Speculators infulence market

Speculators who have been partly responsible for housing's wild ride over the last few years could be responsible for the sector's demise if they all at once decide to cash in their chips.
So far, housing is cooling off "in an orderly fashion," and David Seiders, chief economist of the National Association of Home Builders, thinks it will continue to slow at a gradual pace. But that hasn't stopped him from warning things could turn ugly if speculators dump their holdings, or if rates spike on the so-called exotic mortgages that also have had a hand in the record number of new and resale houses.
"If you are looking for a trigger, that would be it," Seiders said at the NAHB's annual convention in Orlando earlier last week. "If there is a sudden unloading by speculators, or if interest rates go up by more than a few points, it could spark a quick reversal."
The wild card is that no one knows for certain exactly how many houses were snapped up over the last four or five years by investors looking for quick capital gains. Estimates suggest that as many as four out of every 10 purchases in some places were by investors, some of whom Seiders believes are depending solely on appreciation to float their boats and are not even renting their units.
Seiders painted a rather scary picture of what could happen if speculators pull out of the market as quickly as they swooped in. Such a scenario could "provoke sizeable house price declines, cut into housing equity and provoke a snapback in the personal savings rate that would seriously cut consumer spending," he told the convention.
Actually, builders have been concerned about the rise in speculative buying for the better part of the last 12 months, and some have gone to great lengths to stop it. For the most part, those who don't want investors in their communities will sell only to owner-occupants, refuse to allow sales contracts to be "flipped" to other buyers prior to closing and/or prohibit resales within the first year of ownership.
But a smaller percentage has taken even stronger steps. Some require that they be given the right of first refusal on all resales within the first 12 months of ownership. Others prohibit rentals for a year under a penalty of up to $50,000. Some limit the number of investor sales, and some go so far as to sell only one house to someone with the same last name.
Despite these precautions, however, the issue has made its way onto the list of single-family production builders' Top Ten concerns because they fear their markets could be "rocked" if prices stop rising and what they call "hidden" inventory comes back on the market all at once or too quickly.
And No. 10 on their list of worries is that rates on the unconventional forms of adjustable-rate mortgages will rise enough to force investors' hands. While they seemed to have had no qualms about Interest-only loans and pay-option ARMs when they were the seller, they are now concerned that such financing vehicles "promote investor buying instead of real home ownership."
The markets that are said to be the most vulnerable to an investor-induced downturn are those with the highest share of such buyers. According to Loan Performance, a San Francisco company which studies the mortgage market, the share of second home and investor purchases has been between 31 percent and 39 percent in eight metro areas -- Las Vegas, San Francisco, West Palm Beach, Phoenix, Tucson, Orlando, Honolulu and Monterey. In the Capital Region it has been estimated that nearly 20 percent of all home sales have been made to investors and speculators. Let’s hope they all don’t decide to sell at once.

New home sales fall hard in region

New home sales were down during the fourth quarter all over the Capital Region. So was the median new home price.
In El Dorado County new home sales were off 76 percent from the same quarter a year ago. In Placer County sales were off 58 percent and in Sacramento County new home sales were down 56 percent. The Gregory Group that keeps track of new home sales activity found only 1,569 homes sold during the last three months of the year. It was the slowest quarter since they began tracking monthly sales in 1999.
The median price of a new home in the region dropped slightly to $456,619 from the previous quarter but sales prices were still 19 percent above the median last year. In addition to incentives builders are finally dropping their prices. It was a good sign for buyers but a sign of caution for those involved in the construction industry.
Look for builders to back off building homes priced over $600,000. Builders will shift price ranges in order to attract more first time buyers. More emphasis will be placed on building on smaller homes on smaller lots along with the recent trend for condos, townhouses and patio homes.
Now is an excellent time for buyers to make a deal on a new home. However, don’t visit the new development without your agent.

Thoughts about solar

Our electric bill averages $275 a month. That might be considered high but we have a large home, (with 75 windows and 5 glass sliders doors) and both of us work out of it. Vicki is running a potter’s kiln half the time at temperatures between 1,800 and 2,600 degrees and then I have all my office equipment plugged into some socket. We have taken all the usually energy conservation steps, ceiling fans, the whole house fan and very limited use of the AC but just can’t seam to get a PG&E bill lower than $250. I have looked at spending $25,000 on a solar energy system but I am not convenience that it is worth the initial investment. Now, it appears that solar may be worth another look.
Pushing California's status as a trend-setting progressive policy state, California's Public Utilities Commission, by a vote of 3 to 1, approved the $3.2 billion "California Solar Initiative".
Among its provisions is a subsidy program that will pay hundreds of thousands of home owners a third of the cost of a solar system large enough to supply all of a home's electricity needs.
The initiative's funding is enough to help finance solar systems on 1 million buildings statewide, commercial, public and residential, by 2017. That's equal to more than 3,000 megawatts of electricity, the generating capacity of six power plants and enough juice to serve 2.3 million people.
Funded by an average $1.10 increase in monthly utility bills, the program comes with a big piece of sunshine for home owners -- a $9,000 rebate on a $27,000 home solar power generating station.
The $27,000, before federal tax credits and other incentives, is the going price to install a flush-mounted, rooftop, 320-square-foot photovoltaic (PV) 3 kilowatt residential solar system generating enough electricity to zero out the electricity bill of a 2,500 square foot home, according to Tom McCalmont, chief engineer at REGrid Power in San Jose, CA.
Solar powered homes remain wired to the grid for extended periods of gray days or when battery-stored power dwindles. Home owners must still pay a connection fee and the costs of maintenance and upkeep, but the electricity bill virtually vanishes.
"It nets out to a zero. You run positive in the summer as the meter runs backward and negative in the winter (when there's less sun), but it nets out to zero," said McCalmont.
The new initiative effectively solidifies the cash benefit for the next 10 years, thrusting the solar-powered home to the forefront as another icon of the California lifestyle. California gets more sunshine days than any other state except Arizona, according to the National Weather Service.
Home owners in some jurisdictions still will have to overcome the prohibitively high cost of solar permits which can tack more than $1,000 onto the cost of a solar system, but the expected boost in demand for sun power will help lower the cost of solar systems already down 50 percent in the last 10 years.
Another issue, will be to see if home buyers will spend thousands of dollars more to buy a home that has no electric bill? If not, sellers who pay the price for conversion to solar will not recapture their investment if they sell too soon.