A Rebounding Market

This week a Realty Times article provided some insight into a rebounding market. Here are the highlights:

• Pending home sales rose sharply, by nearly 7 percent, in the last month measured by the National Association of Realtors.
• Pending sales were up in all four major regions of the country—and that caught the attention of some key industry economists.
• Orawin Velz, economic forecaster for the Mortgage Bankers Association, said in a commentary that "the steady improvements in pending home sales are encouraging," and confirm the view that existing home sales hit their cyclical bottom in January and are likely to continue to rise in the coming months.
• Since the January low point, she noted, the Realtors' pending sale index is up by 13 percent.
• Mortgage rates continue to be favorable, an average of 5.3 percent last week for 30 year fixed rate loans, 4. 8 percent for 15 year fixed, and those rates are pulling in growing numbers of home purchase loan applications.
• According to the Mortgage Bankers Association's weekly survey, new applications to buy houses increased by nearly 7 percent in the week ending July 3rd.

My overall assessment of the market is that while we are still seeing challenges out there, the market continues to show some encouraging signs. The fact is, we’ve seen the low-end of the market doing well for a while, but its starting to cascade to other segments of the market. We’re starting to see more activity and interest in the move-up market and luxury market.

There appears to be growing consumer confidence from buyers, perhaps as the stock market has stabilized and real estate is showing improvement. Also, buyers in our offices are telling us that they believe that the market overall is starting to recover and they don’t want to miss out on the buyer’s market.

Now let’s take a look at this week in real estate:

• Auburn—No information reported.
• Dixon/Davis—No information reported.
• El Dorado Hills—Inventory remaining steady. Most sales are in the $200k to $600k range, very little activity in the million dollar plus. Several appraisals have come in quite low and we've lost a few transactions.
• Elk Grove Laguna—No information reported.
• Folsom— Crazy market. Average price is inching up but the majority of sales still being in the under $300,000 range. Floor seems to be good; Open Houses traffic is still strong and for Agents that are willing to work, the business is there!
• Placerville— Average activity on all sales prices. Inventory is stable, very few REO or Short Sale opportunities. Two appraisals came in very high, that's a change, and one seller asked to increase the sales price. Agents that are working very hard are staying very busy.
• Rocklin/Lincoln—No information reported.
• Roseville/Granite Bay—No information reported.
• Sacramento Fair Oaks—The buyers are still out there looking and writing offers but the inventory is very low. Actually the median price has risen this past month because of the low inventory. It is still a great time for the buyers to pursue buying and a great time for real sellers if thinking of upgrading to a larger home is a great opportunity.
• Sacramento Metro—Market seems to have slowed a bit. Listing inventory is decreasing and sales inventory is steady.
• Sacramento Sierra Oaks— We are experiencing a LOT of activity but with STRONG competition. Indications hold true that our inventory is light and really picked over. There a lot of Buyers (knowledgeable) and surprisingly a lot that do not have a working relationship with a Realtor. Opportunity abounds, but business is not coming easily.
• Tahoe/Truckee— Inventory Summary: The listing inventory for the Tahoe-Truckee market increased slightly last week to 2,334 active listings in the market - 1,668 residential properties and 666 lots/land listed for sale. As we approach the busy months of summer more Sellers are placing their homes on the market for sale. Of the active listings, there are 140 properties listed as short sales, (6.1%) and 57 properties listed as REO sales, (2.4%). Overall, the Tahoe-Truckee market has less than 9% of its active inventory listed as a short sale or REO which is dramatically less than many markets outside of the area. Based on the current inventory and sales year to date the market has roughly 28-months of inventory available. Sold Summary: On a year to date basis there have been 386 properties sold in the market as compared to 493 for the same period in 2008 which is (21.7%) reduction in sales. For properties sold year to date, 47 were REOs, (12.2%), and 40 were Short Sales, (10.4%). The median sales price for the properties sold YTD in 2009 is $456,475 while the average sale price is $565,662. For the same period in 2008, the median sales price was $517,500 and the average sales price was $733,067 which is an (11.8%) and (22.8%) reduction in price respectively. For the week of June 29th to July 5th, there were 25 properties which closed in the market with seven (7) above $750,000. This week’s closing was a 47% over the previous week and the single highest week of closings in the past four months. Activity is definitely picking up. Pending sales in the market decreased slightly to 150 which is a 6% reduction from the previous week. Activity Summary: Open house activity is definitely picking up as more and more visitors are coming to the Tahoe-Truckee market. Over the 4th of July weekend we held 25 open houses with average to good traffic depending on the location. Sales Associates are seeing increased buyer activity and more and more are writing offers than in the previous six months. Coldwell Banker currently has over 40 homes in escrow which is 27% of the pending escrows. Lake Tahoe and Truckee properties are priced at levels we have not seen in five years and coupled with today’s low mortgage rates present great opportunities for interested buyers. Now is the time to buy!
• Vacaville/Fairfield— Solano County is still experiencing a robust market in most price ranges. According to N.S.C.A.R. Solano County statistics; our median home price has dropped 37% in the last 12 months to $184,950. Our sales volume has increased 40% to 652 units in June 2009. Currently our average days on market is 50 days and declining. Going forward, currently 993 REO properties on the market, 2,403 Bank Owned “NOT” on the market and 3,082 NOD Notices filed.

Regardless of the market or the reason behind the recent upswing, things are starting to pick up throughout Northern California. It seems buyers are finally starting to get the message that we may have hit bottom and, as buyers take action, we’re slowly but surely working our way into a transitioning market.

It’s been a challenging ride but what we have to look forward to is exciting. Prepare. The coming months and into 2010 are going to be an exciting ride.

Make it a great week,

Bob Bronswick
Coldwell Banker Residential Brokerage Sacramento/Tahoe