Absent from NAR convention

I skipped the National Association of Realtors (NAR) national convention held last week in Las Vegas. I had the time but not the inclination. After 30+ years in the real estate business, I have been to more conventions, seminars, work sessions, retreats, and out of town meeting than I care to repeat. I have been to at least five conventions in Vegas dating back to 1977. When there were $2 Black Jack tables, holding a convention in Vegas could be a distraction from attending all the meetings and work-sessions. I suspect that today’s $10 minimum tables are less distractive. Washington DC in the spring of 1984 was a nice place for a convention. Hawaii was a great place for a winter trip. Seattle is beautiful in the summer. The fall colors in the Napa Valley this weekend was pretty nice and less expensive.

NAR keeps me informed of the latest developments in the real estate market and here are some highlights from last week’s convention.


The NAR's newly appointed chief economist announced that while home prices are down almost two percent this year, many areas of the country including Salt Lake City and Austin, Texas, are seeing double-digit appreciation and other areas "from the Rocky Mountain states to Appalachia," have undervalued home prices.

NAR released the results of its 2007 Profile of Home Buyers and Sellers. Typically released in late summer, this year the annual report found that for-sale-by-owner transactions remain at record lows at 12 percent, the same percentage as in 2006.

NAR announced that the Pending Home Sales Index for September rose 0.2 percent to a reading of 85.7 from an index of 85.5 in August. It was 20.4 percent lower than the September 2006 level of 107.6. “Even with relatively low fourth quarter sales, 2007 will be the fifth highest year on record for existing-home sales. The median existing-home price in 2007 will have fallen by less than 2 percent from an all-time high set in 2006,” Yun said. Managing Director of Public Affairs Lucien Salvant pointed out to Realty Times that the Pending Home Index is forward-looking and becomes irrelevant as soon as sales are reported, which is one reason he among other NAR leadership is frustrated with media who overplay negative statistics and discount favorable numbers in order to scare consumers.

NAR leadership, including outgoing President Pat V. Combs performed a spoof on the hit TV show CSI, "dispatching her trusted advisors" to find out why homebuyers are "staying on the fence" despite "solid U.S. economic performance. Chief Economist Lawrence Yun, incoming President Dick Gaylord and others "reported" back that other national sales downturns were driven by broad economic problems, but not this year. Despite a "solid" economy, sales are slower but will still reach a fifth-year record, and home prices are remaining at near record highs. This suggests that the national media, misled "by a few vocal but misinformed analysts, have been painting the U.S. housing markets in the clutches of a meltdown, even though the facts paint a very different picture."

In addition, NAR launched a new campaign targeting buyers, urging them to get the facts. For example, markets are local, the small decline in home prices nationwide is "no big deal" after years of rapid appreciation, and that subprimes is only about 10 percent of loans but are 40 percent of current foreclosures. Gross Domestic product is expected to be 2.8 percent and job growth will be 1.1 percent in 2008 after 2 million job gains in 2006. Inflation should remain under 3 percent. These are all good conditions for home buying. Further, the Federal Housing Administration (FHA) has doubled its loan volume in the last 12 months, and is on track to reach some 240,000 borrowers in 2007, including 80,000 refinancings by borrowers with troubled subprime loans, said Fannie Mae at the Regulatory Issues Forum.

Places you don't want to live

What has Detroit, St. Louis, Flint Michigan, Oakland, Camden, N.J., Birmingham, Ala.; North Charleston, S.C.; Memphis, Tenn., Richmond, Calif. Compton and Cleveland have in common? They are all ranked as places where you don’t want to live. The FBI says they are the most dangerous cities in the country.

The 14th annual "City Crime Rankings: Crime in Metropolitan America" was published by CQ Press, a unit of Congressional Quarterly Inc. It is based on the FBI's Sept. 24 crime statistics report. The report looked at 378 cities with at least 75,000 people based on per-capita rates for homicide, rape, robbery, aggravated assault, burglary and auto theft. Each crime category was considered separately and weighted based on its seriousness.The study ranked Mission Viejo, Calif., as the safest U.S. city, followed by Clarkstown, N.Y.; Brick Township, N.J.; Amherst, N.Y.; and Sugar Land, Texas.

The study assigns a crime score to each city, with zero representing the national average. Detroit got a score of 407, while St. Louis followed at 406. The score for Mission Viejo, in affluent Orange County, was minus 82. Detroit was pegged the nation's murder capital in the 1980s and has lost nearly 1 million people since 1950, according to the Census Bureau. Downtown sports stadiums and corporate headquarters along with the redevelopment of the riverfront of this city of 919,000 -- have slowed but not reversed the decline. Officials have said crime reports don't help. Doug Goldenberg-Hart, acquisitions editor at CQ Press, said that the rankings are imperfect, but that the numbers are straightforward. Cities at the top of the list would not be there unless they ranked poorly in all six crime categories, he said. The report "helps concerned Americans learn how their communities fare in the fight against crime," CQ Press said in a statement. "The first step in making our cities and states safer is to understand the true magnitude of their crime problems. This will only be achieved through straightforward data that all of us can use and understand."

Now, despite the current condition of our real estate market, aren’t you glad your real estate is located in one of the country’s safest places. It makes for long-term appreciation.

"Ask a question go to jail"

Regardless of what their personal views about the immigration debate may be, California landlords need to know that, effective January 1, 2008, neither they nor their agents may, "Make any inquiry regarding or based on the immigration or citizenship status of a tenant, prospective tenant, occupant or prospective occupant," nor may they require that any of those persons, "make any statement, representation, or certification concerning his or her immigration or citizenship status."

This addition to the law is the result of the passage of AB 976 (Calderon) which was signed into law by the Governor on Oct. 10, 2007. The new law also prohibits any California city and/or county from requiring landlords to make such inquiries or to provide or report information about the immigration or citizenship status of their tenants.
This legislation was sparked in large part by the city of Escondido's October, 2006 adoption of an ordinance which would have barred landlords from renting to undocumented immigrants. Shortly after the adoption of the ordinance, a lawsuit was filed which resulted in a temporary restraining ordinance by a U.S. District Judge. Subsequently, the Escondido ordinance was rescinded.

A supporter of the bill, the Western Center on Law and Poverty, said "Too often, poor immigrants face bleak housing choices. They are forced to rent substandard dwellings at high prices from landlords who exploit their circumstances. They are constrained from reporting housing code violations and are unable to enforce the landlord's responsibilities required by law. This bill would serve to lessen these problems." Ah, the joys of being a landlord. No one said it would be easy.

El Dorado County sales drop off chart

The median price for a county home closing escrow last month, slipped below $400,000 for the first time since April of 2004. October’s $389,500 median price was an 8 percent decrease from September and nearly a 15 percent drop from October of 2006. The monthly price decline can be attributed to a stepped up interest in homes priced under $350,000. Last month 35 percent of all homes sold were priced under $350,000 and 52 percent of all sales were below $400,000. While first-time homebuyers were rediscovering El Dorado County, the number of home sales above $750,000 accounted for only 8 percent of all sales. When comparing the first 10 months of this year to last year, our median price of $463,000 is 7 percent down.

The 124 total residential sales reported by the El Dorado County Association of Realtors, was a slight increase from September’s 115 but 14 percent below October of 2006. Historically October sales will average 200 sales. Last month was the worst October for the number of house sales since 1995. With the holidays and winter on the way, October may well be our most active month until spring.

The El Dorado Hills area has 453 homes currently listed for sale, 21 properties sold last month for an average price of $664,600. Of the five county homes that closed escrow last month in excess of a million dollars, four were in ED Hills. At the current sales rate, the area will have a 2-year supply of homes for sale by the end of the year. The area accounts for twenty-eight percent of all county sales and 30 percent of all homes currently listed.

Cameron Park has 182 homes for sale. The areas average selling priced nose-dived below $400,000 last month to $390,600. The 21 local sales were nearly the same as in October of 2006 but the average price fell $95,000. The area has 12 percent of all the homes listed for sale and 17 percent of all county home sales.

The third most active real estate area in the county was the Greater Placerville area, which reported 14 sales at an average price of $386,250. Sales gently settled from the 16 sales a year earlier but the average price fell like a rock, down $118,000. There are currently 165 homes listed for sale, which accounts for 11 percent of the county’s home inventory and 9 percent of the county’s sales.

All other zip codes in the county reported single digit sales numbers for the month including: Shingle Springs with 7 sales for an average closing price of $664,000, Diamond Springs/El Dorado reported 9 sales for an average price of $373,000, Pollock Pines/Sly Park had 7 sales for the month with an average escrow at $277,100, Georgetown/Garden Valley had 6 sales with an average price of $226,300 and Cool/Pilot Hill reported 5 sales with an average price of $426,400.


There are fewer homes getting listed but still too many for the measly number of sales. Last month’s 309 new residential listings were the lowest number of new listings since December of 2006 but with monthly sales hovering below 150, the county has 10 months of available inventory provided no other homes go up for sale.

Sellers should follow the lead of several regional builders who have decided to temporary close down their home building until the market improves. Pardee Homes recently halted its planned 660 home building project in Natomas. David Ragland, chief of operations for Pardee said, “We plan to re-emerge and reopen in a year or a year and a half in a market with less competition.” A good idea for anyone in the position to hold until the market improves.

There is little on the immediate horizon that favors area home sellers who are faced with the decision of waiting out our market malaise or dropping their price substantially to attract a buyer. Homebuyers who have been patiently waiting on the sidelines received a wakeup call from the Federal Reserve last week.

The Fed conducted a survey in October of a number of national lenders who supply approximately 75 percent of all residential mortgage loans. The survey found that 41 percent have tightened their lending requirements either “considerably” or “somewhat” for the best qualified borrowers while 60 percent had even more stringent lending requirements for non-traditional or Alt-A mortgages. Forty of the 49 banks surveyed are no longer offering subprime loans.
It doesn’t do much good to close the barn door after the horses have run for the pasture. Lenders are attempting to close the door on their excessive liberal lending policies of the past by making it more difficult for today’s homebuyers to qualify for a loan. In so doing, they are hurting recovery efforts. First time homebuyers will be the key to the real estate market’s recovery but they will need reasonable and not reactionary consideration for a loan.