“U.S. Economic Recovery on Track”

While we await the results of the possible expiration, extension or expansion of the $8,000 first time home buyer tax credit, one thing is for sure, the economy is moving forward in full force—which is driving consumer confidence. Earlier this week, Reuters.com ran a very interesting story on the U.S. economic recovery and the result was very encouraging. Among the story’s highlights:

• “The U.S. economy is firmly poised for a recovery from its deep recession but growth may be moderate and the job market will not revive immediately, senior White House aide Lawrence Summers predicted on Wednesday.”
• “On the economy, Summers said the $787 billion stimulus package and inventory rebuilding by businesses were among the “dominant drivers” lifting the economy.”
• “It will be some time before unemployment starts to decline. Once it declines it will take a long time to return to normal levels, given how elevated it is…The jobless rate is now at a 26-year high of 9.8 percent.”
• “Most private economists think the recession, which began in December 2007, ended in the third quarter. But there is much disagreement about the path to recovery.”
• “Some see above-average growth continuing through next year, arguing that deep recessions are typically followed by powerful recoveries, helped along by pent-up demand as consumers and companies resume spending.”

Obviously this is welcome news for the economy which ultimately benefits the local housing market. What I can tell you is that I am encouraged by the progress we are making in the real estate market. We’re beginning to see more days of progress than days of back stepping. We’re watching sales activity and consumer sentiment and we are expecting over the coming months a moderate to a more sustainable pace and we will probably see a modest rise in housing prices in the coming year. Will it be the double digit appreciation we saw in the earlier part of the decade? Probably not. But this new normal (as we’re calling it) is much more sustainable and a much healthier path to build upon. It makes me excited about the future and gives us all hope for a relatively modest and productive 2010.

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

• Auburn--Most short sales are showing as contingent and we need some new listings. The buyers are still waiting for the next surge of REOs and we are using the information provided by the economic report from CAR to show them they should act now. We have gotten a few very good leads from floor. We are also in our 2nd week of the 100 days from Buffini.
• Dixon-Davis--Since we have not had any changes in the last few months I ask for quotes from my Agents to see how they are dealing with our market here is one of them: In doing the research for Coldwell Banker’s "Move up Marketing Program,” I am finding that a great number of homeowners do have equity that they can use to purchase another property that better suits their needs or buy property as an investment. In this time of short sales and REOs it is great to see that there can be some "regular" sellers. All we need to do is go to work and let them know of the great opportunity that exists now. It is Real Estate 101. Door knocking and putting your face and name out there. Marianne MacDonald
• El Dorado Hills-- Inventory continues to drop with only 329 active listings. Our high last year was over 450. Over 1/3 of the actives are short sales and 2/3 of those have offers waiting for bank approval but the REO’s make up only 5% of our market.
• Elk Grove--For September 2009 in the 95624 Zip Code, there were a total of 77 closed sales approximately 43% REO, 27% Short Sales and 30%(28% August) conventional sales. Average sales price was $250k ($230k August) for conventional sales vs. $232 for REO/Short. For 95758 there were 77 sales with approximately 47% REO, 24% Short and 29%( 25% August) conventional sales. While conventional sales average price was $240k, REO’s were $218k and Short Sales were $194k. For 95757, there were 69 sales with 55% being REO, 20% Short Sale and 25% (no change from August) conventional sales. Again, average sales price for conventional sales was considerably higher than REO and Short Sales with averages of $280k, $267k and $247k. The 3 zips combined: 240 closed sales with approximately 47% REO, 24% Short Sales and 29% conventional sales (26% August). From all this, it appears that we are starting to see more conventional sales with average sales prices higher on these sales in 95624 and lower in 95757 and 95758 month over month. No clear trend in sight.
• Folsom--We are looking for more listings! Every week we sell our good listings but we are not replacing our inventory! Closings are strong so we are paying the bills, new escrows are being opened so the pipeline is good, and agent attitude is for the most part good. So, I think the last quarter of 2009 will be the start of a better year in 2010!
• Placerville--We continue to get walk ins nearly every day from all areas. Inventory is “skinny” and good deals go quickly. Inner office networking is paying off and we’re double ending many of our listings.
• Rocklin/Lincoln--Loans are the challenge. It took a week to fund a loan on what should have been a “slam dunk.” We were to fund on Monday but a review of the credit report showed two social security numbers. It turned out the one number was from her ex husband and they had been divorced for 15 years. On top of that there was nothing derogatory but the lender demanded a copy of the divorce decree and then when that was submitted, the lender said they needed proof of the notary being an employee of Old Republic Title and that person had to supply 2 current pay check stubs.
• Sacramento Metro--Inventory in our core areas continue to be 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--Active Inventory Summary: Active Listings: The listing inventory for the Tahoe-Truckee market went down slightly again to its lowest level since May of this year to 2,083 active listings - 1,423 residential properties and 660 lots and land listed for sale. Active Listings - REO’s and Short Sales: Of the active listings, there are 167 properties listed as short sales, (8.0%) and 68 properties listed as REO sales, (3.3%). While less than 12% of the active listings are short sales and REO’s, roughly 25% of the properties selling are short sales and REOs. Sales Summary: Last Week’s Sales: For the week of October 12th to October 18th there were 37 properties that sold which was the largest single week of sales in 2009. Of the properties sold last week, nine (9) of those sold at a price above $750,000. Coldwell Banker was involved in 12 of the properties sold. Pending Sales: Pending sales decreased once again to 191 properties from the previous week.
• Vacaville-Fairfield--For Solano County we have 1450 active single family homes. 1004 Pending Sale and 245 single family homes have closed escrow in the last 22 days. The lowest selling price as $60K and the highest was $1,556,500. Homes that were on the market 0-30 days sold at 102.68% of their list price and the average days on market to close of escrow is 63 days. As you can deduct from our numbers we are in a robust market with no signs of slowing down.

This week I’ll conclude with a few articles of interest:

• What Housing Bust?; CNN Money

• Housing Tax Credit Working, So Keep Momentum Going, NAR Urges Congress; Realtor.org
• Shape Of The Housing Recovery; CNBC
• Real Estate Outlook: Mixed Signals; Realty Times

Until next week,
Make it a great one,

Bob Bronswick
Coldwell Banker Residential Brokerage Sacramento/Tahoe