Home ownership rate declines

More people own their own homes than in any time in history. More minorities own their own home than ever before. In California, a record number of resident aliens with work-permits own their own home. That said, higher home prices and rising mortgage interest rates may be taking their toll on the nation's home ownership rate.

The U.S. Census Bureau said recently the rate of home ownership was 69 percent in the fourth quarter 2005, down from the record 69.2 percent set in the fourth quarter in 2004.

It's the first time since 1994 that the rate (not the number) of home ownership at year's end hasn't increased from the previous year and the third quarter in a row that the rate hasn't posted a year-over-year gain.

The post-World War II economic and housing boom that gave rise to the suburbs fueled a steady climb in overall home ownership rates from 55 percent in 1950 to the record 69.2 percent in 2004.

By the end of the third quarter of 2004 home prices had risen more than 14 percent nationwide, according to the Office of Federal Housing Enterprise Oversight. Prices rose another 12 percent a year later, by the third quarter of 2005.

During the past five years when home prices rose a total of more than 55 percent, the 12.05 percent year-to-year increase by the third quarter 2005 was the smallest increase -- revealing the housing market is currently losing some of its luster. Rising mortgage rates are making it more difficult to own already expensive housing.

On February 23, 2005 Freddie Mac's Weekly Mortgage Market Survey put the average fixed interest rate on 30-year conforming loans at 6.26 percent, up from 5.69 percent during the same period last year. Adjustable rate mortgages are up substantially too. During the same period five-year ARMs averaged 5.96 percent compared to an average 5.05 percent a year ago.

In some instances, interest rates are rising faster than home prices are falling and that's offsetting the potential for greater affordability that comes with falling home prices.

Home ownership rate was highest in the Midwest at 72.8 percent, followed by the South at 71.1 percent. The Northeast at 65.4 percent and the West, at 64.6 percent were lowest. California, Hawaii, Massachusetts and New York are among the states with the lowest rates of home ownership; Alaska, Delaware Michigan and West Virginia are among the states with the highest rates.

Have a nice weekend. I will be taking a loan application on Saturday and having an open house on a new listing in Cameron Park on Sunday. If you want to preview the new digital technology that I now use to feature my listings, go to my web site at www.kencalhoon.co and click on Featured Listings and Virtual Tours. If you know someone who is looking for an affordable home in El Dorado County, please forward them the link. Thanks.

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.

Mandatory flood insurance for Sacramento?

A few years ago I was working with a young couple who were attempting to purchase their first home in the Pocket Area. The home was off of Riverside Drive which was appropriately named since the Sacramento River is adjacent and held in place by levees. My clients didn’t have a lot of money for a downpayment and with other monthly obligation were stretching to qualify for a loan. Since the property was in a 100-year flood plane, flood insurance was required by the lender. The high cost of the premium figured into their monthly payment and nearly derailed the deal.

Now a local Sacramento legislator wants to make flood insurance mandatory for every home and business owner in the Central Valley. Assemblyman Dave Jones recently introduced legislation to require every household and business in Sacramento to carry flood insurance if their property is located in a 200-year flood plane which includes all of the Central Valley. Although well intentioned, requiring home owners to spend an additional $400 to $500 a year for a state flood insurance program will impact property values and sales. It will also be a boom to real estate attorneys specializing in litigation against sellers who fail to disclose to buyers issues that may affect a home’s desirability.

If we are going to require flood insurance for every home located within a 200-year flood plane why not require earthquake insurance for every home that could be affected by an earthquake? Why not require mudslide insurance for every home that could be affected by mudslides or radon gas insurance or mold or termite insurance for every possible contingency regardless of how remote. Well, you get my direction here.

If homeowners want to purchase flood insurance, so they should. Another new law requiring it as a condition for all loans in the state that has an address lower than 300 feet in elevation will be a boom to home values in the foothills having no such requirements.

Residents of Placer and El Dorado County should get on the Dave Jones bandwagon and support yet another reason why homes are not affordable in California. The cost of flood insurance after Hurricane Katrina is going up and insurance policy holders, who pay the premiums, will be paying for that mess. Dave Jones should allow individual homeowners to make the decision on flood insurance not the state.

The terminator (Austrian Oak) recently proposed $9 billion in general obligation bonds for flood control and water improvements. Homeowners and businesses in the Central Valley should not pay for the cost twice.

Don't throw away that light bulb

Since 2002, households and small businesses have been exempt from the Golden State's rule that has mandated larger operations properly dispose of what's called "universal waste," but effective Feb. 9, that changed.
It's now illegal in California for households and any other entity to improperly dispose of a new list of widely used, but potentially harmful items containing mercury and other heavy metals that often wound up in garbage pails or recycle bins.
Households must cart universal waste items -- along with a host of hazardous waste, electronic waste and other potentially harmful, everyday items to sanctioned disposal centers.
According to California's Department of Toxic Substances Control (DTSC), mercury is a neurotoxin when it is released into the environment by improper disposal. Exposure to high levels of mercury can cause permanent brain, kidney and developing fetus damage. Short term exposure may damage lungs and cause nausea, vomiting, increased blood pressure, skin rashes and eye irritation.
What is universal waste?
Most of it is found in products commonly used throughout the home and eventually outlive their useful life cycles. Ironically, some of the items with potentially deadly substances are designed to put a smile on your face.
Novelty items like greeting cards that play music, shoes with lighted soles and certain maze games contain mercury.
Other universal waste items include AA, AAA, C cell, D cell, and button batteries, such as those used in hearing aids and small toys; fluorescent light bulbs, lamps, tubes as well as high intensity discharge (HID), metal halide, sodium and neon bulbs; and certain thermostats and thermometers.
Electronic devices ready for disposal -- also commonly referred to as "e-waste" or "electronic waste" -- also can be universal waste carriers. They include a host of consumer electronics from the era of New Technology, including computer monitors, processors and other computer innards, televisions, cell, cordless and regular telephones, pagers, printers, video cassette recorders (VCRs), radios and microwave ovens.
There are many more. Pilot light sensors, electric switches, barometers, blood pressure devices, stoves, ovens, water heaters, space heaters, clothes dryers, and furnaces frequently use mercury switches. Flammable propellants such as butane can remain in aerosol cans if not completely empty. If a can is marked "flammable" or "toxic" it should not be tossed into the trash unless it is completely empty of all contents.
Most local jurisdictions already have recommendations or rules in place for the proper disposal of universal waste products as well as hazardous waste. Such rules are nearly as ubiquitous as recycle centers. Like the California law, the rules come with help or instructions for proper disposal.
An aptly named website, Earth 911 is a portal that will direct you to your local universal waste disposal centers as well as recycle and hazardous waste disposal centers while helping you learn which goes where. California offers the similar Zero Waste California website with similar information for Golden Staters and a partner website eRecycle.org to help hammer home the point.

Slower Sales for Capital Region

The number of listings in the Capital region by the end of January doubled from a year earlier according to TrendGraphic, a Sacramento data company. The total number of homes for sale reached 9,267 up another 8 percent from December’s record high numbers.
The same area reported the number of home sales declined by 30 percent from December levels. Home prices are still ahead of last year’s average but the rate of increase is slowing considerably.
The slow down isn’t just affecting the Capital Region. Statewide, home sales hit a four-year low in January, making the fourth consecutive monthly decline.
Home sales in El Dorado County were down 42 percent from a year earlier while Sacramento County reported declines of 28 percent and Placer reported a 27 percent decline from a year earlier. One of the few counties to report an increase in monthly sales was Yuba County with a 16 percent increase this year over last.
The higher the price range the lower the number of sales and the longer it takes to sell a home. Homes on the market and priced above $500,000 in Sacramento County are taking 90 days and longer to sell often requiring major price reductions from their initial offering price. El Dorado and Placer counties are experiencing slower sales and longer time on the market when a home is priced above $600,000.
The big QUESTION is how long will this sales slide continue and if it does continue when will we start to see home prices slide below last years’ level? The average price of a home can not continue to increase with declining sales can they?