Recent Housing Stats Are Showing Encouraging Signs for Market

This week I thought I’d share some positive stories that continue to permeate not only our local news but on a national level as well.

The National Association of Realtors® said its Pending Home Sales Index, based on contracts signed in March, rose 3.2% as first-time buyers waded into the market to take advantage of favorable prices and mortgage rates.

A report from the U.S. Commerce Department showed construction spending rose 0.3% in March, the first increase in six months.

The pending home sales report added evidence that sales have reached a bottom. “That's critical because once sales bottom, it's only a matter of time before you work off excess inventories. That's the key to stabilization in the financial system and the economy at large. We're closer to that than people thought just a few months ago.”

-- Michael Darda, chief economist at MKM Partners in Greenwich, Conn., “Sales and Construction Data Lift Hopes for Housing,” by Lucia Mutikani, Reuters, May 4, 2009.

On a national basis, the forces driving real estate right now are increasingly turning positive and encouraging.

• Home sales in major markets around the country have shown dramatic gains in the past month.
• In Florida, statewide sales jumped by 30% in March over year-earlier levels, and were up 33% over the previous month. Even condo sales were up by 25%.
• In California, statewide sales rose 64% in March compared with March 2008. Unsold inventory is now just five months -- that's down from 12 months the previous March.
• Median house prices may be bottoming out. The California Association of Realtors® reports the median price of homes sold was up by 2.2% for the past month.”
  
  -- “Real Estate Outlook: Sales Rising in Some Areas,” by Kenneth R. Harney, Realty Times, May 5, 2009.
  
  Also interesting to note:
  
• The current price level of homes seems to be drawing more buyers into the market, according to Jim Gillespie, president and CEO of Coldwell Banker Real Estate. “We are seeing a lot of activity across the nation. Of course we're in the spring market, but we've seen more buyers in the market now than at this same time last year.”
• “Home prices are where they should be. Sellers are accepting the current reality and are pricing more realistically," said Robert Abbott, co-owner and VP of a northern New Jersey brokerage. “More people are not only 'kicking the tires' but actually buying right now. We are showing significant activity when it comes to sales. The number of days for a house on the market is going down.”
  
  -- “More Homes Get Multiple Offers; Downturn May be Nearing End,” by Julie Schmit, USA Today, May 6, 2009.
  
  Multiple bids have picked up in recent months in California and other states hit hard by foreclosures and steep price drops, real estate executives say. “If a house is in a good neighborhood, is maintained and is a good value, it'll get multiple offers. One in 10 homes now draw multiple offers, up from one in 30 last fall.”

-- Julie Holt, owner of a title services company in Florida, “Is Now the Time for Some Home Buyers to Make a Deal?,” by Mark Koba, CNBC, April 28, 2009.

So what does all of this mean for our local market?

Well for starters, there is no question, we’ve definitely seen a sudden surge in sales. What a difference a year makes. Having said that, the biggest challenge affecting our market right now is the foreclosure moratorium that has greatly impacted the inventory levels and therefore sales, in the market. Take a look at this article from the Sacramento Bee this week: http://www.sacbee.com/business/story/1856386.html

We anticipate that this moratorium will end sometime in June which will increase our inventory levels and get our sales path back on track. Right now homes that do go on the market, in most areas, are scooped up immediately as buyers are chomping at the bit to get homes. Once the foreclosure moratorium ends, we should see a huge jump in sales.

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

• Auburn—We are seeing more mobile homes on the market than we have in the past few months. Cash is still the king when you are in a purchase with multiple offers. We have had a few very good floor leads that have turned into sales or listings. Appraisals have come in under the purchase price on a few contracts
• Dixon/Davis—Not much change from prior weeks. Need inventory, we have lots of buyers and no houses to sell. We have 30 active homes in all of Dixon! New listings sell in one day often with multiple offers.
• El Dorado Hills—Inventory seems about the same (344) but over 100 of these are short sales so our normal active listings are less than 250 so inventory is tight. Agents are making multiple offers and really looking for good homes that can be sold and closed. Open house activity is steady.
• Elk Grove Laguna—No information reported.
• Folsom—No information reported.
• Placerville—We’ve had multiple offers on homes in Placerville and good listings are selling. Some homes that have been on the market for 100+ days have sold. We don’t have many REOs. Inventory is stable.
• Rocklin/Lincoln—Agents are busy. Inventory that sat for a while now have pending sales and we have a slight shortage in the homes under $300,000. We will be having a “Summer Surge” beginning June 15th with activities to increase production and have fun.
  Roseville/Granite Bay—Listing inventory is steady, while sales inventory is increasing. If only the REOs would do the same! The office saw two multiple offers and 16(!) ratified offers. There were only six open homes with very light traffic. Only one Previews-type listing. Same as before- we are playing the waiting game for more inventory.
• Sacramento Fair Oaks—REO/Short Sale activity is very high. The REO Agents are selling what they have left in inventory. Activity at the high-end is slow. The buyers are out there on a daily basis. It is keeping our Agents very busy showing property but losing out because of multiple offers and getting out bid.
• Sacramento Metro—The local marketplace is very good with inventory very low. The last four office tours have been great.
• Sacramento Sierra Oaks—Inventory is very low which is causing decreases in sales activity. There continue to be a ton of multiple offers on the $100,000 and below price range.
• Tahoe-Truckee—Inventory Summary: The listing inventory for the Tahoe-Truckee market increased slightly for the week. Currently, there are 2,045 active listings in the market - 1,423 residential properties and 622 lots/land listed for sale. Of the active listings, there are 124 properties listed as short sales which increased slightly, (6.1%) and 56 properties listed as REO sales, (2.7%). Based on the current inventory and sales year to date the market has roughly 9-months of inventory available. Sold Summary: On a year to date basis there have been 228 properties sold in the market as compared to 328 for the same period in 2008 which is (30.5%) reduction in sales. The median sales price for the properties sold YTD in 2009 was $428,850 while the average sale price was $573,071. For the same period in 2008, the median sales price was $509,000 and the average sales price was $731,217 which is a (15.7%) and (21.6%) reduction in price respectively. For the week of May 4th to 10th, there were 12 properties sold in the market with three above $750,000. Coldwell Banker was involved in five (5) of the sales. Pending sales for the week increased from 133 to 137. Activity Summary: Open house activity continues to be slow during this time of year in the Tahoe-Truckee area. Sales Associates are seeing increased buyer activity at all price points and especially on properties classified as short sales and REO’s. Coldwell Banker had four (4) properties go into escrow last week with one over $850,000. It is apparent that buyer interest and activity is picking up as there are continued great values in the market. Lake Tahoe and Truckee properties are priced well and present great opportunities for interested buyers. As the summer season approaches, we are anticipating more and more buyer activity.
• Vacaville/Fairfield—Have Buyers! Need Homes! We are experiencing a true seller’s market in Solano County for homes priced under $350,000. Our inventory is down and has a result, listings are receiving multiple offers within hours of hitting the market. Buyers and Agents are very frustrated because they are having a difficult time securing a home. One of the things that we are doing to improve is doing a better job at communicating with each other regarding new inventory. We have implemented a white board within the office where Agents can post “coming soon” properties. We are also focusing on aggressively going after short sales to create additional inventory for our buyers.

In short, it seems buyers are finally starting to get the sense that now is a good time to buy and that if they wait, they may loose out on one of the best times in California history to purchase real estate. Now, if we could just get more listings. What a difference a year makes…I’m still scratching my head. It’s an exciting time so make use of it!

Until next week,
Make it great one,


Bob Bronswick
President
Coldwell Banker Residential Brokerage Sacramento/Tahoe