“The patient is out of intensive care, but still has a very long road ahead to a clean bill of health.”

Those were the words last week from Fannie Mae Chief Executive Officer Michael Williams. The CEO went on to say, “Anyone looking objectively at the economy and the housing market sees hope.”

Another good solid indicator of what I’ve been saying in my weekly updates. The U.S. housing market still has a long road ahead but we are making some definite moves towards a housing recovery. So what’s the challenge? Well for starters, rising unemployment numbers aren’t helping. The United States Department of Labor reported in its September 4 Economic Situation Summary that the number of unemployed persons increased by 466,000 to 14.9 million and the unemployment rate rose by 0.3 percentage point to 9.7%. Just to give you an idea, since the recession began in December 2007, the number of unemployed persons has risen by 7.4 million, and the unemployment rate has grown by 4.8 percentage points.

We also need to couple that with the challenges in the mortgage industry. Bloomberg reported, “The mortgage market is still dependent on government-affiliated programs, with private banks providing just 10 percent of loan liquidity, down from about 60 percent in 2006. Fannie Mae and Freddie Mac are responsible for about 70 percent of all new mortgages, while the Federal Housing Administration accounts for about 20 percent.”

Before we can be truly reformed, we need to get into a position where there is more of a balance between private bank loans and Fannie Mae and Freddie Mac loans. In all actuality, we probably won’t see that for some time.

Having said that, U.S. mortgage applications surged last week with demanding rising to its highest level since late-May as consumers sought to take advantage of the lowest interest rates in months, according to Reuters.

The Reuters article reported, “While home refinancing loans dominated demand, the appetite for applications to buy a home, a tentative early indicator of sales, hit its highest level since early January. The overall trend bodes well for the hard-hit U.S. housing market, which has been showing signs of stabilization.”

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications which includes both purchase and refinance loans, for the week ended September 4 increased 17.0 percent to 648.3, the highest level since the week ended May 29.

These are all very positive indicators that showcase that we are on the right track…it’ll probably be a slow track…but we’re on the right one.

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

• Auburn—The energy of the Agents is amazingly positive even with the challenges of this market. A couple of the Agents attended the Buffini workshop and said that Brian Buffini used the analogy of the Rocky movie with the scene where Rocky’s face is bloody and swollen and said that is where we are in the market today and having come through this we just need to hang in there and we will survive.
• Elk Grove—For the month of August there were a total of 254 closed sales. Of these, 50.4% were REO, 23.2% were short sales and the remaining 26.4% were traditional sales. It goes without saying that with 75% of the business in the hands of lenders either releasing inventory or approving a short sale, Agents need to work extremely hard for every deal.
• Folsom—The market is crazy but very frustrating to both the buyers and the Agents!! Agents are getting a lot of practice writing offers, but difficult to get into escrow! Floor time is good and open houses are still a good place to meet buyers. Sellers in the higher priced properties are getting some lookers, but still quite slow.
• Rocklin-Lincoln—Still not enough inventory but we have two new Agents that have been in the business for a month or less and each have a pending sale. We have qualified buyers but not enough in the under $300,000 inventory.
• Roseville-Granite Bay--We're seeing many short sale offers though overall, sales activity is decreasing. Activity on listings above $750,000 is very slow.
• Sacramento Sierra Oaks—The inventory is very low. A LOT of “frustration” from the Agents in getting appraisals and loans. The whole process is getting bogged down and taking a lot longer.
• Tahoe-Truckee— Inventory Summary: nnActive Listings: The listing inventory for the Tahoe-Truckee market went down 2% for the week to 2,269 active listings - 1,587 residential properties and 682 lots and land listed for sale. REOs and Short Sales Active Listings: Of the active listings, there are 159 properties listed as short sales, (7.0%) and 63 properties listed as REO sales, (2.8%). Overall, the Tahoe-Truckee market has less than 10% of its active inventory listed as a short sale or REO. Months of Inventory: Based on the current inventory and sales for the previous 30-day period, the market has roughly 17-months of inventory available. Lots to choose from if you are a buyer! Sales Summary: Last Week’s Sales: For the week of September 7th through 13th there were 22 properties which closed in the market which is half of what closed the previous week. Of the properties sold last week, two (2) of those sold at a price above $750,000. Of last week’s sales, Coldwell Banker was involved in 13 of the transactions, (6 listings sold and 7 buyer sales). Pending Sales: Pending sales increased to 225 properties from the previous week. This is yet another indication of buyer interest in Tahoe-Truckee real estate and the increased affordability of our homes. Market Activity Summary: Open house activity has slowed along with the visitor activity in the area. However, the level of buyer interest and offers on homes has remained brisk given the motivation of buyers to secure great deals in the market and motivated sellers who want to sell before the winter. Coldwell Banker currently has over 59 homes in escrow scheduled to close in the next 30-60 days
• Vacaville-Fairfield— Our current active inventory for Vacaville is 370 active listings. Of those 171 are “Contingent Show” (a sub category of our MLS system) and 199 are available for an offer. Since 9/1/09 219 are Pending and 42 are Sold. All of our listings that are priced correctly up to the $375K range are receiving multiple offers. Our Agents are out pounding the pavement looking for inventory. They are busy educating the public that now is a great time to sell and buy.

I did want to let you all know that I will be taking next week off of Weekly Market Watch but I will return the following week with another robust edition.

Until then,

Bob Bronswick
Coldwell Banker Residential Brokerage Sacramento/Tahoe