Placer County home sales

While down the hill in Rocklin the other day, I stopped by the Placer County Board of Realtor’s office to pick up a copy of their March sales report. Here are some highlights of the real estate market for the month.

The average sales price is up a scant 5.5 percent from last year at $546,000. The number of monthly sales however, dropped 23 percent from 505 in March of 2005 to 389 in March of 2006. The total monthly dollar volume is also down 20 percent from what is last year.

Listings in Placer County, just as everywhere else in the region have increased dramatically. In March of 2005 there were 941 homes with a “For Sale” sign on them. In March of 2004 there were 681. This last month 2,210 homes were on the market for a 135% increase. It was the highest number of county homes ever for sale.

The area with the most amounts of “For Sale” signs was Roseville. Last year at this time Roseville had 234 homes for sale. This year during the same time there is 684 with an average price tag of $535,000. Granite Bay has the county’s most expensive homes on the market. Last year the area had 43 monthly sales with an average price of $1.1 million. This last month the average price was $878,000 on 37 sales.

The number of monthly sales declined in Auburn and Newcastle where there were 34 down from 50 but the average price climbed from $545,000 to $574,000. Lincoln had 113 sales. It was an increase from 87 last years with an increase in price from $457,500 to $511,000. Rocklin reported half as many sales as they did in 2005 with only 45 for the month but a price hike from $496,000 to $565,000. Foresthill had the smallest number of sales at 7, which was actually higher than last year same month but the average price declined from $481,500 down to $415,000.

What continues to amaze me is how so many real estate agents can be chasing so few deals. There are 2,800 active Realtors members in Placer County. With only 389 sale closings there are a few agents with a lot of free time.

Have a nice weekend. I have a little free time myself and will be working around the house on Saturday and then previewing acreage on Sunday.

Jobs

There never was a real estate bubble in the capital region. There was a shortage of listings, a historically low interest rate, investors and flippers turned off by the meager investment returns in equities and treasuries and investing in real estate and their were Bay Area Buyers escaping congestion and the high cost of housing in the Bay Area, discovering the Capital Region, but there was no real estate bubble. Why?……. Jobs.

According to the California Employment Development Department non-farm employment in the Sacramento Region between 1994 and 2004 grew by 195,000 new jobs. Then between 2004 and 2005 the area gained another 27,000 new jobs. Total regional employment in January of 2005 was 861,400 and 888,500 a year later.

New homes in the region were not built on speculation they were built to house an army of new employees to the region. So will that continue? Most likely according to the Sacramento Area Council of Governments. Our current six-county regional population will expand from the current 2.1 million to 2.3 million in another 4 years. Planners and demographers expect 2.5 million people hanging around the area in 2015 and within 45 years the area will have 4 million people. Why? …..Jobs.

Employment is the bell ringer of the housing market. Interest rates rise and fall. Construction and development costs continue to increase. Land becomes more scarce and expensive but as long as jobs are being created the housing market will do just fine.


A magazine recently ran a "Dilbert Quotes" contest. They were looking for people to submit quotes from their real-life Dilbert-comic-strip-type managers. These were voted the top ten quotes from the managers we work for in corporate America, circa 2004:

"As of tomorrow, employees will only be able to access the building using individual security cards. Pictures will be taken next Wednesday, and employees will receive their cards in two weeks." (This was the winning quote from Fred Dales, Microsoft Corp. in Redmond WA)

"What I need is an exact list of specific unknown problems we might encounter." (Lykes Lines Shipping)

"E-mail is not to be used to pass on information or data. It should be used only for company business." (Accounting manager, Electric Boat Company)

"This project is so important we can't let things that are more important interfere with it." (Advertising/Marketing manager, United Parcel Service)

"Doing it right is no excuse for not meeting the schedule." (Plant Manager, Delco Corporation)

"No one will believe you solved this problem in one day! We've been working on it for months. Now go act busy for a few weeks and I'll let you know when it's time to tell them." (R&D supervisor, Minnesota Mining and Manufacturing/3M Corp.)

Quote from the Boss: "Teamwork is a lot of people doing what I say." (Marketing executive, Citrix Corporation)

My sister passed away and her funeral was scheduled for Monday. When I told my Boss, he said she died on purpose so that I would have to miss work on the busiest day of the year. He then asked if we could change her burial to Friday. He said, "That would be better for me." (Shipping executive, FTD Florists)

"We know that communication is a problem, but the company is not going to discuss it with the employees." (Switching supervisor, AT&T Long

The next Big One

It's been 100 years since the San Andreas fault ripped along a 300 mile rift and the resultant 7.9 San Francisco Earthquake nearly leveled the city on April 18, 1906, but today, little more than one in four Californians are ready for the next inevitable Big One.
Should another earthquake like the one that hit the San Francisco Bay Area 100 years ago strike today, the result would be an unprecedented natural disaster more than four times as devastating as Hurricane Katrina's impact on New Orleans.
The psychological impact could be even worse. Death and destruction from an earthquake can be instantaneous with virtually no warning, unlike a forecasted hurricane which if you’re smart you try to avoid and leave the area.
Just days before the 100th anniversary of the San Francisco Earthquake, the Survey and Policy Research Institute at San Jose State University, San Jose, CA released results of a poll revealing 70 percent of Californians believe a big quake will strike the state and affect them, but only 22 percent say they are well prepared. The newly released, quake information-packed United States Geological Survey's "Putting Down Roots In Earthquake Country" says there's a 62 percent probability that a quake of magnitude 6.7 or greater will occur in the region by 2032, but fewer than 10 percent of households have disaster plans, fewer than 10 percent of home owners have taken steps to retrofit their homes and fewer than 50 percent of households have disaster supply kits.
Half of those surveyed by the university institute had confidence that the government is well prepared or somewhat prepared to provide disaster assistance after a significant quake. A faith-in-government is somewhat wishful thinking given governments' response after Hurricane Katrina.
Hurricane Katrina, at about $35 billion, was the nation's costliest natural disaster thus far, but a major quake now in the San Francisco Bay Area would cost more than four times as much, $150 billion, cause the death of 1,800 to 3,400 people, damage 90,000 buildings and displace as many as 250,000 households, according to "When the Big One Strikes Again," a report just released at the three-day 100th Anniversary Earthquake Conference held this week in San Francisco.
Prepared by the engineering firm Charles Kircher & Associates in Mountain View and the Earthquake Engineering Research Institute, the study used computer models to estimate how a 1906-type quake would impact the nine-county San Francisco Bay Area, home to more than 7 million people. Trust me, you wouldn’t want to be there.
According to the report a 7.9-magnitude quake along San Andreas would cause up to $34 billion in building-related losses in San Francisco, $28 billion in Santa Clara County, $26 billion in San Mateo County and $15 billion in Alameda County. No damage would be done to the Capital Region, which is another good reason to be here.

Key interest rate index up

The global bond market sent an unmistakable message to the U.S. real estate market last Thursday: 10-year Treasury notes, the key index used by American lenders to price 30-year home mortgages, jumped past 5 percent for the first time in nearly four years.
That means that mortgage rates are virtually certain to rise beyond where they were earlier last week -- 6.5 percent for conforming 30-year loans, according to the Mortgage Bankers Association of America.
Though the Federal Reserve Board has pushed short-term interest rates up steadily for the past year -- the bank prime is now at 7.75 percent -- long-term mortgage money has remained relatively inexpensive because 10-year Treasury notes remained well below 5 percent. The prime bank rate affects home equity credit lines, which tend to float at 1 or 1.5 percent above the prime, but has no effect on 30-year mortgage rates.
The reason for the big gap between long-term and short-term rates, according to money market analysts, has been that demand for super-secure 10-year Treasury notes by banks and investors in China, Japan and other Asian economies with huge trade surpluses kept rates unusually low. Some of that demand may now be slackening while at the same time the U.S. economy appears to be heating up—forcing long-term Treasury rates to rise.
The upshot for homebuyers for the summer months: Get adjusted to the idea of conventional mortgage rates jumping from 6.5 percent to 7 percent and maybe beyond. Higher rates, in turn, will put a further damper on home price appreciation, so sellers and their agents should set asking prices with the cost of money in mind if you want to sell property within a reasonable amount of time after listing.
Moderately higher rates may be just what the doctor ordered to restore affordability in high-cost, high-froth markets on the West and East coasts. According to the National Association of Realtors, the median-income household in the Western region of the U.S. can only afford 81 percent of the median-priced house in the region.
Freddie Mac's chief economist, Frank Nothaft, said last week that rising rates will help "deflate some of the affordability pressures as house price growth moderates to the single digits." The cooling of once-sizzling markets is already well underway, even without significant increases in rates. The increased interest rates may put a chill on Northern California properties.