Thursday, February 23, 2006

January home sales

January is traditionally an opportune time for agents to schedule their vacations, make up for lost family time or work on their business plan for the coming year. Many home buyers and sellers are recuperating from the busy holidays and the weather isn’t all that inviting. No one expects January to be a good sales month but no one was expecting it to be the slowest January since 1997 either.

Over the years, monthly year-over-year sales activity has generally increased along with an increase in the average selling price. Monthly year-over-year sales may increase for many reasons, but in El Dorado County the increase is attributed to the increased supply of homes. If you haven’t noticed, we have a few more homes along the 50 freeway than when you moved here. A slight decline in monthly sales was anticipated as a normal adjustment. A nine year low wasn’t.

The higher price of an average county home is partly responsible for the decrease of sales activity. The average price for one of the 119 homes sold last month was $572,500. It was the highest average price ever, according to the El Dorado County Board of Realtors and 9.5 percent higher than January of 2005. The reported monthly sales, however, were 35 percent below this time last year.

Although there are few signs of home prices falling below last year’s level, buyers in El Dorado Hills may be reaching their price point. In January of 2005, 57 buyers paid an average of $777,000 for a home in that zip code. This January, with 340 homes currently for sale, 35 buyers paid an average of $716,500. Cameron Park reported only 14 monthly sales of the 150 homes listed but the average selling price increased from $437,000 reported in January of 2005, to $506,000 last month.

In addition to El Dorado Hills, Shingle Springs contributed to the county’s highest monthly average price. With only 40 homes for sale the area reported 6 sales with an average price of $744,000. The greater Placerville area currently has about 100 homes for sale. Only 12 sold during January, with an average price of $467,500 which was 19 percent higher than the same month a year earlier.

Last month’s wet and snowy weather may have discouraged home buyers from making offers on properties in Camino/Cedar Grove and Pollock Pines/Sly Park. The total number of sales for the four communities was an anemic 8 from the 136 homes currently for sale.

The Cool/Pilot Hill area was one of the more active regions for the month. The area reported 10 sales on an inventory of 60 properties with an average selling price that jumped 45 percent from an affordable $355,000 last year to $517,000 this past month.

Vacant land sales last month declined by half from a year earlier. Only 28 parcels were reported sold. Limited availability of good parcels, the nearly prohibitive cost of building permits and fees and an average selling price of $321,000 is discouraging buyers from making offers.

The excess number of new listings coming on the market in light of the reduced monthly sales activity should be a concern to sellers and their agents. New listings for last month were 93 percent higher than January of 2005. It was the highest number for any January or February in recent history.

The county’s average home price is rising despite the increased housing inventory and declining sales. Our price creep is likely the result of fewer lower priced sales and not a corresponding increase in value of all homes. A rising tide may lift all boats provided they are in the water. Most homes priced below $350,000 are not offering quality or desirability.

El Dorado County remains a destination for those who can afford to live here. Our housing market is not job dependent as Sacramento or western Placer County. We are not an appealing housing market for first time home buyers and we have limited service and retail sectors. Fewer but higher priced housing sales may become the norm as our market continues to transition. July of 2005 was the peak of a prolonged 5 year market expansion. January hopefully was the bottom.


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