I’m Invigorated!

Okay, I know that headline seems a little exaggerated and maybe even a little far-fetched, but honestly I am. I don’t know if it is a combination of the sun, the clean Spring air and the excitement that seems to be brewing in our offices, but I can feel that change is abuzz in the real estate market and for the first time in a long time, I’m truly invigorated!

This week was yet another week of milestones. Several weeks ago I questioned, are all of these positive indicators the start of a trend or are they just that, positive indicators that will have a short shelf life. Well, after at least four weeks of some strong, positive gains, I truly am invigorated.

This week, NAR released its Pending Home Sales Index, a forward-looking indicator based on contracts signed in February, reporting that pending home sales rose 2.1 percent to 82.1 from a reading of 80.4 in January. Pending home sales have a way to go for there to be a meaningful increase, but recent increases in shopping activity are hopeful indicators that we’ll see additional sales gains.

NAR’s Housing Affordability Index also rose 0.9 percentage points to a record high of 173.5 in February from an upwardly revised index of 172.6 in January, and is 36.3 percentage points higher than a year ago. This broad measure of housing affordability using consistent values and assumptions over time, shows that the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970. 1970!!!!

Also interesting, Inman News released a survey this week noting that of the 225 readers who responded to an online survey from March 23 to April 1, 48.9 percent said housing markets in their area were improving, 27.1 percent said they were stabilizing and just 12.9 percent characterized them as worsening.

That, along with the indicators I’ve referenced over the last several weeks including last week’s jump in mortgage applications, the historic drop in interest rates and the surge in new housing starts, we truly are seeing some very positive and indicative signs of recovery. I truly believe that buyers are seeing inventory move and that gets them moving.

It seems some of Obama’s various recovery efforts are starting to have some effect on the market. The billions to slow foreclosures and goose bank lending, plus the tax credit, are getting buyers to move which is a positive sign.

Now, of course, we’ll have to keep our eye on it and watch as the market continues to progress through our traditionally busy Spring selling season, but thus far the signs are positive and my magic eight balls says “Outlook is Good.”

With that good news in tow, let’s take a look at this week in real estate:

• Auburn—We’re seeing a lot of good open house activity. This week we saw a lot of multiple offers on our REO and short sale properties with some properties receiving up to 20 offers. The REOs were all sold to cash buyers even though they received other offers using FHA for several thousands more. REOs are few and far between though short sales dominate the homes on the market. We have had a couple of normal sales as well. We are getting a lot more calls regarding financing and first time home buyers.
• El Dorado Hills—Our listing inventory is steady with about 10% REO listings and a slight increase in our short sale listings to nearly 30%. Open house activity is sporadic and some buyers are seeing good opportunities but many are hoping prices will continue to come down. We did have at least one buyer who is relocating from Oregon tell us he was thinking of buying in June but feels the market has reached bottom and he wants to get going before the “rush.”
• Elk Grove Laguna—We had fewer open houses this week but traffic counts remain high. The trend is consistent. We have lot of buyers—both first timers and investors. The phones are ringing and Agents who are working a plan are flourishing.
• Folsom—Activity is up and Agents seem to be smiling more! Not a lot of listings this week but the average list price for the Folsom office was only $1,753,000! OK so having only four listings and one at $4,700,000 helped pop the numbers up a little bit! Ratified sales were good but an average price of $330,000 is still quite low. We had 12 closings for the week which was good but once again price per unit is low!
• Placerville—The Placerville office had a really good month for new sales. The inventory is also steady but the buyer traffic is very optimistic. Buyer’s are commenting that they believe the market is at or near the bottom of the market and want to make a move now. The media seems to be helping at this time. We don’t see a lot of open houses because of the geographic location of many listings.
• Rocklin-Lincoln—Open house activity seems to be good. REOs are not coming on the market as frequently as in the past. It was not unusual to see 12+ any one day in the Rocklin/Lincoln area and now the most seen in one day has been four.
• Roseville-Granite Bay—Both inventories are increasing; no multiple offers, 8 ratified offers. We had seven opens with 0-10 attendees at each. Seems a little bit more upbeat. Agents have buyers and are looking to find the correct sales situation. Obviously buyers can dictate the prices except for the REOs. Agents are correctly focused and reading for a good Spring market.
• Sacramento Fair Oaks—Sales inventory is steady, Listing inventory is declining. We had 14 multiple offers, seven ratified offers and six opens with 78 groups through. REO/ Short sale activity is pretty good. The market is good- there are real sellers getting off of the fence. The market’s little inventory means more multiple offers come into play and has been raising the strike price a bit. Great opportunity to get buyer’s into the market. Sellers should take advantage of the REO moratorium and if it is priced right, it will sell.
• Sacramento Metro—Open house activity is good in core areas. Activity has increased within the last 10 days with a great month of 100 sales and 78 closings. The REO/short sale market remain slow.
• Sacramento Sierra Oaks—The price range of under $100,000 is seeing a ton of multiple offers. Overall our local market is seeing very low inventory which should, over time, help to drive up prices.
• Tahoe-Truckee Region—The listing inventory for the Tahoe-Truckee market remained relatively stable from the previous week. Currently, there are 1,369 residential properties and 602 lots/land listed for sale. Of the active listings, there are 101 properties listed as short sales, (5.1%) and 52 properties listed as REO, (2.6%). The median price for the active short sale properties is $410,000 and for the REO properties is $399,000. Based on the current inventory and sales year to date the market has roughly 14-months of inventory available. On a year to date basis there have been 146 properties sold in the market as compared to 230 for the same period in 2008 which is 36.5% reduction in sales. For the week of March 23rd through 29th, there were 17 properties sold which is double from the week prior. We held seven open houses over the past weekend with very little activity. The Sales Associates are seeing increased buyer activity with multiple showings at all price points. The short sale and REO properties are receiving the majority of the initial interest from buyers. However, buyers are realizing there are great values as well in the non short sale and REO inventory. We had three properties go into escrow last week with the largest being $809,000. It is apparent that buyer interest and activity is picking up as there are continued great values in the market.

As you can see, the market is heating up. Consumer confidence is finally on the rise and buyers are edging off the fence. For those who are still cautious, please consider all of the positive signs that are knocking at your front door. From the first time home buyer credit to the historically low interest rates to the increases in conforming loan limits to the generous amount of inventory to the motivated sellers to the…honestly, the list goes on. Opportunity is knocking and it is time for buyers to recognize this and jump in.

Until next week,
Have a great one,

Bob Bronswick
President
Coldwell Banker Residential Brokerage Sacramento/Tahoe