Statewide sales drop 28 percent

Single-family home sales in California declined 28.7 percent in October compared to the same month last year, the California Association of Realtors reported Tuesday. The median sales price of existing single-family homes slipped 1.5 percent since September but rose 2 percent in the state compared to October 2005, the association also reported.

"While it appears that home sales have stabilized over the past three months, it's too soon to say whether or not the market has bottomed out," said Colleen Badagliacco, association president, in a statement. "We do expect smaller year-over-year declines in home sales for the remainder of the year. Badagliacco noted that price trends are varied at the regional and county level, "with some areas posting year-to-year declines while others continue to register price gains compared with last year."

The median price of an existing, single-family detached home in California in October was $548,680. "The existing-home market continues to be impacted by the inventory of new homes for sale, especially in areas where there has been excess capacity since the start of the year," said Leslie Appleton-Young, C.A.R. vice president and chief economist. The unsold inventory of existing homes is at 7.2 months -- compared with 3.4 months in October 2005, she also noted. "Higher inventory levels are a key factor in the moderation of home-price appreciation." An unsold inventory of greater than six months is generally considered to indicate a buyer's market.

The 30-year fixed-mortgage interest rates averaged 6.36 percent during October 2006, compared with 6.07 percent in October 2005, according to Freddie Mac. Adjustable-mortgage interest rates averaged 5.55 percent in October 2006, compared with 4.86 percent in October 2005.
In a separate report covering more localized statistics generated by C.A.R. and research company DataQuick Information Systems, 52.4 percent of 372 cities and communities in the state had an increase in their respective median home prices compared to a year ago.

Statewide, the 10 cities and communities with the highest median home prices in California during October 2006 were: Newport Beach, $1.33 million; Burlingame, $1.26 million; Los Gatos, $1.2 million; Mill Valley, $1.06 million; Santa Barbara, $1.03 million; Danville, $970,000; Cupertino, $924,500; San Clemente, $910,000; Yorba Linda, $886,000; and Rancho Palos Verdes, $865,000.
Statewide, the 10 cities and communities with the greatest median home-price increases in October 2006 compared with the same period a year ago were: Taft, 37 percent; Inglewood, 30.1 percent; Barstow, 25.8 percent; Walnut Creek, 24 percent; Los Gatos, 21.8 percent; California City, 21.6 percent; Monrovia, 19.8 percent; Hercules, 19.6 percent; Ridgecrest, 18.8 percent; and Tehachapi, 18.5 percent, according to the report.

Who can you believe?

Good Morning,

Back East, the Wall Street Journal's bullish group of more than 50 economists were leaning 2-to-1 that the worst of the housing bust is already over with only mild price declines to come. "We're nearing the end of the slowdown for most markets," said Ethan S. Harris at Lehman Brothers, reporting to the Wall Street Journal.
Out West, on the same Monday, Nov. 20, more bearish forecasters said the worst is yet to come with some areas still due for 5 to 15 percent price declines. "These housing cycles have typically lasted about three years, four years. They don't get over in six months. So all the rhetoric you see from people in Washington saying it's over, it's just not right," said Ken Rosen, at the Fisher Center for Real Estate and Urban Economics at the University of California-Berkeley.

It could be confusing times for housing consumers trying to sort out what's really happening in their local housing market when forecasts published by the media are flying with so much turbulence. But housing consumers are more down to earth than the real estate industry often gives them credit.

Rather than being swayed away from the housing market by gloomy housing news reports, as recent real estate industry complaints have charged, consumers pay more attention to their own, individual housing needs, goals and market conditions, then what's published in the media.

When consumers think about buying or selling a home, what's in the media is one of the last things on their mind, according to a recent survey by the National Association of Home Builders (NAHB). The vast majority, 80 percent of survey respondents, put housing prices, the cost of housing, at the top of the list.
That was followed by:
· The prospect of selling their current home at a fair price, 70 percent.
· The potential for a home to increase in value, 71 percent.
· Mortgage interest rates, 69 percent.
· Personal life changes, such as a new job or a family addition, 60 percent.
· News stories on real estate market conditions, 28 percent.

Among eight items, news reports was at the bottom of the list.
Also, 48 percent of consumers surveyed said the media had no influence whatsoever on their buying decision; 19 percent of consumers said the influence of the news media played an important role in buying decisions; 23 percent said it had some importance and 7 percent said it played a minor role.

The survey found 61 percent said the media is only "sometimes trustworthy" as a source of information on the housing market, while only 5 percent said that it is "always trustworthy," 20 percent said it is "seldom trustworthy" and 8 percent said the media is "never trustworthy." What we do know for sure is that 8 out of 10 people buy homes for lifestyle reasons not economic ones. Day trading for quick profits should be confined to the stock market and not the housing market regardless of the news.

October Sales for El Dorado County

El Dorado County continues to defy the regional trend of declining home prices. In their October report, DataQuick Information Systems found year-over-year median price declines in existing single-family homes for Nevada, Placer, Sacramento, Sutter, Yolo and Yuba Counties. The drop in home values ranged from 5 percent in Sacramento to 11 percent in Placer County. El Dorado County, however, posted a slight 2.7 percent increase, finishing the month with a $445,000 median price, the second highest in the eight county region.

Our local Board of Realtors compiles its sales numbers from the multiple listing service. Over the last 10 years, October housing sales have averaged 215 units. This last month only 145 county home sales were reported. Although average and median sales prices appear to be holding, the number of properties changing hands fell 22 percent from last year and was 37 percent less than October of 2004. It was the slowest October since 1996.

With 1,650 county homes currently for sale, the odds of selling one in any given month is less than one in ten. El Dorado Hills continues to be the most popular destination for homebuyers and healthy appreciation rates. There are currently 450 homes for sale in EDH, 40 sold last month but the average price of $791,500 was a whopping $91,500 over the average price in October of 2005. Cameron Park, on the other hand, has 200 homes currently for sale, 20 sold last month for an average price of $486,000, a loss of $10,000 from last year at this time.

The Placerville area has 155 homes on the market. Eighteen closed escrow last month with an average selling price of $471,000 but $45,000 over last years average. El Dorado/Diamond Springs reported only 6 sales on an inventory of 86 units for an average selling price of $356,000 and a loss of $40,000 from a year earlier. Pollock Pines/Sly Park has 125 homes with a “For Sale” in their front yard. Fifteen closed escrow last month with an average price of $373,500 and $15,000 above last year. Cool/Pilot Hill has 70 homes on the market. Six sold last month for an average price of $412,000 but $15,000 less than last year.

The new Traffic Impact Mitigation Fees are having their desired effect. Vacant land sales have nearly stopped. With over 700 vacant land parcels listed for sale in the county, only 13 monthly sales were reported. It was the slowest month for land sales in recent history. Building and impact fees now easily total $80,000 for an average size house in some parts of the county, forcing many to look for lots and acreage elsewhere.

A healthy sign for the real estate market is fewer of them. The number of new monthly listings is finally slowing. The 340 new listings last month were 18 percent less than September and 40 fewer than October of 2005. It was the fifth consecutive month of declining new listings. Total residential listings at 1,650 are still 15 percent higher than last year but the declining number is headed in the right direction. Many discretionary sellers have decided not to sell at this time and are pulling their properties off the market. Others, are having second thoughts about listing their home given current market conditions.

After 10 months, year-to-date home sales have declined 31 percent from 2005 levels while the median and average price continues to hold at or near 2005 levels. Land sales have been hit hard by the declining market and by the county’s building and impact fees.

It’s no consolation to area sellers but our county real estate market appears to be weathering the regional market slow down better than most. If the number of new listings continues to decline, interest rates hold below 6.5 and regional populations and job growth continue, the worst will be behind us by spring. Our current market correction was long overdue and anticipated by most in the real estate industry. If it only last 18 months, so much the better.