Friday, September 22, 2006

August sales

Over the last 10 years, home sales during the month of August in El Dorado County average about 250. August of 2004 was the best sales month in recorded history with 319 reported sales and last month with only 170 was the slowest. With nearly 1,800 homes currently listed for sale, our sales rate is only nine percent. August of 1997 had 9 fewer sales than last month but the number of homes for sale at the time was half the current inventory.

The number of new monthly listings is exasperating the situation. Last month 443 new “for sale” signs went up in front yards. Since April, nearly 2,500 homes have been listed for sale. The county currently has a ten-month supply of homes for sale and at our current monthly new listing rate of 400 plus, we will have a year’s supply by November. It will be a long, cold, wet winter for sellers and their agents.

Monthly housing sales have declined 36 percent from last year and no community is exempt from the wait-and-see attitude of potential buyers. El Dorado Hills currently has 524 homes for sale and last month reported 53 sales. Cameron Park has 228 homes looking for buyers but only 18-closed escrow. The communities of Placerville, El Dorado and Diamond Springs have 300 homes for sale and 35 sales last month. Camino/Cedar Grove and Pollock Pines collectively have 250 homes for sale and reported only 22 sales. Cool, Pilot Hill, Garden Valley and Georgetown have 180 homes listed and only 10 reported monthly sales.

Vacant land sales are even more anemic. There are currently 750 vacant land parcels listed in the county. Twenty-one sold last month. A year earlier 75 to 100 monthly sales were more typical. Land prices are falling. Last year the average parcel sold for $285,000. Last month the average was $236,500. Potential land buyers are finding it less expensive to buy a home than build a new one and investors have disappeared from the landscape.

The bright spot in an otherwise lackluster sales month continues to be the median and average selling price. While Sacramento and Placer counties report falling home prices, El Dorado home prices continue to defy gravity. Sacramento County’s median selling price dropped 4 percent in the last year and Placer County’s median selling price declined 12 percent, down to $460,000 last month. Increasing home prices in El Dorado County are an anomaly in the region.

The average selling price of the 170 residential sales last month was $575,000, a healthy $50,000 above August of 2005. If the home was located in El Dorado Hills the price tag was averaging $742,000, up from last year’s $685,000. Cameron Park’s average home sale was $517,500, up from $496,000 and the average price of the 5 homes that sold in Shingle Springs at $831,000 was $115,000 higher than a year ago.

A few communities did witness price declines. Pollock Pine/Sly Park reported 17 monthly sales and a price drop from $422,500, a year earlier to $377,000 last month. Camino/Cedar Grove had 11 sales and prices dipped from $457,000 to $436,600. Cool/Pilot Hill reported only 5 monthly sales down from 15 in August of 2005 with the average price dropping from $499,000 to $477,500.

A factor propping up the statistical average and median selling price is the number of million dollar home sales. Last month, 14 homes sold for excess of a million dollars. The percentage of sales above a million dollars is actually very good. With 80 county homes listed above $1 million, the chances of selling is 17 percent while the county’s average monthly selling rate is 9 percent. So if your house isn’t selling, raise the price above a million and your odds of getting an offer will increase…….. at least statistically.

Thursday, September 21, 2006

Jobs and the housing market

Employment gains continue to prop-up the housing market. Jobs are the fundamental reason that home prices are not crashing as they did between 1991 and 1995 when 3 major military installations were closed in Sacramento. That was the beginning of a period of high unemployment, and severe job losses not only in the capital region but all over California. It contributed to thousands of homes going into foreclosure. This housing market adjustment is different and it will be brief. Here is why.

In August California added 37,000 new payroll jobs according to the California Employment Development Department. Non-payroll jobs and independent contractors are not counted in the department’s numbers so add a few thousand more new workers. Construction did lose 3,800 workers but professional and business services gained 40,700 jobs.

The four-county Sacramento area saw its unemployment rate drop to 4.2 percent down again from July. In 1996 it was 8.5 percent. The region added 18,100 jobs in the past year. “Sacramento is typically one of the top-notch job markets in the state,” said David Lyons, a labor market economist with the state EDD. “We certainly don’t have any looming areas of concern.”

The declining housing market is more psychological than real. Our economy, measured by all normal statistical standards such as productively, employment, wages, and low inflation is doing just fine. That’s probably little help if you haven’t been able to sell your home in the past few months, however, as long as employment continues to grow, traditional homebuyers will again recognize the opportunities and the housing market and the market will cycle back from uncertainty. It’s just a matter of time.

Wednesday, September 20, 2006

The housing slowdown shouldn't last long, and new optimism is to the point that some economists are starting to wonder if the Federal Reserve will start to lower short-term interest rates in 2007 in order to reignite home sales. They are already betting that the Fed will leave rates alone this week when the policy makers meet this Wednesday. Inflation's whipped, they say:

· Housing is on the run. The National Association of Realtors reporting that 2006 may be the first year since 1968 that housing prices fall below the rate of inflation for the year. Housing prices are projected to end the year up 2.8 percent while inflation is expected to be 3.5 percent.

· Gasoline prices are falling. The confluence of events -- hurricanes, possible terrorist attacks, economic embargoes, and other possible disruptions to energy supplies -- that were expected to drive up gasoline prices over the summer never materialized. No hurricanes made landfall, so far, even though some refineries are still offline due to hurricane damage from last year's storms. In fact, some companies are cutting production. The Energy Department says that prices at the pump are about $2.62 from record $3 highs earlier in the summer.

· Consumer prices remained tame. The Labor Department's Consumer Price Index posted a nominal 0.2 increase in August, suggesting that outside of energy and food, core inflation was moderate. Core inflation was 2.8 percent for the year, the biggest gain in nearly five years, so an August easing of prices in air fares to clothing was welcome.

The National Association of Home Builders told Congress last week that the "current downswing in home sales and housing production following the record housing boom of 2004-2005 is expected to bottom out around the middle of next year and gradually move back up toward trend by late 2008."

Listing its reasons for such optimism, the NAHB counted, payroll employment, household income growth, favorable interest rates, readily available mortgage credit, and falling energy prices.

David Seiders, NAHB's chief economist, says he believes home prices will remain relatively flat. "Indeed, some decline is a distinct possibility, and the rate of price appreciation should remain below trend for some time," he says.
But some are keeping their eyes on foreclosures -- one of the first signals that housing is not recovering.

"To this point, generally healthy economic growth and labor markets have kept delinquency rates from rising," explains Doug Duncan, chief economist for The Mortgage Bankers Association. "Going forward we expect some further slowing in the economy and the housing market. As a result, we will see modest increases in delinquency and foreclosure rates in the quarters ahead." This could encourage the Federal Reserve to lower short-term rates instead of raising them.
Says David Lereah, chief economist for the National Association of Realtors, "Mortgage rates are one of the bright spots in the economy right now, with an unexpected decline recently in the 30-year fixed rate to a narrow range around six-and-a-half percent. This should encourage some of the nearly 4 million people who’ve found newly created jobs over the last two years.”

Tuesday, September 19, 2006

Your free credit report

Under the provisions of federal consumer law, if you want to obtain a free credit report from one or all of the big three credit reporting companies, go to AnnualCreditReport.com. Period.
If you want a free credit report from Experian -- one of the big three -- and the possibility that the company will sign you up for a credit report monitoring service with a monthly fee, go to Experian's FreeCreditReport.com website. Likewise, FreeCreditReportSource.com; FreebieCreditReport.com;FreeCreditReportsInstantly.com and a host of other similarly named websites will all also "give" you your "free" credit report, but you could wind up paying extra for credit services you may not want. Confused? That's not surprising.
A year ago this month the federal government finished rolling out the free annual credit report provision of the Fair and Accurate Credit Transactions Act (FACTA).The provision says you are entitled to one free credit report each year from each of the three major credit reporting agencies, Equifax; Experian; and TransUnion.
Along with your personal identification information -- Social Security number, birth date, name, recent addresses and employers, etc. -- your credit report is a sort of fiscal fitness report on your credit habits. It names your credit accounts, identifies them by type and tracks balances, credit limits, payments, available credit, open-or-closed status and other information that reveals how well or how poorly you pay each account. The report also documents credit requests and notices of liens, judgments and other "derogatory" remarks, remarks from the consumer, and other information.
When you apply for credit, the creditor takes a look at your credit report, among other documents and data, to determine if you qualify for credit and to determine how much credit it will grant you.
It's a good idea to keep tabs on your credit report before you apply for credit to avoid surprises, to correct any mistakes that could adversely affect your application, and to take steps to improve your credit whenever possible. An unblemished credit report not only gives you fast access to credit, you also pay less in interest than you would if your report contains blemishes.
Under the federal law's provision, official, free access to your credit report is available through a single website, AnnualCreditReport.com; by phone, via (877) 322-8228; by mail (Annual Credit Report Service, P.O.Box 105281, Atlanta, GA 30348-5281); or by filling out the official "Annual Credit Report Request Form" available on the Federal Trade Commission's website.

The FTC warns consumers to beware of "impostor" websites, those with enticing names that pose as "free credit report" websites but which are questionable marketing gimmicks designed to enroll you in credit report monitoring and other credit services in exchange for granting you your "free" credit report. Selling credit report monitoring services is a legitimate business, though consumer advocates say the services are of dubious value.
"While consumers may be offered additional products or services while on the authorized website, they are not required to make a purchase to receive their free annual credit reports," the FTC says.

Monday, September 18, 2006

Placer County August Sales

The median selling price of an average home in Placer County last month dropped $57,000 from its highest price in August of 2005 when it was $517,000. It has been consistently declining since then, hitting $460,000 last month. The median was still well above August of 2004 when it was $417,000 and way above August of 2003 when it stood at $330,000.

While prices are sliding, the number of people putting their home up for sale is increasing. A year ago, Placer County had 1,800 published listings. Last month 3,000 houses were for sale, a 60 percent increase.

The number of monthly sales has declined by 33 percent. Last month 332 closed escrows were reported by the MLS. A year earlier, closed sales in August totaled 500.

Roseville’s average price on 184 sales declined from $509,900 in August of 2005 to $485,600 last month. Loomis/Penryn saw their average drop from $870,00 a year ago to $780,000. Lincoln reported 77 monthly sales down from 95 last year same month and the median price has fallen from $500,000 to $418,500. Auburn/Newcastle had only 35 sales with the average price dropping from $682,000 last year to $541,000. Granite bay wasn’t exempt from falling prices. The median selling price of a home in that prestigious zip code dropped from $829,000 to $760,000.

The condo rage is officially over in Placer County. There were only 8 that sold during August but the average price is holding at $255,000 still up from $249,000 average last year same month.

While there were only 8 single-family homes that sold during the month for less than $300,000, 13 homes sold for over a million dollars. Fifty-seven percent of all county sales were priced between $400,000 and $750,000.

The excess supply of newly built homes in Placer County is negatively effecting resale values. Builders are offering big incentives to homebuyers who are choosing new over resale. Once new standing inventory is sold builders will be quick to eliminate incentives and increase prices. Resale values will follow. It may take a year.

Now go take on the week!