A few new homes

In the Sacramento Region 77,000 new homes have been built and sold since 2001. But wait there’s more…………Thirty thousand more are on the way in Rancho Cordova, 21,000 in south Placer County and another 7,800 in Elk Grove. But wait there’s more…………….
According to the Sacramento Area Council of Governments, in their recently released 50-year growth blueprint, the agency calls for the building of 840,000 new dwelling units to accommodate the future population of the area.
According to another report released by the California Building Industry Association, Sacramento County needs 62,619 additional more homes than the number we already have in the pipeline. According to the report released this week 128,000 new homes are in the planning stages for Sacramento, Placer and El Dorado Counties and that isn’t enough. We could use another 62,000.
The builders point out that California homes cost $300,000 more than the rest of the country and the percentage of homeowners in the area is much less than the national average. While true that the national home ownership rate is close to 70 percent while our state’s ownership rate is around 57 percent I am not sure that another gazillion new homes is going to ever bring our ownership rates in line with Iowa or Ohio.
The builders are pointing out in their report that the high cost of home ownership reduces the percentage of homeowners. Then it naturally must follow, that if the cost to build a home (permits, building fees, development costs, government regulations, restrictive zoning etc) is reduced then our ownership rates will increase. The argument has some merit but our state has some unique demographics that are against a high home ownership rate.
The Capital Region already has a higher percentage of people who own their own homes. The percentage for the state is 57 while the percentage for Sac County is 62 percent and for Placer and El Dorado another 10 points higher. Placer and El Dorado County are already within national ownership rates it is Sacramento that needs some attention.
If all environmental and government restrictions were lifted today on all new developments I still don’t think it would reduce the cost of local housing by $300,000. If the social impact of increased population is to be paid for, then it will come from the specific development and/or everyone collectively. There has been a balance. The builders are pointing out that high development costs are preventing home ownership and they are right. But the report is too simplistic in saying just build more homes and “presto” problem solved. We can’t figure out how to solve the social problems that we already have with the people already here. Maybe we should work on that first.
Have a good weekend.

A few new homes

In the Sacramento Region 77,000 new homes have been built and sold since 2001. But wait there’s more…………Thirty thousand more are on the way in Rancho Cordova, 21,000 in south Placer County and another 7,800 in Elk Grove. But wait there’s more…………….
According to the Sacramento Area Council of Governments, in their recently released 50-year growth blueprint, the agency calls for the building of 840,000 new dwelling units to accommodate the future population of the area.
According to another report released by the California Building Industry Association, Sacramento County needs 62,619 additional more homes than the number we already have in the pipeline. According to the report released this week 128,000 new homes are in the planning stages for Sacramento, Placer and El Dorado Counties and that isn’t enough. We could use another 62,000.
The builders point out that California homes cost $300,000 more than the rest of the country and the percentage of homeowners in the area is much less than the national average. While true that the national home ownership rate is close to 70 percent while our state’s ownership rate is around 57 percent I am not sure that another gazillion new homes is going to ever bring our ownership rates in line with Iowa or Ohio.
The builders are pointing out in their report that the high cost of home ownership reduces the percentage of homeowners. Then it naturally must follow, that if the cost to build a home (permits, building fees, development costs, government regulations, restrictive zoning etc) is reduced then our ownership rates will increase. The argument has some merit but our state has some unique demographics that are against a high home ownership rate.
The Capital Region already has a higher percentage of people who own their own homes. The percentage for the state is 57 while the percentage for Sac County is 62 percent and for Placer and El Dorado another 10 points higher. Placer and El Dorado County are already within national ownership rates it is Sacramento that needs some attention.
If all environmental and government restrictions were lifted today on all new developments I still don’t think it would reduce the cost of local housing by $300,000. If the social impact of increased population is to be paid for, then it will come from the specific development and/or everyone collectively. There has been a balance. The builders are pointing out that high development costs are preventing home ownership and they are right. But the report is too simplistic in saying just build more homes and “presto” problem solved. We can’t figure out how to solve the social problems that we already have with the people already here. Maybe we should work on that first.
Have a good weekend.

Cost vs. value when remodeling

There are many benefits to remodeling a home rather than moving. Then there are a lot of inconveniences also. The National Association of Realtors in a recently released report found the four remodeling projects that would have the largest return at resale. They are the kitchen, bathroom, siding and windows. This is a national study and regional differences do occur.
Their findings were based upon the average cost of the remodeling projects and the increased value that a seller received within one year of the remodel. For instance:
A minor kitchen remodel cost $14,913 and the increased in value actually received upon resale was $14,691 or 98 percent of cost. A major kitchen remodel was found to cost $43,862 but the owner only recaptured $39,920 or 91 percent of the cost.
To remodel a bathroom (midrange) would cost $10,500 and a seller could get $10,727 upon resale. Siding replacement averaged $7,239 and the seller only got $6,914 for the effort. Window replacement may cost $9,684 yet only recoup $8,681.
The total and more detailed report can be found in the Remodeling magazine’s “Cost vs. Resale Report available on line at www.remodeling.hw.net. And my point is…………..
Many potential sellers when considering selling their home will incorrectly value the improvements that they have made. As an example I did an evaluation for a seller last week who had completed some extensive remodeling over the last year. His expectations were unrealistic and my truthful reality check probably cost me a listing.
There is a difference between cost of an item and it’s value. Sometimes it is more and sometimes not. Rarely should a seller do a major remodeling project within a year of putting their house up for sale. Paint, carpet, removing the cluttering and perhaps some landscaping will have a greater return on money invested than a major remodeling project

Signs of the times

Last summer when I would order an appraisal, it would take two weeks for the appraiser to inspect the property and then another few days to e-mail me the report. Last week I ordered an appraisal from the same appraiser and he was there the next day. I had the report that afternoon. I was even more surprised when he called the following day requesting payment for his services. Normally he would get paid when I do when the loan or sale closes but things have been a little slow recently and would I please mail him a check.
During the recent boom years in the real estate market, thousands of Americans flocked to jobs in the real estate industry. As the housing market slows, there will likely be a large number of people bailing out of their real estate jobs and other professions related to housing - appraisers, mortgage brokers and home construction workers. This could send shock waves through the job market and the economy.

Almost four out of every ten jobs created in the past four years were in housing-related fields. At the end of last year, a record 9.8 percent of U.S. workers were employed in the real estate industry, up from 8.2 percent a decade ago, according to Moody's Economy.com. Then last month, Washington Mutual said it would close 10 mortgage processing centers and let 2,500 employees go. In November, Ameriquest laid off 1,500.

There are few trends which could reduce the blow to the economy. Although residential construction is weakening, commercial building is picking up, thanks to demand for new roads, government office buildings and retail shops. The hurricanes last year damaged or destroyed 700,000 homes. Although it is unclear how many of those homes will be rebuilt, the rebuilding process will likely create jobs for years to come. According to the Mortgage Bankers Association, about 25 percent of outstanding mortgages in the fourth quarter were adjustable-rate mortgage. Many homeowners will likely want to refinance their mortgages to lock in a fixed rate as interest rates are expected to rise.

Who do you trust?

Most of my loan clients don’t have a clue about the minute details involved in obtaining a loan. That’s not all bad. I have no idea about a lot of things. I have discovered that the more stuff I have and do the less I know. I don’t really understand how my computer works. It allows me to do a few functions but I have no idea how it does what it does. Car engines were much easier when I was going to college. I was always working on my car. Now I can’t figure out how to change a wiper blade.
There are some details I just don’t really want to know. Just give me the bottom line. Does it work? Are we making money? How does it taste? Will I live?” My CPA and Financial Planner produce more reports than I have time to read. Try to read an insurance policy or a credit card agreement. No one reads all the loan documents, so it isn’t surprising that a lot of people haven’t a clue about their adjustable rate mortgage according to a new study by the Federal Reserve Board.
The study found that about 35 percent of people with adjustable-rate mortgages didn't know how much the rate could increase at one time, and 41 percent weren't sure of the maximum rate they could face. About 28 percent didn't know which index of interest rates would be used to determine their adjustments; many others gave incorrect answers, such as the consumer price index or "the going rate."

Adjustable-rate loans accounted for about a third of mortgages granted in 2004 and 2005, up from an average of about one-quarter in the 1990s, according to the Mortgage Bankers Association, a trade group based in Washington. In recent months, however, the rise of short-term rates has greatly reduced the attraction of ARMs, and more borrowers are choosing or switching to fixed-rate loans.
I have found that many successful people (who know even less than me) surround themselves with people they can trust. They depend upon them for their expertise and take their advice. And that’s a comforting feeling.

Price Per Square Foot

Homebuyers considering where to live in the Capital Region should review the TrendGraphix report. Each month this data company compiles the average price that a square foot of a home is selling for in specific locations. The study allows buyers to become familiar with the price that they will most likely pay for a home based upon the home’s actual size. For instance:
In January homes that sold in the college town of Davis averaged $337 a square foot. Davis was the highest priced area within reasonable driving distance. That cost per square foot was down from a high of $356 a square foot recorded in August.
Thinking about buying a home in El Dorado Hills? Better plan on spending $263 for each square foot in the home that you like. The price paid in the area for January was higher than the August price of $254 a square foot. Travel up highway 50 and discover quaint Placerville where homes are selling for about $275 a square foot down slightly from their high in September of $276.
On the other side of the American River is historic Auburn where home prices averaged $252 a square foot, a bargain in comparison to their $281 high in November. The most expensive zip code in Placer County is Granite Bay where the average home price is $284 for every square foot of home purchased. That’s down from their neighborhood high of $308 in October. The Roseville/Rocklin area is where to find more affordable housing. The average cost for housing there is only $246 a sq. ft.
Sacramento County is still considered affordable. Homes in Antelope are selling for $227 a square foot down from a high of $249 in October. Citrus Heights sells fro $235 down from $251 in September and Folsom is up around $260 but down from its high of $271 a square foot in September. Elk Grove is considered one of the more affordable locations in Sac County. Homes there are selling for $233 a sq. ft. down from their high point of $264 in October.
Naturally, you can’t squeeze into one square foot of a home unless you really take that diet more seriously. I hope you enjoyed the sunshine we had Saturday and Sunday. Saturday I previewed homes with some out of town clients shopping for a new address in the foothills and then Sunday I hosted an open house in Cameron Park while writing my weekly newspaper column. Now go take on the week!