Reinvigorating the Housing Market

This week there were some exciting change of events going on with the government. Realogy (Coldwell Banker Residential Brokerage’s parent company) President Richard Smith met with legislators regarding a positive development for the real estate industry. Specifically, the Business Roundtable (an association of chief executive officers of leading U.S. corporations)— of which Richard is the chair—issued a set of recommendations for the White House and Congress that are aimed at jump starting the housing market in order to stimulate a broader economic recovery.

The Business Roundtable’s recommendations are as follows:

· Keep mortgage interest rates at historically low levels (below 5 percent) for at least one year;
· Expand the current First-Time Homebuyer Tax Credit incentive from the lesser of 10 percent of the purchase price of the home or $8,000 to a higher limit of either 10 percent or $15,000 for all homebuyers, remove the income restrictions and include all primary residence purchases for one full year;
· Conduct a thorough review of current foreclosure mitigation and loan-modification programs in light of rising loan-modification re-default rates;
· Make permanent the current temporary conforming loan limits; and
· Continue to review and strengthen government efforts already underway to review and refine mortgage lending practices.

We believe targeted, demand-side solutions—such as the ones Business Roundtable is recommending—will provide a critical next step for a housing recovery that will help create jobs and boost the economy as a whole. To obtain a copy of the Business Roundtable press release and its Housing Working Group’s detailed recommendations, click here. To read an article that appeared in today’s online edition of The Wall Street Journal containing an interview about the Business Roundtable’s recommendations and why they are crucial to jumpstarting the housing market, click here.

Please understand that the legislative process is often a long and winding road that is hard to predict, but at some point in the future, we expect to call on you to make your voices heard in support of any new legislation in Congress that would advance these recommendations. We will communicate with you as these legislative opportunities occur—but for now, just know that we appreciate your support and are proud to be part of this initiative.

In other news this week, RealtyTrac released its foreclosure findings with positive news that foreclosure filings dipped 6% in May compared with April. But the news wasn’t all positive as the number is still 18% above this time last year. Essentially one in ever 398 homes received a foreclosure filing last month.

Here in California, the picture continues to be a bit more bleak. We are ranked No. 2 out of 50 states in foreclosure filings with 92,249 total filings or one in ever 144 households. Our numbers, however, are on the decline with a decline from April 2009 to May 2009 earning a 4.5% drop but from May 2008 to May 2009 earning a 22.8% increase. For a complete look at the USA Today story that ran on the figures, click here: http://www.usatoday.com/money/economy/housing/2009-06-10-may-home-foreclosures_N.htm#chart.

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

• Auburn—Activity has been slow for the last couple of weeks possibly due to school getting out and graduations. Also, the uncertainty of the interest rates seems to be keeping people from jumping in. Many are still waiting for the next wave of REOs.
• Dixon/Davis—No information reported.
• El Dorado Hills— We had 10 sales this week ranging from $68,000 to $652,000. 1/3 of our inventory is short sales and we have less than 20 REOs.
• Elk Grove Laguna—Waiting for the wave. A lot of buyers cannot get property because of the tight inventory. There is by far more demand than supply.
• Folsom— Same story different day…under $350,000 is really moving, anything else is selling if it is priced at wholesale levels! Phones are ringing and open houses are well attended. Agents are writing offers but each transaction is a lot of work to get it closed!
• Placerville—Business is picking up with many walk-ins and finally some short sales are closing. Inventory is stable with very few short sales and REOs.
• Rocklin/Lincoln—Listing inventory is decreasing while REOs and short sales are also on the decline. We continue to have issues with appraisals.
• Roseville/Granite Bay—No information reported.
• Sacramento Fair Oaks—The local market of Fair Oaks and Carmichael , Orangevale and Citrus Heights has been increasing in sales and new listings. My Agents are really energized and are working extremely hard. The Agents that do not work short sales or REOs are doing very well working off of past clients sellers and buyers.
• Sacramento Metro—Local marketplace is good but not seeing much activity in the move up buyer.
• Sacramento Sierra Oaks—The inventory is very low.
• Tahoe/Truckee—Inventory Summary: The listing inventory for the Tahoe-Truckee market increased slightly last week to 2,177 active listings in the market - 1,552 residential properties and 625 lots/land listed for sale. Of the active listings, there are 132 properties listed as short sales which increased slightly, (6.1%) and 60 properties listed as REO sales, (2.8%). Based on the current inventory and sales year to date the market has roughly 7-months of inventory available. Sold Summary: On a year to date basis there have been 298 properties sold in the market as compared to 405 for the same period in 2008 which is (26.4%) reduction in sales. The median sales price for the properties sold YTD in 2009 is $450,000 while the average sale price is $575,163. For the same period in 2008, the median sales price was $515,000 and the average sales price was $721,017 which is a (12.6%) and (20.2%) reduction in price respectively. For the week of June 1st to 7th, there were only 10 properties which closed in the market with three above $750,000. Pending sales in the market remained constant at 140. Activity Summary: Open house activity for the past week was slow given the unseasonable rainy weather. Additionally, with graduation weekends occurring, visitor travel slowed. 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 and are seeing many offers on our listings. 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. Summer is right around the corner and we are anticipating more and more buyer activity.
• Vacaville/Fairfield— Same story as last week. We have buyers, now all we need is inventory. Agents are even door-knocking to find homes for buyers!

I did want to let you all know that I will take a brief hiatus from Weekly Market Watch next week but will return the following week with another robust edition.

Until next week,
Make it a great one,

Bob Bronswick
Coldwell Banker Residential Brokerage Sacramento/Tahoe

Showing Activity In the Entry Level and Mid-Level Markets Continues to Rise

Now that school is almost out, we’re finding many families are starting to look at homes in anticipation of getting settled prior to next school year. Showing activity, in many markets, has increased considerably.

Sellers are now getting their homes on the market and, in general, seem to be quite knowledgeable regarding staging and pricing. The homes in the entry-level market, for th most part, are moving well if they are in good condition and fairly and competitively priced. Several Agents whose clients’ listings are in the entry level market are reporting that they have had buyers lose out on homes in bidding wars. Could they be back? The competition for well priced homes in good condition is heating up and we are seeing multiple offer situations in most of our first time home buyer markets.

Though we have seen sporadic increases in the upper end market, it is still relatively slow on showings and closings but we do anticipate that that sector will loosen somewhat if the economic news continues to show some stabilization and an upswing.

Before I get into the week’s top news, what I would like to share is that LORE Magazine and The Wall Street Journal this week released their Top 400 list. You may view it online at http://online.wsj.com/ad/top400-articlecontinued.html. Many of our own Coldwell Banker Residential Brokerage colleagues we’re recognized within this coveted ranking and for that—along with all of their hard work and dedication—I salute them.

The most notable news this week was The Mortgage Bankers Association’s (MBA) release of is Weekly Mortgage Applications Survey for the week ending May 29, 2009. The Market Composite Index, a measure of mortgage loan application volume, was 658.7, a decrease of 16.2 percent on a seasonally adjusted basis from 786.0 one week earlier but was 14.4% higher than the same week a year ago. This increase is due, largely in part to the first time home buyer market which, as we know, has been vastly stimulated by a triple threat combination of low interest rates, the $8,000 first time home buyer tax credit and increased affordability. Together these incentives are finally getting buyers in the first time home buyer market off the fence and into the market which—once we get through the large number of REOs on the market—we should finally start to see some price stabilization.

But for those of you who are waiting for your homes to come back to their pre-recession values, be prepared to wait. A recent study that I read notes that real estate is now as affordable as its has been in the past 38 years (this of course relates to median homes when compared to median mortgage rates and incomes).

The fact is, the peak of unaffordability was in 2006, when an average family in the United States needed to spend 44% of their income to purchase an average single family home. Today, housing affordability in the United States is up to 73%. This means 73% of all new and existing homes sold in the first quarter of 2009 were affordable to families earning the national median income of $64,000.

A couple of other interesting articles of note this week:

- RISMedia’s First Time Home Buyers Grabbing Houses and Tax Credit (http://rismedia.com/2009-06-03/first-time-home-buyers-grabbing-houses-and-tax-credit/)
- Realty Times Multifamily Builder Confidence Up From Record Lows; Interest From Prospective Renters and Buyers Rises (http://realtytimes.com/rtpages/20090603_confidenceup.htm)
- Realtor.org Pending Home Sales Up For Three Months in a Row (http://www.realtor.org/press_room/news_releases/2009/06/phs_up)

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

• Auburn—No information reported.
• Dixon/Davis—Very very low inventory. Agents are working hard on short sales and waiting for more REO listings to come on the market.
• El Dorado Hills—Inventory is stable with closings ranging from around $120,500 to $850,000. Most new sales are ranging in the $200,000 to $500,000 range. Lots of multiple offers in that range. We have buyers coming in from out of the area. Some first timers and some who have been waiting out the market the last year or two.
• Elk Grove/Laguna—While the number of opens is a bit on the low side, the traffic counts remain high. Double digit traffic in all cases. Still the market driver on REO and short sales. The numbers of pendings have slowed due to lack of inventory and increased interest rates. Everyone, Agents and buyers, are waiting to see how the Tsunami of foreclosures will affect our market.
• Folsom—We’re finely getting quite a few listings this week, most were in the $400,000 - $500,000 range. 11 closings for the week was very strong for us. It’s a great market!
• Placerville—Appraisals are still an issue and we’ve seen a few sellers get “seller’s remorse” because they can’t find a new home to move to after their home is in escrow. Lots of really good land deals in desirable areas. Very few REOs or short sales.
• Rocklin/Lincoln—No information reported.
• Roseville/Granite Bay—We are looking for opportunities everywhere. Listing inventory and sales inventory is steady while short sales activity continues to bring in multiple offers.
• Sacramento Fair Oaks—The local market of Fair Oaks and Carmichael, Orangevale and Citrus Heights has been increasing in sales and new listings. My Agents are really energized and are working extremely hard. The Agents that do not work short sales or REOs are doing very well working off of past clients, both sellers and buyers.
• Sacramento Metro—No information reported.
• Sacramento Sierra Oaks—The inventory is very low. Most of our business is REO and short sale.
• Tahoe/Truckee—Inventory Summary: The listing inventory for the Tahoe-Truckee market currently stands at 2,152 active listings in the market - 1,532 residential properties and 620 lots/land listed for sale. Of the active listings, there are 128 properties listed as short sales which increased slightly, (5.9%) and 61 properties listed as REO sales, (2.8%). Based on the current inventory and sales year to date the market has roughly 8-months of inventory available. Sold Summary: On a year to date basis there have been 287 properties sold in the market as compared to 390 for the same period in 2008 which is (26.4%) reduction in sales. The median sales price for the properties sold YTD in 2009 is $450,000 while the average sale price is $575,558. For the same period in 2008, the median sales price was $511,150 and the average sales price was $720,726 which is a (12.0%) and (20.1%) reduction in price respectively. For the week of May 25th to 31st, there were 21 properties sold in the market with five above $750,000. Pending sales in the market remained constant at 140. Activity Summary: Open house activity for the past week was slow given the unseasonable rainy weather and the post Memorial Day weekend. Additionally, with graduation weekends occurring, visitor travel slowed. 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 35 homes in escrow and are seeing many offers on our listings.
• Vacaville/Fairfield—Same story…we have buyers, now all we need is inventory. This week we have had three failed sales due to appraisal issues. Each were “regular” sellers and we just could not get the value on the properties so therefore buyer/seller killed the deal.

I’d like to leave you with this. It is an excerpt of an article I found online that I think really should get us all thinking. As I visit our offices, what I hear from most is that things are changing and I think many of us agree—at least as far as the housing market is concerned—it seems we are on the path to recovery. Having said that, there are some buyers and sellers out there who continue to wait. For those of you (and you know who you are), please read on:

“…If you're a buyer, buy because you love what you're buying. Buy because the lifestyle you're looking to live can more easily be accomplished with the purchase than without. If you're selling, sell because you want to sell. Sell because you need to sell. Sell because your neighbor is driving you crazy. Sell because the house you've always had your eye on just hit the market. Sell to move up in the market. Sell to downsize. Sell to liquidate, but if you really want to sell, just sell already. If you're waiting to sell until markets rebound, please realize that doesn't mean to list in October. That means you'll be listing several years down the road, and the reason you were planning on selling in the first place might not exist at that magical time in the future. None of us are promised today, let alone tomorrow. Let alone 6 years from now when you can possibly sell your home for 15% more money.

If you're in no hurry to sell, do your neighbors a favor and take your home off the open market. If you're wanting to sell, be realistic in your asking price and aggressive in your hunt for a buyer. If you're a buyer, John Burns seems to be telling you that it's a pretty good time to buy. I'm telling you it's a good time to buy, and my reasons are not the same as Mr. Burns'. Buy because you want to. Buy because you can. Buy because you know the purchase will make you look like a real estate savant 15 years from now. Welcome to 2009 and the new rules of real estate. Sell low, hopefully buy lower.”

And with that, I’ll bid you adieux.

Until next week,
Make it a great one,


Bob Bronswick
Coldwell Banker Residential Brokerage Sacramento/Tahoe