"Half full or empty?"

Most of us are generally optimistic or generally skeptical. We look at a glass as either being half full or half empty. For me it depends upon the contents of the glass. With the real estate market, I think it’s half full.
Two economic forecasts concerning the construction industry were released last week that demonstrates economists are also positive or negatively inclined. The UCLA Anderson Forecast reports the construction industry is going to loose 200,000 jobs this year. The construction sector’s loss will be so great as to cut the state’s employment gain by half of what they were last year.
You may recall the Anderson School of Business at UCLA has been predicting the demise of the real estate market since the boom started in 2000. They have been promoting the real estate bubble theory for the last two years. Their dire predictions have included that property values would fall 20 percent, massive job looses and high interest rates would lead to a recession.
On the same day that the UCLA economic forecast was released, the University of the Pacific released their economic findings and predictions for the construction industry. It looked at the same numbers as did UCLA but their findings were much rosier.
The University of the Pacific said that residential construction would not collapse. It would still continue to grow but at a slower pace than it has in the past. The senior economist at PU, Sean Smith, said that commercial construction would continue to expand and that the Sacramento Region would “lead the state in growth and jobs and personal income.”
Both economic reports recognized the housing industry was the leading economic engine driving growth for the past four years. Does our environment influence the way we look at life? Could two leading universities come up with two different economic predictions based upon their location?
The Ritz-Carlton thinks Northstar is a great place for their new 5-star, 172 room, $300 million new hotel. Ground breaking is scheduled for this summer with an opening in 2009. The developers East West Partners must be optimistic about our future.
Have a great weekend. I will be showing homes in Cool and Foresthill and Vicki will be working both days at one of our local wineries. Each year, the El Dorado County Vintners Association sponsors a Passport Weekend to promote El Dorado County wines. This year, 25 participating wineries will feature their food, music, wine and special art demonstrations. Local volunteers from all over the county will host nearly 2,000 attendees. It’s a fun event and the proceeds go to a worthy non-profit. Let’s all be positive about the weather and look for sunshine.

High Growth in Placer County

Placer County is one of the fastest growing counties in the state and nation. According to a new U.S. Census Bureau Report, Placer County’s growth rate over the past five years exceeded all other 58 California counties. From April of 2000 to June of 2005 Placer County grew 27.6 percent, ranking it the 34th highest it its rate of growth among 3,152 counties nationally. The Census calculates Placer’s population at 317,000 shoppers up from 248,0400 in 2000.

Fortunately, most of the growth has occurred in south Placer more specifically Lincoln, Roseville and Rocklin. The topography (flat) is conducive to building 6 to 10 new homes on an acre of ground. South Placer also has appropriate infrastructure in place to accommodate their accelerated growth.

East Placer County, consisting of the Sierra Foothill is a not as developer friendly. The city of Auburn did add a few more people last year (112) but most of the people who can afford to live there don’t have young children and so our school population is declining.

Although I live in El Dorado County, many of my clients live in Placer County. I have been a member of the Auburn Chamber of Commerce since 1997 and take in interest in city politics. Two years ago the city of Auburn was forced to comply with state mandated affordable housing legislation. They had been criticized for years because people who worked in Auburn could not afford to live there. Low-income housing advocates threatened lawsuits if the city would not build some affordable housing where “working people” like teachers, police and firefighters could afford to rent.

The city built 300 low-income apartments. So how many police, teachers and firefighters do we have today taking advantage of our affordable housing? None! It took the property management company (also a chamber member) nearly a year to fill the tax subsidized affordable housing. Where do you think most of the new tenants came from? Sacramento! And where do most of the tenants work? Roseville, Rocklin and Lincoln in south Placer County. So Auburn spent tax dollars to attract tenants out of Sacramento that commute back down the hill to Roseville.

Government does many things well but much of what they do should be left up to the private sector. The next time affordable housing advocates request money for low income “working families” the city should just write a check to Sacramento.

Road ice and Energy Tax Credits

Yesterday I was previewing homes in Foresthill for some clients when it started to rain. It's not unusual during the winter or spring for me to be out in the wet weather previewing or showing homes, but Foresthill is a small mountain community another 2,000 feet above Auburn. When it rains in Auburn it is often snowing there. About halfway through my rounds it stated to hail. Not just the small pea size hail that we occasionally get in the foothills, this hail was the size of ice cubes. Then the lighting and thunder started. When the radio station began broadcasting "Emergency Broadcasting Notices" about severe storms in the higher elevations of Placer and El Dorado Counties I decided to cut short my tour and get off the mountain as quickly as possible and down to the lower elevation and safety of Auburn. That's when I nearly slid off the mountain. The road down the hill was covered in ice and snow. My haste to get down the hill was reflected in my foot on the accelerator and before my brain could process what all that clear glass-looking stuff (ice) was doing on the highway, I was into a downhill slide. Whoaaaaaaaaaaa.

Foresthill is a beautiful mountain community 15 miles above Auburn and the 80 highway. Like other high elevation communities the weather can change quickly. On my next trip up the hill I will remind my foot.

Now here is how you can save yourself $500 on your taxes next year.

Under the Energy Policy Act of 2005, homeowners who make certain energy-conscious improvements during the 2006 and 2007 tax years can claim a credit on their tax returns. To qualify, the law states, the component must meet or exceed the criteria established by the 2000 International Energy Conservation Code, including supplements, and must be installed in the taxpayer's principal residence.

Now, IRS says taxpayers can rely on manufacturers claim's that their products will qualify for the credit as proof the items meet the law's requirements.

There are different levels of credit, depending on the type of improvement made. But the maximum amount of credit for all energy-related improvements combined and undertaken by an individual homeowner cannot exceed $500 during the two-year period of the tax credit. Improvements eligible for the credit include the following:

· Added insulation to walls, ceilings or other part of the building envelope.

Replacement windows.
High-efficiency gas, oil and propane furnaces and boilers.
High-efficiency central air conditioning units, including air-source and ground-source heat pumps.
High-efficiency fans for heating and cooling systems.
High-efficiency water heaters, including heat pump water heaters.
A good website for information concerning federal tax credits for energy-related home improvements is EnergyStar.com.

Lock & Leave

An alternative to the traditional but costly, single-family detached home for many homeowners is the condominium. Condos have become very popular over the last few years in our region. Three years ago condo sales made up only 3 percent of all new home sales. Last year they accounted for 23 percent of all new units sold in the Sacramento Region.
The average price for a new two-bedroom, 1,200 to 1,350 square foot condo is running around $300,000. Not exactly cheep but less than the $450,000 for a median priced single family home. Condo buyers closed escrow on 2,695 new units last year and another 2,917 existing units were sold with a median price of $250,000.
Years ago there was a negative response to living in a condominiums. New building technology has eliminated much of the noisy neighbor stigma and price, convenience, and location have pushed condo values up. The typical condo appreciated 38 percent from the fourth quarter of 2001 through 2005 according to John Schleimer, owner of Market Perspectives, a Roseville firm that tracts regional home sales.
Marketing of new condominiums has been traditionally targeted toward first time homebuyers with an emphasis on price. Not anymore. While price is still a factor, a large number of sales are made to empty nesters, older couples and affluent singles. I call them “Lock & Leave” buyers. They are not interested in the maintenance of yards, pools and gardens. They are active, career or recreational focused and retired and want the security of being able to lock up their home and leave to enjoy other activities.
As the baby boomers mature and land for building single-family attached housing becomes scarce watch for condos to become even more popular and thus more expensive.

Weekly Interest Rates

Freddie Mac released the results of its Primary Mortgage Market Survey in which the 30-year fixed-rate mortgage (FRM) averaged 6.32 percent, with an average 0.6 point, for the week ending March 23, 2006, down from the previous week's average of 6.34 percent. Last year at this time, the 30-year FRM averaged 6.01 percent.
The average for the 15-year FRM this week is 5.97 percent, with an average 0.6 point, down slightly from the previous week's average of 5.98 percent. A year ago, the 15-year FRM averaged 5.56 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.96 percent this week, with an average 0.7 point, up from the previous week when it averaged 5.93 percent. A year ago, the five-year ARM averaged 5.35 percent. Six months ago nearly half of all loans were adjustable rate mortgages today maybe 20 percent.
One-year Treasury-indexed ARMs averaged 5.41 percent with an average 0.7 point, up from 5.37 percent. At this time last year, the one-year ARM averaged 4.24 percent.
"The most recent economic indicators released this week showed that inflation is, indeed, being held in check," said Frank Nothaft, Freddie Mac vice president and chief economist. "That news allowed long-term mortgage rates to drift a little lower for the second week in a row. Shorter-term rates, however, rose in reaction to a recent speech by Chairman Bernanke, of the Federal Reserve Board, that hinted at even further rate hikes this year."
Meanwhile, existing home sales (in more affordable states) for February were unexpectedly high, but experts think that this may be due to an unseasonably warm January when those contracts were closed. Nonetheless, the housing industry remains fundamentally fit as we move into the spring buying season.