Friday, June 22, 2007

It is what it is

My wife Vicki, has a saying she uses whenever I start complaining about the high price of gas, our insurance premiums or the cost of groceries. “It is what it is,” she reminds me, expressing in those five little words the futility in my haranguing about what I cannot change or do without. While reviewing the May real estate sales report, compliments of the El Dorado County Board of Realtors, I was reminded of her wisdom.

Home sales in the county should have been better than the 146 reported. There are usually more home sales in May than in the months of March or April but not this year. It was the slowest May dating back 10 years. Last year wasn’t terrific either with only 197 monthly sales but last month was another 25 percent drop. Historically, May sales will average 250, which puts our measly monthly number 41 percent off our average. DataQuick Information Service reported only 22 new home sales for the month, a 43 percent decline from a year ago.

Thirty-four percent (50) of all county sales occurred in El Dorado Hills. The average price of a home that closed escrow was $668,000 and a 7 percent dip from May of 2006. El Dorado Hills, with an available inventory of 500 homes, has more properties for sale today than did the entire county back in 2002. While home sellers in EDH have a 1 in 10 chance of attracting a buyer, sellers in Cameron Park had even less odds. Currently, Cameron Park has 210 homes on the market, 17 closed escrow last month with an average selling price of $513,500. That puts Cameron Park with a year’s supply of inventory.

The greater Placerville area was the third most popular destination for county homebuyers last month. The average selling price of the 16 homes that closed escrow was $511,000. That was a big monthly jump from the $458,500 last year during the same month. The Placerville area currently has 188 homes looking for new owners.

Between Apple Hill and Sly Park there are currently 219 homes with a “for sale” sign in their front yards. Eighteen sold last month with an average price of $350,000. The Georgetown Divide has another 200 homes for sale and with only 8 monthly sales, was the slowest area in the county.

While too much inventory and too few buyers summarizes our local market, the median selling price of the few homes that close escrow each month is holding, at least, statistically. Last month’s median price of $497,500 was actually $3,000 higher than the county’s median price for May of 2006 and $10,000 higher than the median for May of 2005. What’s up with that? Higher priced home sales continue to prop-up the county’s median sales price. One out of every five homes selling in the county are in excess of $700,000. Ten percent of our total sales are in excess of $900,000 and we had six existing homes and 5 new homes sell for in excess of a million bucks.

Another interesting statistical phenomenon was the number of new listing added to an already crowded market. New listings historically increase during May-July and then decline in the fall and winter. Last month, the 449 new listings were a decrease from March and April and down 135 from May of 2006. Perhaps after 18 months into our market correction, sellers are finally getting the message that now isn’t the best time to be selling their home or maybe it’s just a monthly anomaly.

Land sales have been weaker than house sales. There are currently 800 parcels of vacant land for sale in the county and only 25 reported sales for the month. The average price of a vacant parcel that did sell was $293,000. I expect the residential market to be stagnant for another year and then gradually increase in activity and price but land sales could be impacted for a longer period of time. Permit and building fees are much less in Folsom than adjacent El Dorado Hills.

There is no immediate cure for our market malaise. Potential buyers continue to sit on the sidelines waiting to see the effects of increased foreclosures and excess competition from too many listings. The recent rise in the interest rates and more stringent loan guidelines for borrowers are not helping the situation. Oh well, it is what it is.

Enjoy the weekend.


Post a Comment

<< Home