eastern).

Jim will participate on the “Roadmap to Rebound” segment hosted by Maria Bartiromo. Yale economist Dr. Robert Schiller and Sanjiy Das, CEO of CitiMortgage, will also participate.

In another powerful symbol of what our Coldwell Banker and Realogy leaders are doing on behalf of consumers and the real estate sector in general to enact change that will stimulate housing and ultimately the economy, Jim plans to call upon government leaders to enact a $15,000 non-refundable tax credit to ALL buyers and also a mortgage buy down that would bring rates to the 4-4.5% range. This, NAR reports, could generate an additional 840,000 home sales over 12 months. This home buying activity would have major implications in stimulating the overall US economy since NAR also reports that each home sold generates more than $60,000 in economic activity. The proposal would also have a greater impact on foreclosures than the current stimulus package. I hope you will all watch.

Now, with all of that exciting news for the week in tow, let’s take a look at our local real estate news:

• Auburn—Listing inventory and sales inventory is steady out of our Auburn office. We had a few REOs in the area and we are in multiple situations on a couple of the short sales. Listings are sparse and land listings are sitting. Many of the Agents believe that we are going to finish strong in 2009 and that the confidence level is beginning to be a bit more positive.
• Dixon-Davis—Our Dixon-Davis office is reporting very slow inventory and very active sales, though prices remain low. If you looked at our inventory in our area you might actually think the market was taking a turn. We’re seeing less inventory and more multiple offers over the list price. Hopefully when the REO listings are released they will come out slow but steady to keep the market from being shocked again.
• El Dorado Hills/Placerville—Our inventory in El Dorado Hills and Placerville has stayed about the same this year. El Dorado Hills has 345 listings and we had over 450 the middle of last year. About 10% of our market is REO and 20-25% is short sales. Traffic at open houses has been spotty depending on the weather. We’re seeing occasional multiple offers on homes priced at or below market. We seem to be getting more traffic on floor but overall the market has remained the same all year which is certainly better than the declining market we experienced last year.
• Elk Grove/Laguna—What a difference a year makes. Many buyers are still frustrated because most listings are receiving so many offers they are having to write a lot of offers to get one to stick. For the second week in a row, traffic counts remain high. Short sale approvals are occurring at an increasing pace. REO listings have slowed, but there are a lot waiting in the wings. Multiple offers are still common place on properties below $300,000.
• Folsom—Open house traffic has been super! One listing, with help of a home builder promotion, drew 40 groups! Our REO inventory is decreasing. Three of our 11 sales for the week were short sales. Overall it was a good, solid week. Everything was working, including floor time, open homes, new home sales, etc. The weekend was very busy with all of the conference rooms tied up most of Saturday.
• Rocklin/Lincoln—Inventory is down but, according to some reports, banks reportedly have 700,000 REOs waiting to unload on the market, many in California. High end homes have not seen much movement or activity in the area.
• Roseville/Granite Bay—Looking forward to new stimulus and when the next foreclosures will be hitting the market. Spring starts on the 20th and everyone needs to hear our motto: “LOOK FOR OPPORTUNITIES.”
• Sacramento Fair Oaks—The local market overall is slower. The inventory is out about three to four months—a lot slower than what we are accustomed to. REOs have been very slow. Our open home traffic has been fairly good. Now with the weather warming up, we expect more.
• Sacramento Metro—Our biggest challenge right now is that the banks are holding the REOs which are the majority of our business so once that increases, the inventory will be the same. Experienced, veteran Agents are seeing less activity on traditional listings; we’re seeing some offers fall apart for various reasons. Agents are doing what they can to stay in the game. Activity in the office is more steady than the crazy pace we were previously feeling.
• Sacramento Sierra Oaks—Sierra Oaks is our “Steady Eddy” office. Several REO Agents are working steadily, not as crazily as like before. We’re awaiting the bank flooding to open up again (likely April). Multiple offers are the norm; we had 11 Short Sales approved by the banks last Friday. All major players (Bank of America, Wells Fargo, CitiBank, etc.) that want to get the assets off of their books. Open homes that were listed at a good price point had a fair amount of traffic.
• Tahoe/Truckee Region—The listing inventory for the Tahoe-Truckee market had a slight increase last week with 1,382 residential properties and 588 lots/land listed for sale. Short sales represent 5% and REOs were 2.6% of the active listings in the market respectively. The majority of the short sales and REOs listed, (86%) are priced below $750,000 which is where the sales activity is most brisk. Based on the current inventory and sales year to date, the market has roughly 17-months of inventory available. There continues to be meaningful price reductions within all price points yielding great buying opportunities for discerning buyers. On a year to date basis there have been 122 properties sold in the market as compared to 177 for the same period in 2008 which is a 31% reduction in sales. For the week of March 9th through 15th, there were 13 properties sold which is a slight increase from the week prior with three being over $750,000. We held eight open houses over the past weekend with a fair amount of activity but nothing significant. One of our open houses on the west shore had eight groups through which was encouraging. A fair number of Agents reported their listings are receiving showings at all price points. Over the weekend we had six walk-ins in the Tahoe City offices and a number of sign calls. The time to buy Lake Tahoe-Truckee real estate couldn’t be better.
• Vacaville-Fairfield—This week our market continues to be robust. We are experiencing multiple offers on the majority of our listings. Buyers are in our market place and taking advantage of the low interest rates and the availability of the $8,000 credit. Our Agents are actively seeking out their investor clients, as they see positive signs in the marketplace.

With spring break on the horizon and the warmer, spring weather in the air, look for the first of the garage sales as well as lots of great homes holding open houses! For a schedule of open houses, go to www.OpenHouse.com or www.CaliforniaMoves.com. Spring has sprung!

Until next week,
Make it a great one,

Bob Bronswick