Friday, June 23, 2006

May sales in El Dorado County

It was the slowest May for home sales since May of 1997. Normally the month of May is the seasonal beginning of the four best home selling months of the year. If last month is an indication of the rest of the summer, several agents should plan on taking extended vacations. Home sales last month, as reported by the El Dorado County Board of Realtors, were down 27 percent from May of 2005 and year-to-date remain 33 percent below last years level.

While potential homebuyers are showing their lack of enthusiasm for making home buying commitments, sellers are listing their homes in record numbers. More homes went up for sale in May (584) than in any single month ever. It was a 67 percent increase in the number of listings over May of 2005 and a 36 percent increase from the previous record number of listings set in April.

Home prices continue to escalate in defiance of traditional market forces. Despite the record number of 1,650 homes for sale and the large drop in the number of interested buyers, home prices continue to increase. With an eight-month supply of homes on the market, we are clearly in a “buyers market” but the average price paid for a county home continues to increase. The $544,000 average selling price last month was $10,000 higher than a year ago. So what’s up with that?

There are 450 homes currently for sale in El Dorado Hills. Last month there were only 55 sales. At that current sales rate and if no other homes go up for sale (not likely) it would take 9 months to sell all of them. Statistically, free market forces should drive down the average price but that isn’t happening. The average price increased from $696,000 in May of 2005 to $724,000 last month.

The average selling price for a home in Cameron Park did slip below last year but not by much. There are currently 200 homes for sale in Cameron Park and there were 27 sales during the month at an average selling price of $470,000. In May of 2005 the average price of a home sold for $489,000.

The Greater Placerville area has 190 homes with a “For Sale” signs in the front yard. The average price of the 15 that sold was $458,000, which was $50,000 higher than last year during the same month. Pollock Pines reported 15 monthly sales on an available housing inventory of 157. The average price at $398,000 was eighteen thousand above a year ago. Cool/Pilot Hill has 70 homes currently for sale, 12 sold last month at an average price of $597,600, which was $150,000 higher than May of 2005.

Land sales are dismal with only 30 reported sales for the month. Last year during the same month there were 80. The average price for a vacant land sale did fall 9 percent from a year ago for an average of $260,600.

The sale of Mac Mansions in El Dorado Hills and large estate homes in the rest of the county is responsible for bumping up the “average” selling price. There were 13 million-dollar home sales in the county last month. Ten were in El Dorado Hills. The lowest of the bunch was for $1 million and the highest was for $1.7. The average size of the 13 sales was 4,400 square feet for an average price per square foot of $294. In case you missed out on one, there are still 40 others to choose from.

Existing price levels will not hold with the current amount of available inventory and with more homes going on the market each day. Seller’s price expectations will need adjusting and more than a few should reevaluate their need to sell. Listings agents are discovering that increased advertising and creative marketing will not sell over-priced listings. In a free market, buyers and not sellers control the price.

Thursday, June 22, 2006

Elk Grove takes first place in U.S.

According to the U.S. Census Bureau, in a report released this week, Elk Grove was the fastest-growing city in the country last year. Elk Grove wasn’t an incorporated city six years ago and today its population is 131,000 according to the California Demographic Research Unit.

From the end of 2002 to the end of 2004, the state shows the city’s population jumping from 86,000 to 121,000, a 41 percent increase. Local officials are planning for more growth. Elk Grove Mayor Richard Soares said his city has the infrastructure ready to handle anticipated future growth.

The growth of Elk Grove typifies homeowner’s appetite for open space, affordable housing and suburban living. All, which disappear after everyone, moves there.

Tuesday, June 20, 2006

Economic contribution of housing

In the state, the business of building homes is a major boon to the economy, creating jobs to pay the bills and economic activity that helps keep California in the black. New home building is a true cornerstone of the state's economy.
Giving new home developers an opportunity to toot their horn as well as some lobbying leverage to pry loose cumbersome building restrictions, the Sacramento Regional Research Institute's (SRRI) new report, "Economic Benefits of Housing in California" says the Golden State's home building industry could pull even more economic weight.
SRRI, which spotlights the intimate details of California's regional and statewide economies, says the new home construction industry alone:
· Contributes nearly $68 billion to the California economy, about 3 percent. A little over one half of the sector's economic output, about $37 billion, is directly the result of new housing construction. The balance, some $31 billion is generated by those sectors which supply goods and services to the residential construction industry as well as the consumption activities of the employees of the construction industry and its supplier sectors. Include the impact of still more related industries -- remodeling, repair, brokerage, property management, financing, etc. -- and the economic output jumps to $273 billion or 11 percent of the total output.
That's more than any one of other sectors, including computer and electronics technology manufacturing ($131.6 billion); professional, scientific and technical services ($197 billion); and wholesale and retail trade ($238 billion).
· Is directly responsible for nearly a half million jobs a year. Again, when related activities are considered the industry supports twice as many jobs, 960,000.
"In all of the state's major economic regions, new housing construction is a sizable and stable economic contributor with total output benefits measuring in the billions and job creation in the tens of thousands for 10 of California's 26 major regions," the report says.
What's more, "The Riverside-San Bernardino; Los Angeles-Long Beach-Santa Ana; and Sacramento-Arden Arcade-Roseville economic regions have seen the greatest economic benefits from new housing construction, based on 2005 new housing unit construction data."
Unfortunately that data represents a housing shortfall of as many as 20,000 homes a year since the late 1990s, based on demand projections calculated by a California Department of Housing and Community Development analysis in the latest report this February "California's Deepening Housing Crisis".
Not only does the shortfall get a large share of the blame for the high-cost of housing in California, especially in large metropolitan areas, it also represents missed economic opportunity. The report says every dollar spent on new housing construction in California generates another $0.80 in total economic activity. Each job created through residential construction supports an additional 1.2 jobs.
While new housing construction is clearly a leading economic force in the state, its potential economic contributions are much greater. An annual production level closer to the statewide need would significantly increase the economic benefits of new housing construction in California.
"Practice is the best of all instructors."
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