It Was a Positive Week of News

I have to say, it was a positive week for our industry. It seemed everywhere you looked, the media was reporting on some sort of positive indicator relating to the real estate market rebound. Last week I posed the question, is it a blip on the screen or are we finally out of the woods. It seems this week, the answer to the question is much clearer.

For starters, Good Morning America ran a very good interview on Tuesday about the state of the housing market. Liz Ann Sanders, the Chief Investment Strategist for Charles Schwab was interviewed. Essentially what she said was that we are in the process of bottoming out and “you have to go through less bad on your way to good.” As I’ve said in my weekly updates, we’re seeing pockets of significant strength and the housing market is really showing signs of recovery.
Our industry was the first to be hit by the market downturn and if all continues on this path, we will be the first out.

Now if I’ve said it once, I’ve said it a million times. The turnaround won’t be happening overnight. We probably won’t see housing numbers start to appreciate anytime soon. But what we can relish in is Sanders’ conservative viewpoint that “we have to see less bad for a while before we start to see some real positive gains.” What we have right now is the bottoming out of our market. Speculators and investors are competing with first time home buyers. Those individuals are going to continue to gobble up the inventory—both REOs and regular, now much more affordable starter homes. As we see this inventory deteriorate (again, over time), we will continue to see that trickle into our mid-level and upper-end price ranges.

Also interesting to note this week was the Standard & Poor’s/Case-Schiller 20-city index was released and in it, home prices in May posted their first monthly increase since the summer of 2006. Prices rose from April in 13 of the metro areas tracked, notably Cleveland, Dallas, Boston and the Bay Area.

The news followed reports showing sales of newly built and existing homes rose in June for the third consecutive month. New home construction, though still weak, is the best it’s been since the fall.

Although the index is rising nationally and locally, I would caution that this doesn’t necessarily apply to homes across the board. For the most part, the local gains are reflected more in the low-end side of the market, though we are showing signs of improvement in the mid and upper end.

The 20-city home price index rose 0.5 percent from April to a reading of 139.8, but it was still 17.1 percent below the reading of 168.6 in May a year ago. It was the fourth consecutive month that the index indicated prices have turned the corner and are heading back toward positive territory.

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

• Auburn—Still having appraisal issues and need more listings.
• El Dorado Hills—The inventory level has remained very stable all year with around 355 active listings. The short sales have increased with 127 current short sales but only 19 REO properties. Properties are selling at around the 2002-2003 price point. Homes priced well are getting multiple offers and two Agents wrote offers this week on properties that had been on the market for 250+ days and now there are multiple offers.
• Elk Grove—Agents working with buyers are writing offers at a feverish pace. This week we had several go into contract. One Agent wrote 11 offers over the weekend!!! We are seeing more and quicker short sale approvals. Fall out rate has jumped a little with buyers using lenders that promise, but don’t deliver
• Placerville—Inventory in Placerville, like most of El Dorado County, is at a stable level with active listings under 200. Our short sale inventory has increased but we still have only 40 short sales and 17 REOs. The El Dorado County Board of Supervisors voted last night to approve proposition 90 for El Dorado County so homeowner’s will be able to transfer their property tax base from their existing county to a new home in El Dorado County. It should be great for our market when this takes effect.
• Roseville Granite Bay—Decreasing listing inventory, and steady sales inventory. No multiple offers this week, but we did have eight ratified offers. Ten open homes but fairly light traffic possibly due to the heat? Short sales and sales of new homes are up, up! We are waiting…. still…for the REO flood!
• Rocklin-Lincoln—Agents were pleased to hear that the “noise” we are making in regards to HVCC is being heard and one of the changes so far, is that they will be using appraisers local to that area.
• 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 Listings: The listing inventory for the Tahoe-Truckee market remained flat from last week at 2,379 active listings in the market - 1,687 residential properties and 692 lots/land listed for sale. REOs and Short Sales: Of the active listings, there are 142 properties listed as short sales, (6.0%) and 60 properties listed as REO sales, (2.5%). Overall, the Tahoe-Truckee market has less than 9% of its active inventory listed as a short sale or REO. Inventory: Based on the current inventory and sales year to date the market has roughly 24-months of inventory available. Sales Summary: Total Sales 2009 Vs 2008: On a year to date (YTD) basis there have been 446 properties sold in the market as compared to 544 for the same period in 2008 which is (18.0%) reduction in sales. For properties sold YTD 2009, 56 were REO’s, (12.6%), and 47 were Short Sales, (10.5%). For 2009, there have been 250 properties sold < $500,000, 147 properties sold between $500,000 and $1,000,000 and 49 properties sold > $1,000,000. Median and Average Sales Prices 2009 Vs 2008: The median sales price for the properties sold YTD in 2009 dropped to 451,500 while the average sale price is dropped to $571,622. For the same period in 2008, the median sales price was $515,000 and the average sales price was $723,707 which is an (12.3%) and (21.0%) reduction in price respectively. Last Week’s Sales: For the week of July 20th to July 26th, there were 18 properties which closed in the market with four (4) of those sold at a price above $750,000. This past week’s closings were down from the previous week. Pending Sales: Pending sales in the market increased to 174 which is slightly higher from the previous week. Market Activity Summary: Open house activity was fairly light last week. Coldwell Banker open houses yielded average to low traffic depending on the location. Sales Associates are continuing to see more buyer activity and more and more are writing offers than in the previous six-months. Coldwell Banker currently has over 54 homes in escrow which is 31% 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!

This week I’ll leave you with a few interesting articles from the week:

• http://www.bloomberg.com/apps/quote?ticker=SPCS20%3AIND
• http://sbk.online.wsj.com/article/SB124878477560186517.html
• http://www.usatoday.com/money/economy/housing/2009-07-28-home-prices_N.htm

Until next week,
Make it a great one,

Bob Bronswick
Coldwell Banker Residential Brokerage Sacramento/Tahoe

Existing Home Sales Up For Third Straight Month...The Question of the Day: Have We Bottomed Out?

Some are calling it the sign that we have hit bottom and are on our way back up. Others are calling it a blip on the screen. Whatever your take, NAR released Thursday its existing home sales report which showed three key, positive indicators regarding the housing sector:

• For the third consecutive month, existing home sales rose
• Inventory is easing
• Home prices declined less sharply in June

The report noted, “Existing home sales…increased 3.6 percent to a seasonally adjusted annual rate of 4.89 million units in June from a downwardly revised pace of 4.72 million in May, but are 0.2 percent lower than the 4.9 million-unit level in June 2008.

The report also revealed, “Total housing inventory at the end of June fell 0.7 percent to 3.82 million existing homes available for sale, which represents a 9.4 month supply at the current sales pace, down from a 9.8 month supply in May. Raw inventory totals are 14.9 percent below a year ago.”

The Wall Street Journal reported Thursday a look at 28 major real estate markets and where they are headed. The results (http://online.wsj.com/public/resources/documents/retro-HAGERTY.html) were interesting for Sacramento:

• A 43.3% decline in housing inventory (from a year ago)
• We are currently at a 2.7 month supply
• We’ve seen a 42% drop in price since the peak

What all of this leads us to believe is despite some of the challenges we continue to face nationally and globally, the domestic housing market continues to demonstrate signs of recovery. The temporary first-time home buyer tax credit is clearly helping people make a decision and is contributing to the overall stimulus impact.

Are we out of the woods yet? It’s tough to say but the signs are encouraging and three months of continued increases in home sales are a positive sign that we may be on the road to recovery.

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

• Auburn—We’re still having appraisal issues. REOs and short sales are on the decline and listing inventory is decreasing.
• Dixon Davis—No Inventory!!! Lots of buyers and no houses. Short sales and REOs want cash or conventional, so the 90% of the buyers with VA or FHA miss out. More inventory would help these buyers out. But I'm sure this is everywhere.
• El Dorado Hills—Sales are ranging from $93,000 to around $550,00 the last few weeks with several under $300,000. Prices continue to decline in the million dollar plus range. Lots of multiple offers and appraisals are a challenge. One agent says if he just keeps his head down, keeps working, doesn’t look at the sales board and continues to work out the diverse escrow challenges, transactions are closing.
• Elk Grove Laguna—Until we see an uptick in listings, every buyer will be fighting for property. With that in mind, average sales price has not yet increased.
• Sacramento Fair Oaks—No information reported.
• Folsom—Good solid week but not crazy like the first week or so of the month! Decent week for closings, listings and sales but still fighting some “agent attitudes” that need improving!
• Sacramento Metro—Lots of buyers out there just waiting for bank approval on short sales.
• Sacramento Sierra Oaks—No information reported.
• Placerville—Inventory remains stable and we have a slight increase in sales activity. Very few REOs. However, the sun is shining and Placerville continues to be a gorgeous area with a lot of wonderful opportunities for the buyer looking for a lifestyle change. Very important to work with a local agent. The history and stories of this area are terrific.
  Rocklin Lincoln—Still having appraisal issues and a very hard time with Ocwin. They do not return phone calls and they do not have utilities turned on in many cases. We had Rian from CAR political action at our meeting this week and it is very important that we respond to many of the bills that are being presented.
• Roseville Granite Bay—Short sales are moving although still long timeframes. Still need REO inventory as buyers wait patiently. Appraisal issues continue with new HVCC codes.
• Tahoe/Truckee—Active Listings: The listing inventory for the Tahoe-Truckee market increased slightly last week to 2,378 active listings in the market - 1,695 residential properties and 683 lots/land listed for sale. REOs and Short Sales: Of the active listings, there are 149 properties listed as short sales, (6.3%) and 56 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. Inventory: Based on the current inventory and sales year to date the market has roughly 22.6-months of inventory available. Sales Summary: Year-To-Date (YTD) Sold 2009 Vs 2008: On a YTD basis there have been 427 properties sold in the market as compared to 528 for the same period in 2008 which is (19.1%) reduction in sales. For properties sold YTD, 52 were REO’s, (12.2%), and 45 were Short Sales, (10.5%). For 2009, there have been 238 properties sold < $500,000, 143 properties sold between $500,000 and $1,000,000 and 46 properties sold > $1,000,000. Year-To-Date (YTD) Sales Prices 2009 Vs 2008: The median sales price for the properties sold YTD in 2009 is $460,000 while the average sale price is $572,036. For the same period in 2008, the median sales price was $515,000 and the average sales price was $722,601 which is an (10.7%) and (20.8%) reduction in price respectively. Last Week’s Closed Sales: For the week of July 13th to July 19th, there were 25 properties which closed in the market with seven (7) of those sold at a price above $750,000. This past week’s closing was up dramatically from the previous week. Pending Sales: Pending sales in the market decreased slightly to 160 which is slightly higher from the previous week. Of the pending sales, 29% are either a short sale or an REO property. Market Activity Summary: Open house activity was fairly light last week. Coldwell Banker held a moderate eight open houses with average to low traffic depending on the location. Sales Associates are continuing to see more buyer activity and more and more are writing offers than in the previous six-months. Coldwell Banker currently has over 48 homes in escrow which is 31% 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—At the risk of sounding like a broken record, our market activity is same stuff, different week. First time home buyers, move up buyers and investors are in the marketplace. For those who are fortunate enough to secure a property, the buyers are typically offering more than the asking price. Cash continues to be king, followed by FHA and then VA. With the offers higher than the asking price, appraisals coming in at value continue to be an issue. Numbers: Currently in Solano County there are: 749 active properties ~ 962 pending ~ 83 sold (7/16/09- 7/23/09) our absorption rate in Solano County for all price ranges is currently 1.4 months.

This week I’ll end with a few words of wisdom to our clients:

Pricing and presentation is vital in today’s market. Buyers are paying attention to new inventory and current price reductions so if you want your home to remain competitive in today’s market, you need to consider this fact. I urge you not to test the waters when you place your home on the market. You will prevail if you price your home competitively from the beginning and present it in its best light possible. Listen to your Agent! Once you do this, great opportunities abound.

Until next week,

Bob Bronswick
Coldwell Banker Residential Brokerage Sacramento/Tahoe

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