We’re definitely feeling the beginning effects of this, in many markets, with an increase in calls to our branch offices and Agents as well as increased traffic at our open houses.
But will this “interest” translate into closed transactions is the million dollar question.
Though none of us holds a crystal ball, I would say that we’re anticipating a moderate Spring. In markets hardest hit by foreclosures, we still have quite a few distressed properties to weed through before we can begin to work our way up. Our hope is that the recent passing of the foreclosure prevention plan will significantly reduce the number of foreclosures hitting the market over the next several months, and once this takes effect, we should be able to weed through the current inventory and start making our way through to the other side. In all honesty, this could take several months before we really feel its full impact.
For those markets impacted less by foreclosures and more so by Wall Street and the general state of the national and global economy, we’re really facing two main challenges: a lack of quality inventory and buyers who are struggling with whether or not to get off the fence.
Many buyers right now have misgivings about whether or not now is the best time to buy. Many are trying to time the market. My response to this is, it is very difficult to time a market. Just as you can’t time the stock market, you can’t time the real estate market. Real estate needs to be seen as a long term investment. If you plan to stay in your home for two, three or even five years, buying now probably makes good business sense. And that is solely if you are looking at purchasing a home from a business or investment purpose. But as we all know, purchasing a home isn’t just an investment. Home is where we live. Where we raise our families. Where we create memories. Rather than simply trying to time the market, we should be reminded of this fact and instead, focus on choosing the best home in which we can make that “life” happen. Of course, prosperity in real estate is how the majority of Americans have built their wealth in this country and I for one won’t overlook that fact but I do think it is important for all of us to reflect on the fact that beyond being a solid investment, our home is much more than that.
For buyers who are out there and are considering buying right now, if you plan to stay in your home for a long period of time, you probably can’t go wrong purchasing today. Though we anticipate moderate home sales in the near term, buyers are ultimately expected to respond to much improved affordability conditions as well as the $8,000 first-time home buyer tax credit and the market will pick up. It’s just a matter of time. And when it does, that pick up will translate into more competition, less inventory and possibly higher home prices, resulting in less purchasing power for you. Consider my advice: waiting may cost you.
And with that news in tow, let’s take a look at this week in real estate:
- Auburn—We are seeing some REO activity but more short sale activity. One short sale contract has already been in the process for six weeks. The agents that showed homes this week stated that it was difficult to find a home in the lower price that wasn’t a short sale as the REOs were going so quickly.
- Dixon-Davis—All six of our deals this week are REOs or short sales. Our Agents are busy with multiple buyers who are all prequalified.
- Elk Grove-Laguna—Open house traffic and floor call volume took a big jump this past week. We had 14 floor calls on Saturday alone. On the open house side, most experienced near or above open house traffic.
- Fair Oaks—Last weekend open houses were very good. We had about seven Agents that did them. Two of our Agents had over 30 people in each of their opens. Sales have been decent considering the REOs have not been released. Multiple offers are still going on. The inventory is low causing more activity. The agents in the office are very positive.
- Folsom—Open house activity is very good with our opens averaging about 10 groups. Short sales are dominating right now with four of the seven ratified offers being short sales. We had no REO deals this week. If a property is priced right (especially in the Folsom area) it will sell fairly quickly.
- Rocklin-Lincoln—On the REOs that are priced right, they are receiving multiple offers and many Agents have written over a dozen offers for the same client. With some of the REOs we are also being given a document for the buyer to sign that states they are not in counter offers with other properties. The feeling among many of the Agents is that we are going to turn the corner and have a good year.
- Roseville-Granite Bay—We continue to see struggles. Buyers are reluctant. The positive is affordability and the tax credit. The unfortunate new is the jobless rate.
- Sacramento—Our Sierra Oaks office reports a lot of open house traffic and most sales remain REOs and/or short sales. The inventory for our area is very low right now which is dramatically hindering the number of potential sales.
- Vacaville-Fairfield—Our market appears to be strong and is definitely a sellers market under $250,000. We are noticing an unusual amount of cash buyers. In our opinion this is a great sign. We feel that they represent the most conservative bunch and they obviously see opportunity in the market. Our biggest challenge this week has been with the appraisers, they are taking longer than usual and the conventional appraisers are putting more conditions on the appraisal than even FHA or VA.
- Tahoe-Truckee—The listing inventory for the Tahoe-Truckee market is holding steady with slightly over 2,000 active listings in the area. Of the active inventory there are 53 REO and 93 short sale properties listed which is less than 8% of the total listings in the market. The majority of the REO and short sale listings, (90%) are priced at less than $750,000. Based on the current inventory and sales year to date the market has roughly 19-months of inventory available. On a year to date basis there have been 105 properties sold in the market as compared to 232 for the same period in 2008 which is 54% reduction in sales. For the week of March 2nd through 9th, there were 11 properties sold with 4 being over $750,000. Buyers are being very selective on the properties they are purchasing and many are in a wait and see mode relative to the current economic landscape. Currently there are 111 properties pending sale in the market of which 19 are either an REO or short sale. To demonstrate the selectivity of the buyers, there are currently 28 properties that are active contingent sales and 26 of those properties are classified as short sales. Open house activity has been hit and miss with very little activity on those properties being held open. Part of this is due to the time of year relative to visitors to the area and part of it is due to the slower real estate activity we are seeing. In summary, there are excellent deals available and many great properties to choose from for interested buyers looking to invest in the Tahoe-Truckee market. We certainly expect that as summer approaches and the economic environment improves that sales activity will become more brisk.
As you can see, we really have a mixed bag. Some markets remain slow while others are seeing huge leaps in sales and contracts.
What I’ll leave you with this week is a reminder that, for buyers, opportunity is knocking this Spring. Buyers need to be aware of today’s advantages—attractive interest rates, increased affordability, sizeable inventory, increased loan limits, $8,000 first time home buyer tax credit and motivated sellers. The stars couldn’t be more perfectly aligned.
For sellers, pricing is key. Homes that are priced well (really well) and show well, are selling. Home that aren’t, sit. Consider this as you prepare your home for market and please, take my and your Agent’s advice, and don’t test the market. Price your home well from the beginning to generate the largest pool of potential buyers.
Until next week,
Make it a great one,
Bob Bronswick
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