Time to start promoting El Dorado County
There are a number of theories as to why the real estate market has reversed itself so dramatically since the summer of 2005. One theory is home prices appreciated too high in a short period of time. Between 1999 and 2005 the typical home in El Dorado County doubled in value. Eventually buyers simply said no and quit paying what they considered outrageously high prices. Another theory is builders built too many new homes. The supply of available inventory eventually outpaced the demand, leaving more inventory than buyers. Builders reacted by lowering their new home prices, which subsequently affected the prices in the resale market. Speculators and flippers contributed to the problem, as did lenders with their creative loan programs. Our market correction could be the result of a normal economic cycle or a great conspiracy by foreign financial interest.
I suspect, as with most significant events, our current real estate market is the result of a combination of many factors. Regardless of what single or multiple issues is causing our real estate relapse, it may be prudent to initiate proactive measures to prevent the further erosion of property values, increasing foreclosures and a declining tax revenue.
Traditional market price corrections are usually bad for one party and good for another but they are normal and necessary in a free market. Broad government intervention in a market correction or short-term economic crises usually doesn’t help and in some cases actually exacerbates the problem. This market correction is different and a bit of public tweaking may be all that is necessary to jump-start the real estate market in El Dorado County.
Our local real estate market has already corrected itself from its past excesses. The median selling price for a county home is $100,000 less than two years ago. The selection of homes has never been better and most sellers will assist buyers with closing costs. The state and national economic climate is also favorable for homeownership. Interest rates are historically low, personal income continues to increase as does jobs (albeit at a slower pace) and the best economic measure of all, the gross national product, continues to reach unexpectedly high levels. Since we all understand the financially successful concept of buying low and selling high, why is it that buyers aren’t?
Consumers are suffering from a mental disorder called media-itice. The affliction resulting from four years of being propagandized by the major media and the economic press about the collapse of the real estate, mortgage and credit markets. Beginning in 2003, consumers have been told that the real estate market was: popping, sinking, bursting, plunging, free-falling, imploding, exploding, collapsing and in total meltdown. The mortgage industry has been portrayed as: opportunistic, greedy, corrupt, morally bankrupt and fraudulent. A national news network focuses an entire series on the “National Real Estate Crises.” Congress initiates investigations. Is it any wonder that potential homebuyers are put off from buying a home? Yes, there are some problems but isn’t all the hoopla over a small percentage of troubled homeowners a little too much?
Legislative changes in the mortgage, appraisal and credit industries, insuring market exuberance won’t happen again, will not change consumer immediate attitude toward real estate as a long-term investment and it will do nothing to perk up the county’s housing market. What our current local market needs is a stimulus that will attract homebuyers to El Dorado County.
According to the state Department of Finance, population growth in El Dorado County is the slowest in recent history. Between 2006 and 2007 the county had a net population increase of 1,720 for a total number of 178,689 people. Most of the increase resulted from new births while foreign immigration accounted for an additional 290 area residents and 699 new county residents were the result of domestic migration. At the current estimate of 2.5 people per household and the county’s current homeownership rate, we can assume that new residents purchased only 480 homes throughout the year. That isn’t enough. There are currently 1,450 homes for sale of which 550 are vacant. Having a third of all homes listed for sale, unoccupied isn’t a good sign. We can and should do better.
Anyone who lives in El Dorado County recognizes the benefits. Our quality of life is different in the foothills. Homeownership in the county isn’t a burden, it’s a privilege. We are surrounded with natural beauty and recreational opportunities. Perhaps it’s time for the public and or private sectors to join forces as an advocacy for homeownership in the county. Its charge would be educating potential homebuyers throughout the region as to the benefits of living and working in El Dorado County.
A public/private partnership, similar to an Economic Development Commission, could do much to off set the negative media about homeownership. At the same time it could promote the benefits of choosing El Dorado County as the right place to live. It isn’t only Realtors who have a steak in a healthy housing market. Local merchants, service providers and governmental agencies all should be interested in restoring confidence by promoting the American dream still available in the county.
Potential homebuyers have many choices when considering a place to move. Attracting area residents is now as important to the economic stability of a region as attracting and promoting business or tourism. A Housing Economic Counsel, promoting the benefits of owning a home in the county, is worthy of serious discussion.
I suspect, as with most significant events, our current real estate market is the result of a combination of many factors. Regardless of what single or multiple issues is causing our real estate relapse, it may be prudent to initiate proactive measures to prevent the further erosion of property values, increasing foreclosures and a declining tax revenue.
Traditional market price corrections are usually bad for one party and good for another but they are normal and necessary in a free market. Broad government intervention in a market correction or short-term economic crises usually doesn’t help and in some cases actually exacerbates the problem. This market correction is different and a bit of public tweaking may be all that is necessary to jump-start the real estate market in El Dorado County.
Our local real estate market has already corrected itself from its past excesses. The median selling price for a county home is $100,000 less than two years ago. The selection of homes has never been better and most sellers will assist buyers with closing costs. The state and national economic climate is also favorable for homeownership. Interest rates are historically low, personal income continues to increase as does jobs (albeit at a slower pace) and the best economic measure of all, the gross national product, continues to reach unexpectedly high levels. Since we all understand the financially successful concept of buying low and selling high, why is it that buyers aren’t?
Consumers are suffering from a mental disorder called media-itice. The affliction resulting from four years of being propagandized by the major media and the economic press about the collapse of the real estate, mortgage and credit markets. Beginning in 2003, consumers have been told that the real estate market was: popping, sinking, bursting, plunging, free-falling, imploding, exploding, collapsing and in total meltdown. The mortgage industry has been portrayed as: opportunistic, greedy, corrupt, morally bankrupt and fraudulent. A national news network focuses an entire series on the “National Real Estate Crises.” Congress initiates investigations. Is it any wonder that potential homebuyers are put off from buying a home? Yes, there are some problems but isn’t all the hoopla over a small percentage of troubled homeowners a little too much?
Legislative changes in the mortgage, appraisal and credit industries, insuring market exuberance won’t happen again, will not change consumer immediate attitude toward real estate as a long-term investment and it will do nothing to perk up the county’s housing market. What our current local market needs is a stimulus that will attract homebuyers to El Dorado County.
According to the state Department of Finance, population growth in El Dorado County is the slowest in recent history. Between 2006 and 2007 the county had a net population increase of 1,720 for a total number of 178,689 people. Most of the increase resulted from new births while foreign immigration accounted for an additional 290 area residents and 699 new county residents were the result of domestic migration. At the current estimate of 2.5 people per household and the county’s current homeownership rate, we can assume that new residents purchased only 480 homes throughout the year. That isn’t enough. There are currently 1,450 homes for sale of which 550 are vacant. Having a third of all homes listed for sale, unoccupied isn’t a good sign. We can and should do better.
Anyone who lives in El Dorado County recognizes the benefits. Our quality of life is different in the foothills. Homeownership in the county isn’t a burden, it’s a privilege. We are surrounded with natural beauty and recreational opportunities. Perhaps it’s time for the public and or private sectors to join forces as an advocacy for homeownership in the county. Its charge would be educating potential homebuyers throughout the region as to the benefits of living and working in El Dorado County.
A public/private partnership, similar to an Economic Development Commission, could do much to off set the negative media about homeownership. At the same time it could promote the benefits of choosing El Dorado County as the right place to live. It isn’t only Realtors who have a steak in a healthy housing market. Local merchants, service providers and governmental agencies all should be interested in restoring confidence by promoting the American dream still available in the county.
Potential homebuyers have many choices when considering a place to move. Attracting area residents is now as important to the economic stability of a region as attracting and promoting business or tourism. A Housing Economic Counsel, promoting the benefits of owning a home in the county, is worthy of serious discussion.
posted by Ken Calhoon at 4:34 PM
1 Comments:
Since we all understand the financially successful concept of buying low and selling high, why is it that buyers aren’t?
Consumers are suffering from a mental disorder called media-itice.
I disagree. Consumers are suffering from "Pocket Book-itis". $100K ain't enough, Daddy-o. Homes need to come back down to 3-4x gross median income.
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