Friday, August 31, 2007
More Supply, Less Demand, Somethin's Gotta Give
Heading out of town for the long weekend...so I thought I would leave with an updated chart of the Bubble Market Inventory Tracking. I had posted the same chart a while back. Seems the economics haven't quite kicked in yet.
A Glimmer
Of course right after we sign our new 6 month lease....with a 3 month rent penalty for early termination...we start seeing some nice looking properties that fit our budget.
There is the price range I browse....up to around 25% over what I would like to pay......since, by my calculations, these houses should eventually be in our price range.
And there is the price range we would feel comfortable making an offer on (under $450). Thus far, they have been pretty few and far between...but lately hubby and I have been sending each other at least one or two new listings a week. Most are older houses without all the superfluous trimmings....but that is pretty much what we are looking for.
This reminds me of when I was dating back in college....it seemed the times I attracted the most interest was when I was already in a relationship.
There is the price range I browse....up to around 25% over what I would like to pay......since, by my calculations, these houses should eventually be in our price range.
And there is the price range we would feel comfortable making an offer on (under $450). Thus far, they have been pretty few and far between...but lately hubby and I have been sending each other at least one or two new listings a week. Most are older houses without all the superfluous trimmings....but that is pretty much what we are looking for.
This reminds me of when I was dating back in college....it seemed the times I attracted the most interest was when I was already in a relationship.
Thursday, August 30, 2007
Social Capital
Trying to be a bit more positive today.....after all my complaining this week.
Twice in the last month the WSJ made reference to a book called "Bowling Alone." The follow-up study to this book empirically confirms the sentiments I have regarding the loss of community in our society. They call it "social capital" and civic engagement. I call it "anti-socialization."
In response to their initial findings, they have also followed up on their research by trying to address the situation. They compiled a list of things you can to do build social capital.
While the research has been criticised as being anti-diversity, I think people wrongly assume that diversity means the color of someones skin. The author clarifies by noting that in diverse communities trust erodes not only between members of different ethnic groups, but within them as well.
To some degree I have to agree with him. For instance comparing Salt Lake City to Sacramento. The cities share similarities in climate and economy, however SLC is religiously and ethnically very homogeneous (my little cousins were told by their Mormon classmates that they were going to hell since they were not LDS...sigh). I get a strong sense of local pride in community when I visit SLC as compared to Sacramento. Would I personally want to live there....heck no. But I truly wish we could somehow create the same level of community pride in Sacramento.
(And for the record, some of my dearest friends are LDS...I think the sense of community they have is a wonderful thing....I just wish they would be a little more accepting of those who don't share their faith).
Twice in the last month the WSJ made reference to a book called "Bowling Alone." The follow-up study to this book empirically confirms the sentiments I have regarding the loss of community in our society. They call it "social capital" and civic engagement. I call it "anti-socialization."
In response to their initial findings, they have also followed up on their research by trying to address the situation. They compiled a list of things you can to do build social capital.
While the research has been criticised as being anti-diversity, I think people wrongly assume that diversity means the color of someones skin. The author clarifies by noting that in diverse communities trust erodes not only between members of different ethnic groups, but within them as well.
To some degree I have to agree with him. For instance comparing Salt Lake City to Sacramento. The cities share similarities in climate and economy, however SLC is religiously and ethnically very homogeneous (my little cousins were told by their Mormon classmates that they were going to hell since they were not LDS...sigh). I get a strong sense of local pride in community when I visit SLC as compared to Sacramento. Would I personally want to live there....heck no. But I truly wish we could somehow create the same level of community pride in Sacramento.
(And for the record, some of my dearest friends are LDS...I think the sense of community they have is a wonderful thing....I just wish they would be a little more accepting of those who don't share their faith).
Wednesday, August 29, 2007
Some Perspective Please
Its that time of the month when I don't have any new data to play with....and at present I need to rant a bit.....so consider yourself warned....normally I'm not this bitter...but some things are starting to wear on me.
The first thing that really gets my goat is all the wailing about the 10% drop in values (I think the drop was more like 3% nationwide). Hello......did I not just see my little townhouse in the suburbs of D.C. increase in value by 80% in 5.5 years. Homeowners across the country experienced the same thing (especially in the coastal markets). That's a CAGR of 11%!
Its free money for anyone who is able or willing to cash out. Why everyone feels so entitled to every last penny of this money that they did almost nothing to make is beyond me. So instead, you only make 70% profit if you lower your price to sell your home. Its still 70% more than you had before...plus free rent for x amount of years....So stop complaining!
The whole, "I can't sell my house argument" is also really starting to piss me off. My father has had his house on the market for almost 2 years and is always lamenting how they "can't" sell it. It's not a matter of "can't". I'm almost positive almost anyone can sell their house if they lower their price (ironically Dad increased his price after not being able to sell it the first year).
To some degree I feel the same about the stock market. We have seen relatively steady gains since early 2002. That's 5 years of growth.....a couple days here or there where the value drops 1%-3% is pretty small potatoes in the greater scheme of things.
People need to stop expecting something for nothing. Money doesn't grow on trees. It comes with strings attached.....its called risk.
The first thing that really gets my goat is all the wailing about the 10% drop in values (I think the drop was more like 3% nationwide). Hello......did I not just see my little townhouse in the suburbs of D.C. increase in value by 80% in 5.5 years. Homeowners across the country experienced the same thing (especially in the coastal markets). That's a CAGR of 11%!
Its free money for anyone who is able or willing to cash out. Why everyone feels so entitled to every last penny of this money that they did almost nothing to make is beyond me. So instead, you only make 70% profit if you lower your price to sell your home. Its still 70% more than you had before...plus free rent for x amount of years....So stop complaining!
The whole, "I can't sell my house argument" is also really starting to piss me off. My father has had his house on the market for almost 2 years and is always lamenting how they "can't" sell it. It's not a matter of "can't". I'm almost positive almost anyone can sell their house if they lower their price (ironically Dad increased his price after not being able to sell it the first year).
To some degree I feel the same about the stock market. We have seen relatively steady gains since early 2002. That's 5 years of growth.....a couple days here or there where the value drops 1%-3% is pretty small potatoes in the greater scheme of things.
People need to stop expecting something for nothing. Money doesn't grow on trees. It comes with strings attached.....its called risk.
Tuesday, August 28, 2007
Polite Conversation?
As Cymst aptly noted in an earlier comment, real estate is one of the few safe conversation topics most adults can relate to. However it be a mine field if you aren't careful.
I should preface this by noting how my conversations about real estate have evolved over the last nine months. Previously people looked at me like I was crazy when I told them we sold our house and were waiting for RE prices to come back down to earth. Now things are different. You have to be living under a rock, if you haven't heard that residential real estate is experiencing troubles (there are a surpising number of clueless people out there).
I enjoy hearing people's reaction to our situation. In my recent travels I strike up conversations with people and consider their response a barometer for public sentiment. I never mention my secret obsession. I simply state that we recently moved to Sacramento and are renting until we find something we like. I then listen intently to their advise and nod no matter what.
July was definitely a major breakthrough on the public sentiment side....it has finally sunk in to the national consciousness that housing is not infallible.
However the conversation I am not very good at navigating, when I delve into the subject with people I know..... is where it comes out that I am actually hoping housing prices will drop so we can find something affordable. Trouble is, I am typically talking to a homeowner (who acknowledges that homes aren't affordable), but doesn't want values to go down, because it would mean THEIR house is worth less. Only recently did I have this discussion where the owner actually made the connection that all values would be going down (i.e. all boats rise and fall with the tide) so it wasn't a bad thing.
I should preface this by noting how my conversations about real estate have evolved over the last nine months. Previously people looked at me like I was crazy when I told them we sold our house and were waiting for RE prices to come back down to earth. Now things are different. You have to be living under a rock, if you haven't heard that residential real estate is experiencing troubles (there are a surpising number of clueless people out there).
I enjoy hearing people's reaction to our situation. In my recent travels I strike up conversations with people and consider their response a barometer for public sentiment. I never mention my secret obsession. I simply state that we recently moved to Sacramento and are renting until we find something we like. I then listen intently to their advise and nod no matter what.
July was definitely a major breakthrough on the public sentiment side....it has finally sunk in to the national consciousness that housing is not infallible.
However the conversation I am not very good at navigating, when I delve into the subject with people I know..... is where it comes out that I am actually hoping housing prices will drop so we can find something affordable. Trouble is, I am typically talking to a homeowner (who acknowledges that homes aren't affordable), but doesn't want values to go down, because it would mean THEIR house is worth less. Only recently did I have this discussion where the owner actually made the connection that all values would be going down (i.e. all boats rise and fall with the tide) so it wasn't a bad thing.
Monday, August 27, 2007
The Weekly Screen Scrape - Inventory is the Story
Wow, inventory jumped during last week's screen scrape. As of last week, the number of homes in Folsom and El Dorado Hills that meet my market criteria has basically doubled since I started keeping track of overall statistics in early March!
I am really curious to see if this year the listing cycle will hold. The way I see it, with a lot of bank and short sale properties out there, I don't imagine as much of the "wait till spring" listing dip will occur.
I love that I can be picky now. With our last house, if we didn't put in a contract within hours of it hitting the MLS, we were out of luck. We barely even got to see a place, let alone give it a full evaluation before multiple offers were in. Now I find a whole host of things wrong with every place we see....too close to the main road, bad layout, too hilly, too close to the prison, way overpriced.......
In some ways its good we bought in the previous frenzied market (2002), as it taught us many important lessons. That said, buying in VA is very different than CA. In VA, its all buyer beware, no disclosure etc. which is really tough to navigate for first time buyers and people new to the state in general.
I am really curious to see if this year the listing cycle will hold. The way I see it, with a lot of bank and short sale properties out there, I don't imagine as much of the "wait till spring" listing dip will occur.
I love that I can be picky now. With our last house, if we didn't put in a contract within hours of it hitting the MLS, we were out of luck. We barely even got to see a place, let alone give it a full evaluation before multiple offers were in. Now I find a whole host of things wrong with every place we see....too close to the main road, bad layout, too hilly, too close to the prison, way overpriced.......
In some ways its good we bought in the previous frenzied market (2002), as it taught us many important lessons. That said, buying in VA is very different than CA. In VA, its all buyer beware, no disclosure etc. which is really tough to navigate for first time buyers and people new to the state in general.
Friday, August 24, 2007
Nice to know...
Its nice to know I'm not going crazy. Agent Bubble confirmed the inventory increase I reported on Wednesday's post. Thanks AB! For details see his message is below:
Just ran an early analysis of my monthly "Distressed Property" data...Keep in mind, it has only been 16 days since the last analysis....Check these facts out:
1) From 7/7/07 to 8/7/07 we increased by 544 distressed properties
2) From 8/8/07 to today we have already increased by 515 properties
We still have almost two weeks to go, yet we've almost matched the previous months's data.
Also worth noting:
1) From 7/7/07 to 8/7/07 total inventory increased from 17,659 to 18,182 (523 new listings)
2) From 8/8/07 to today inventory has already increased by 308 listings (we're now at 18,490).
Looks like inventory is still increasing and at a quicker rate than last month!
Just ran an early analysis of my monthly "Distressed Property" data...Keep in mind, it has only been 16 days since the last analysis....Check these facts out:
1) From 7/7/07 to 8/7/07 we increased by 544 distressed properties
2) From 8/8/07 to today we have already increased by 515 properties
We still have almost two weeks to go, yet we've almost matched the previous months's data.
Also worth noting:
1) From 7/7/07 to 8/7/07 total inventory increased from 17,659 to 18,182 (523 new listings)
2) From 8/8/07 to today inventory has already increased by 308 listings (we're now at 18,490).
Looks like inventory is still increasing and at a quicker rate than last month!
Thursday, August 23, 2007
Is the F Word (Foreclosure) Really all that Bad?
With all the front page stories about families facing foreclosure I thought I would try to explore the sympathy factor a little bit.
First let me preface this by saying, I tend to be a bleeding heart on many issues, which is why I have been confused with the media coverage on this one. I feel I should be sympathetic towards folks who are losing their homes....but, in certain instances I don't understand why the media paints this event as being so tragic.
I categorize foreclosures in two buckets.
The first small bucket is the foreclosure as result of some other major tragedy in one's life (like huge medical bills, job loss, death in the family, or divorce etc.). My heart goes out to these folks, as they have much larger problems to deal with than losing their home. In some instance they are truely in danger of becoming homeless.
The second big bucket is the foreclosures resulting from the housing bubble. These folks are facing foreclosure for a variety of reasons (couldn't refinance, appraisals coming in low, fraudulent documentation of income, ARM resets, to name a few). If they lose their home....is it really a bad thing? Worst case, they can rent a house or apartment like the rest of us. They are not on the path to becoming homeless.
Some sweeping generalizations.......
Housing bubble foreclosure folks are likely to take a credit hit, but lets not forget that a large portion of these folks had poor credit to begin with.
In cases where buyers didn't put any money down, which is likely to be a common scenario if they are having trouble refinancing, they aren't even losing any of their hard earned $$.
So where exactly is the tragedy....? In sum, they already had bad credit, they aren't losing their life savings, and they will save money by renting.
First let me preface this by saying, I tend to be a bleeding heart on many issues, which is why I have been confused with the media coverage on this one. I feel I should be sympathetic towards folks who are losing their homes....but, in certain instances I don't understand why the media paints this event as being so tragic.
I categorize foreclosures in two buckets.
The first small bucket is the foreclosure as result of some other major tragedy in one's life (like huge medical bills, job loss, death in the family, or divorce etc.). My heart goes out to these folks, as they have much larger problems to deal with than losing their home. In some instance they are truely in danger of becoming homeless.
The second big bucket is the foreclosures resulting from the housing bubble. These folks are facing foreclosure for a variety of reasons (couldn't refinance, appraisals coming in low, fraudulent documentation of income, ARM resets, to name a few). If they lose their home....is it really a bad thing? Worst case, they can rent a house or apartment like the rest of us. They are not on the path to becoming homeless.
Some sweeping generalizations.......
Housing bubble foreclosure folks are likely to take a credit hit, but lets not forget that a large portion of these folks had poor credit to begin with.
In cases where buyers didn't put any money down, which is likely to be a common scenario if they are having trouble refinancing, they aren't even losing any of their hard earned $$.
So where exactly is the tragedy....? In sum, they already had bad credit, they aren't losing their life savings, and they will save money by renting.
Wednesday, August 22, 2007
Month's Inventory by Zip for July/Aug
This time the zips are ordered descending by month's inventory. The dark line denotes the 6 month mark (buyer and seller equal footing). Quite of few of the nicer neighborhoods are staying stubbornly below that line.
In general, I was a bit surprised at this month's inventory numbers. There seemed to be a larger increase than I had expected based on the other local blogs. Partially to blame is my busy travel schedule. A bit more than a month has passed since my last inventory of inventory.
Again the for sale stats are from ZipReatly SFHs. The sales come from DataQuick supplied by the SacBee. As might be implied from the shadow analysis the month's inventory could actually be much higher.
In general, I was a bit surprised at this month's inventory numbers. There seemed to be a larger increase than I had expected based on the other local blogs. Partially to blame is my busy travel schedule. A bit more than a month has passed since my last inventory of inventory.
Again the for sale stats are from ZipReatly SFHs. The sales come from DataQuick supplied by the SacBee. As might be implied from the shadow analysis the month's inventory could actually be much higher.
Monday, August 20, 2007
July DataQuick for Folsom & El Dorado Hills
Will let the data speak for itself this month since my housing obsession is on the back burner while I get some real work done. All data has been derived from the Sacramento Bee Home Sales Charts found on their website. This data is furnished monthly by DataQuick.
Friday, August 17, 2007
Shedding Light on the Shadow?
For some time now, shadow inventory has been a topic of speculation on Lander & Max’s blogs. In addition, there has been discussion about what is and isn’t present in the data we all rely on. My curiosity got the better of me, so I asked my Realtor for some MLS sales stats from Jan 1, 2007 to present. I compared the MLS data with the data on SacBee’s site from DataQuick.
While this doesn’t specifically identify the shadow inventory everyone is talking about, it does help identify what type of activity is occurring and by whom.
After considerable data cleaning and comparison efforts, at long last I have some general stats to share. Of course there are plenty of caveats, which are listed below.
The data compares Folsom and El Dorado Hills single family home sales in DataQuick from Jan 1, 2007 to June 20, 2007 with MLS for that same period. In general the MLS contains about 2/3 of all sales (69%) including some new construction sales. Approximately 17% of all homes sold during that period are new construction. Please note that these results are not likely to be indicative of the rest of Sacramento.
MLS & DataQuick - I did my best to match up the MLS data with DataQuick. However I didn’t diligently paw through the remaining records manually in the MLS to confirm it wasn’t a match.
MLS Only – These records didn’t match up with DataQuick. There were a couple that looked to be addresses of the new construction. I did find some condos that were not identified as such and pulled them out.
DataQuick Other – These records didn’t match up with the MLS, and didn’t appear to be new construction. Some would be FSBO, others are the initial foreclosure sale to the bank of a home that was later sold via MLS. However these two categories can’t account for the full data set. Not sure if the rest can be considered shadow or not.
Listed Once on MLS and Twice on DataQuick – These appear to be distressed properties that are sold to the bank, and then sold via MLS. The initial sale to the bank is considered under “DataQuick Other.”
New Construction - I did my best to identify the new construction, based on year and some other general indicators in DataQuick but this data is more of an approximation. Some of these records were in the MLS, but the vast majority were in DataQuick.
While this doesn’t specifically identify the shadow inventory everyone is talking about, it does help identify what type of activity is occurring and by whom.
After considerable data cleaning and comparison efforts, at long last I have some general stats to share. Of course there are plenty of caveats, which are listed below.
The data compares Folsom and El Dorado Hills single family home sales in DataQuick from Jan 1, 2007 to June 20, 2007 with MLS for that same period. In general the MLS contains about 2/3 of all sales (69%) including some new construction sales. Approximately 17% of all homes sold during that period are new construction. Please note that these results are not likely to be indicative of the rest of Sacramento.
MLS & DataQuick - I did my best to match up the MLS data with DataQuick. However I didn’t diligently paw through the remaining records manually in the MLS to confirm it wasn’t a match.
MLS Only – These records didn’t match up with DataQuick. There were a couple that looked to be addresses of the new construction. I did find some condos that were not identified as such and pulled them out.
DataQuick Other – These records didn’t match up with the MLS, and didn’t appear to be new construction. Some would be FSBO, others are the initial foreclosure sale to the bank of a home that was later sold via MLS. However these two categories can’t account for the full data set. Not sure if the rest can be considered shadow or not.
Listed Once on MLS and Twice on DataQuick – These appear to be distressed properties that are sold to the bank, and then sold via MLS. The initial sale to the bank is considered under “DataQuick Other.”
New Construction - I did my best to identify the new construction, based on year and some other general indicators in DataQuick but this data is more of an approximation. Some of these records were in the MLS, but the vast majority were in DataQuick.
Thursday, August 16, 2007
Terminal Velocity
I was checking up on the latest market news when I spied this article. I would almost be willing to bet, if this guy stays in California, he will end up in Sacramento. Only those coming from more expensive areas can "afford" to move here. Many of those that have been living here for some time are tapped out/fed up and moving on. In my small circle of friends and acquaintances here in the Sacramento area, quite a few seem to be packing for less expensive areas (for the same or better job quality).
Last month I was getting a bit depressed about our personal situation because prices didn't seem to be moving much. Looks like we have reached terminal velocity and I am just praying the nation survives the trip.
Last month I was getting a bit depressed about our personal situation because prices didn't seem to be moving much. Looks like we have reached terminal velocity and I am just praying the nation survives the trip.
Be careful what you wish for
All I really want is to secure a small piece of the American Dream without leveraging my entire future. Is affordable housing too much to ask? Apparently so.
As of my last quick peak at the market this morning, it appears my dream might come with some serious consequences for the entire country. While I knew some casualties were going to be necessary in the RE and associated construction and mortgage industries, I didn't think it would create a panic in the overall economy.
This reminds me of an anecdote we use a lot in my industry. If a frog is put in a pot of boiling water...it knows to jump out right way. However if its put in a pot of room temp water that is on the stove, it doesn't realize the water is too hot until its too late, because the water is heating gradually.
Been on a crazy busy travel schedule lately, but I have a special treat I hope to post stats on tomorrow.
As of my last quick peak at the market this morning, it appears my dream might come with some serious consequences for the entire country. While I knew some casualties were going to be necessary in the RE and associated construction and mortgage industries, I didn't think it would create a panic in the overall economy.
This reminds me of an anecdote we use a lot in my industry. If a frog is put in a pot of boiling water...it knows to jump out right way. However if its put in a pot of room temp water that is on the stove, it doesn't realize the water is too hot until its too late, because the water is heating gradually.
Been on a crazy busy travel schedule lately, but I have a special treat I hope to post stats on tomorrow.
Tuesday, August 14, 2007
First, Last and Second Chances
WSJ was awash today in news of market turmoil related to credit and mortgages. One article cited the fact that previously 70% of appraisals resulted in loans, today that has been reversed, and now 70% of appraisals result in rejections.
When the purchase price and appraisal on our home ended up being the exact same amount back in 2002 (we purchased with a no money down loan), it was a glaring sign that there was something suspicious and self-reinforcing going on in the RE industry.
Today the effects of this turmoil are starting to be felt by more members of the general public. The cost of jumbo loans are going up and loan products like the one we used to get into a house are starting to dry up. I honestly don't know how any first time home buyer can afford to get into this market now (on either of the coasts). Until something comes along to change that fact, I don't really see this market recovering.
I heard somewhere that if its been over 3 years, you qualify for first time home buyer loan products. At this rate we may get a second chance at a first time.
When the purchase price and appraisal on our home ended up being the exact same amount back in 2002 (we purchased with a no money down loan), it was a glaring sign that there was something suspicious and self-reinforcing going on in the RE industry.
Today the effects of this turmoil are starting to be felt by more members of the general public. The cost of jumbo loans are going up and loan products like the one we used to get into a house are starting to dry up. I honestly don't know how any first time home buyer can afford to get into this market now (on either of the coasts). Until something comes along to change that fact, I don't really see this market recovering.
I heard somewhere that if its been over 3 years, you qualify for first time home buyer loan products. At this rate we may get a second chance at a first time.
Monday, August 13, 2007
Proliferation & Costo-tization
Its time once again for a slightly off topic post on the factors driving our wants and "needs" for a larger house.........
When I first moved to Sacramento in the fall of 1995 my dad was able to fit all my worldly possession in the back of his truck. Fresh out of college, my possessions included a beanbag, a bike, a microwave, and of course some clothes and CDs.
When I returned to Sacramento in the fall of 2006 with my husband and two kids in tow, we had enough stuff to fill an enormous 24 foot Budget Truck, two cars, and a really old old fishing boat.
The amount of stuff I accumulated over those 11 years is staggering if you think about it (not to mention the hubby and kids). It got me thinking about why us Americans accumulate so much stuff. When we tour older houses I can't help but notice how little storage space there is. The closets are tiny by today's standards (especially at the house we just sold). I don't think any other generation, or for that matter culture, can match our ability to purchase and store "needed" items.
First and foremost.....from birth we are bombarded with messages to consume. Whether we like it or not, we respond to these messages, telling us we will be more popular, sexy, envied etc. if we buy product "X".
Second....what I will call the Costco-tization of merchandise. Costco appeals to our sense of value. We see and purchase items that we never knew we "needed" when we go there. Many of these items elegantly carry out a single purpose in life. Take for instance, the Margarita maker. It very elegantly makes Margaritas, but how come you can't just use a blender, or make your Margaritas on ice? What is most unfortunate about this specialization in gadgetry is the fact that we rarely use these gadgets. And of course, the more gadgets we purchase, the less we use our general multi-purpose gadgets. Its a slippery slope of proliferation. While I chose to pick on Costco, Sam's Club, BJ's etc., and even normal retail stores like Bed Bath Beyond, all feed this addiction of ours.
Third....what to get for the people who have everything? We give and get gifts. Over the years this stuff really adds up. This gift giving feeds off item number two above. We start buying our friends and family very specialized items, like creme brulee torches, since they don't "need" anything else.
Fourth.....we don't fix things anymore. The media, and the company's whose products they promote, have conditioned us to purchase new electronic gadgetry every couple years. If they break, we never fix them. Instead, they have made the economics of purchasing a new, bigger and better ones more favorable. Many of us now throw away perfectly good cell phones, PDAs etc., just because we want one with more features.
And finally......I think this goes back to the anti-socialization issue a bit. We no longer have communal property. Things like ladders, which you only use very rarely, used to be owned by a community. This community property was then replaced by our ability to borrow from neighbors (which we all used to know really well). Now we don't have community, and we don't know or trust our neighbors, so we end up purchasing instead. These items then fill our garages and kitchens, and require us to purchase a large house to fit them all. Luckily some sites, like Craigslist, and Freecycle have allowed us to purchase and then unload these items a little more easily.
My personal goal, as of late, is to not purchase things unless I will use them at least every 3 months. While this doesn't sound like much, its surprising how many items in a house/garage don't meet that criteria.
How much stuff do we really truly need? (notice no quotations this time)
When I first moved to Sacramento in the fall of 1995 my dad was able to fit all my worldly possession in the back of his truck. Fresh out of college, my possessions included a beanbag, a bike, a microwave, and of course some clothes and CDs.
When I returned to Sacramento in the fall of 2006 with my husband and two kids in tow, we had enough stuff to fill an enormous 24 foot Budget Truck, two cars, and a really old old fishing boat.
The amount of stuff I accumulated over those 11 years is staggering if you think about it (not to mention the hubby and kids). It got me thinking about why us Americans accumulate so much stuff. When we tour older houses I can't help but notice how little storage space there is. The closets are tiny by today's standards (especially at the house we just sold). I don't think any other generation, or for that matter culture, can match our ability to purchase and store "needed" items.
First and foremost.....from birth we are bombarded with messages to consume. Whether we like it or not, we respond to these messages, telling us we will be more popular, sexy, envied etc. if we buy product "X".
Second....what I will call the Costco-tization of merchandise. Costco appeals to our sense of value. We see and purchase items that we never knew we "needed" when we go there. Many of these items elegantly carry out a single purpose in life. Take for instance, the Margarita maker. It very elegantly makes Margaritas, but how come you can't just use a blender, or make your Margaritas on ice? What is most unfortunate about this specialization in gadgetry is the fact that we rarely use these gadgets. And of course, the more gadgets we purchase, the less we use our general multi-purpose gadgets. Its a slippery slope of proliferation. While I chose to pick on Costco, Sam's Club, BJ's etc., and even normal retail stores like Bed Bath Beyond, all feed this addiction of ours.
Third....what to get for the people who have everything? We give and get gifts. Over the years this stuff really adds up. This gift giving feeds off item number two above. We start buying our friends and family very specialized items, like creme brulee torches, since they don't "need" anything else.
Fourth.....we don't fix things anymore. The media, and the company's whose products they promote, have conditioned us to purchase new electronic gadgetry every couple years. If they break, we never fix them. Instead, they have made the economics of purchasing a new, bigger and better ones more favorable. Many of us now throw away perfectly good cell phones, PDAs etc., just because we want one with more features.
And finally......I think this goes back to the anti-socialization issue a bit. We no longer have communal property. Things like ladders, which you only use very rarely, used to be owned by a community. This community property was then replaced by our ability to borrow from neighbors (which we all used to know really well). Now we don't have community, and we don't know or trust our neighbors, so we end up purchasing instead. These items then fill our garages and kitchens, and require us to purchase a large house to fit them all. Luckily some sites, like Craigslist, and Freecycle have allowed us to purchase and then unload these items a little more easily.
My personal goal, as of late, is to not purchase things unless I will use them at least every 3 months. While this doesn't sound like much, its surprising how many items in a house/garage don't meet that criteria.
How much stuff do we really truly need? (notice no quotations this time)
Friday, August 10, 2007
Sale Price Inflation Revisited
A while back I did a post on how the sale price of a house can be inflated by giving cash back to the buyer at closing. This makes overall market appear to be holding up much better than it really is. In fact, when we sold our townhouse in Virginia to move back to California, almost all the comparable sales had subsidized the borrowers (I'm sure this was also related to the fact that our development was entry level homes, so first time borrower's didn't have the cash for down paymenta and closing costs). This phenomena was rare back in 2002 when we bought. On an aggregate level, I think it makes the RE statistics look much rosier than they really are, particularly at the lower end.
Based on the comments from my earlier post, I found out this doesn't typically occur in California the way it does in Virgina. Although I did see a post a while back on OC Renter's Blog highlighting this activity as fraud. However in that case, $40,000 is a lot more than just closing costs.
Most likely, it doesn't occur in California because the buyer pays taxes on the purchase price of the house, so there is an incentive to make that purchase price as low as possible. In Virginia you pay taxes on the assessed value of the house, so a couple thousand added on to the purchase doesn't do any harm to the buyer. In both cases the seller does have to pay RE commission on it, but in this market, they are lucky to even have buyer with a GFE.
Based on the comments from my earlier post, I found out this doesn't typically occur in California the way it does in Virgina. Although I did see a post a while back on OC Renter's Blog highlighting this activity as fraud. However in that case, $40,000 is a lot more than just closing costs.
Most likely, it doesn't occur in California because the buyer pays taxes on the purchase price of the house, so there is an incentive to make that purchase price as low as possible. In Virginia you pay taxes on the assessed value of the house, so a couple thousand added on to the purchase doesn't do any harm to the buyer. In both cases the seller does have to pay RE commission on it, but in this market, they are lucky to even have buyer with a GFE.
Thursday, August 9, 2007
The Weekly Screen Scrape - Mind the Gap
The last three weeks have seen similar trends. Lots of activity, contracts, price drops, new listings, escrow closings, and some folks giving up and taking their listing off the MLS.
The gulf is widening between the price per square foot of houses still on the market compared to those under contract. The under-contract average asking price per square foot is down to $203 in Folsom and El Dorado Hills! Of course this just applies to the houses in my search criteria (20 pending and 64 still on the market).
Looking forward to seeing the July and August sales stats.
P.S. I was going to give special kudos to the person who could give the original reference from the title of the post...but Wikipedia makes things too easy these days.
The gulf is widening between the price per square foot of houses still on the market compared to those under contract. The under-contract average asking price per square foot is down to $203 in Folsom and El Dorado Hills! Of course this just applies to the houses in my search criteria (20 pending and 64 still on the market).
Looking forward to seeing the July and August sales stats.
P.S. I was going to give special kudos to the person who could give the original reference from the title of the post...but Wikipedia makes things too easy these days.
Wednesday, August 8, 2007
Price Points - El Dorado Hills
Did a quick check of the MetrolistMLS data for El Dorado Hills. Looks like a price point has emerged. There aren't many houses pending above $475,000. But almost all are pending, with some exceptions below it (average family sized houses).
This makes sense to me of course, since my price point is $450,000 or below. I guess there are a lot of average buyers out there! I just wish the sellers would figure this out and start lowering their prices, cause I am really getting tired of buying time.
This makes sense to me of course, since my price point is $450,000 or below. I guess there are a lot of average buyers out there! I just wish the sellers would figure this out and start lowering their prices, cause I am really getting tired of buying time.
Frame of Reference
How we think of our homes has a lot to do with our purchase decision. I see several general stereotypes.
- Some folks see their home purely as investment, buying and selling often. They rarely personalize a home and never really set down roots in the local community.
- Some folks see their home as a place to live and call their own (i.e. their piece of the American Dream). They are proud of their home an involved in the community.
- Some folks see their home as a retirement strategy. They want to own a home outright by the time they retire in order to use their retirement income for other necessities and activities.
- Some folks see their home as the place where the often go when they are not at work.
I'm sure there are more types, and obviously some of these are compatible. For instance I would say I am part American Dream part Retirement Strategy. On the retirement strategy side, with a 30 year fixed rate loan, I should have purchased a year ago if I wanted to retire mortgage free by 65....sigh. Although chances are, retirement age will be closer to 70 by the time I get there. The way I figure it, I will have to make due on 401k alone (since I doubt there will be much left in the SS fund by the time I retire). Actually owning my home outright will make that much easier to do.
Tuesday, August 7, 2007
August Good Buys
See ground rules for posting. Please label you comment, whether you are interested in "Feedback" or if it is a "Good Buy."
Average Buyer Good Buys
Inspired by recent comments, I created a forum for vetting properties we are interested in, and/or sharing information on houses that are "good buys". All properties should be located in family-friendly areas in and around Sacramento.
For now, I will create a section and we can post the listings in the comments on a monthly basis (similar to Sacramento Landing's water cooler). If there is enough interest, I will look into a more interactive format (to allow for updates like sold price).
Here are the ground rules:
1) These should be houses you would consider purchasing yourself (assuming you had the $$)
2) No marketing for friends or relatives...this is not CraigsList.
3) No trolling for houses others have set their hearts on. Conversely, if you are vetting a potential house, please be aware that this is a public forum, so don't share too many details if this is your dream home.
4) No houses over $850K. They are not houses for average buyers (I would have said 500K but I know quite a few folks on the blogs have much higher price ranges than we do).
5) Be respectful of others choices. If you don't like a neighborhood or subdivision, offer viable alternatives and information, not criticism.
6) Try to give enough information that folks have a general idea. Location, price, as well as categories, like tract home, custom home, Streng, large lot, river access etc. would be helpful.
7) No links to specific MLS houses...their terms of use do not allow them and they will be deleted.
For now, I will create a section and we can post the listings in the comments on a monthly basis (similar to Sacramento Landing's water cooler). If there is enough interest, I will look into a more interactive format (to allow for updates like sold price).
Here are the ground rules:
1) These should be houses you would consider purchasing yourself (assuming you had the $$)
2) No marketing for friends or relatives...this is not CraigsList.
3) No trolling for houses others have set their hearts on. Conversely, if you are vetting a potential house, please be aware that this is a public forum, so don't share too many details if this is your dream home.
4) No houses over $850K. They are not houses for average buyers (I would have said 500K but I know quite a few folks on the blogs have much higher price ranges than we do).
5) Be respectful of others choices. If you don't like a neighborhood or subdivision, offer viable alternatives and information, not criticism.
6) Try to give enough information that folks have a general idea. Location, price, as well as categories, like tract home, custom home, Streng, large lot, river access etc. would be helpful.
7) No links to specific MLS houses...their terms of use do not allow them and they will be deleted.
Monday, August 6, 2007
July Melissa Data for Folsom and El Dorado Hills
Looks like El Dorado Hills had a big boost in sales this month. Perhaps due to the opening of Centex and Lennar offices at the new Blackstone Development?
I try not to read into the average price data too much since both these zips can have some really high end sales that skews the averages. However the slow down is sales is hard to miss, but it doesn't really seem to be affecting the prices that dramatically (this is confirmed by my weekly screen scrape).
I try not to read into the average price data too much since both these zips can have some really high end sales that skews the averages. However the slow down is sales is hard to miss, but it doesn't really seem to be affecting the prices that dramatically (this is confirmed by my weekly screen scrape).
Saturday, August 4, 2007
Contemplating a Fixer
Hubby and I used to joke around when referring to our previous house, we called it our practice house. It was our first house....well okay it was a townhouse that had neighbors attached on either side. It was built in 1979 and didn't have a single square wall, but it was right near the last metro stop in the D.C. suburbs of Virginia.
We called it the practice house because we (well, really 80% hubby and 20% me) practiced all our home improvement techniques on it. In the end, it sold within days of listing since the location was great and the home was completely updated compared to others.
Today we saw an opportunity to put that practice to good use. The home is almost everything we want, enormous lot, single story, easy freeway access, nestled in the hills, seasonal creek in the back etc etc. The caveat, its a heavy fixer, much more so than our last house. And while I know we have the ability to do it, I am not sure we have the desire.
As far as ability goes, hubby worked construction growing. His dad is a top quality tile mason (who needs work in case anyone needs a referral), and his brother is very handy as well. As far as desire goes, my children are young. They are at that stage where all they want to do is spend time with me, sitting in my lap, playing with toys on the living room floor. Do I really want to squander this special time to work on a house? After all, I already work 40 hours a week.....our time together is precious.
Sigh....sometimes this housing obsession makes me loose perspective. But oh that house would be fantastic once we finished with it.
We called it the practice house because we (well, really 80% hubby and 20% me) practiced all our home improvement techniques on it. In the end, it sold within days of listing since the location was great and the home was completely updated compared to others.
Today we saw an opportunity to put that practice to good use. The home is almost everything we want, enormous lot, single story, easy freeway access, nestled in the hills, seasonal creek in the back etc etc. The caveat, its a heavy fixer, much more so than our last house. And while I know we have the ability to do it, I am not sure we have the desire.
As far as ability goes, hubby worked construction growing. His dad is a top quality tile mason (who needs work in case anyone needs a referral), and his brother is very handy as well. As far as desire goes, my children are young. They are at that stage where all they want to do is spend time with me, sitting in my lap, playing with toys on the living room floor. Do I really want to squander this special time to work on a house? After all, I already work 40 hours a week.....our time together is precious.
Sigh....sometimes this housing obsession makes me loose perspective. But oh that house would be fantastic once we finished with it.
Friday, August 3, 2007
You Call This an Auction?
Hubby and I were all prepared to go to the Auction in late July. We registered on Hudson & Marshall's site, but after reading the fine print, and wading through their less-than-user-friendly website we bailed at the last minute. We are now on their mailing list, and received this yesterday in the mail:
“The Sellers have decided to allow prospective buyers the opportunity to submit offers at or above the original high bid amount….The Sellers will review the offers they receive on a first come first serve basis and notify the prospective buyer if they are willing to consider the buyers offer. The Seller reserves the right to, in its sole and absolute discretion, reject any and all offers as well as remove the property from sale at anytime.” On the other side is a list of 36 properties and their high bids. The highest bid is $470k with most high bids under $200k.
I want to know how this is any different than accepting offers through an agent. Seems to be the same, just the "agent" is attempting to organize all the potential buyers in one spot and gather the offers all at once...so the process might go a bit quicker.
Of course in addition to the bid a buyer must pay 5% buyer premium, 5% of highest bid earnest money, agree to a 30-day closing, and property taken “as-is”, cash contract, no contingencies.....Yikes, this is certainly not a gig for your Average Buyer. I think the only way this process might pay off, is if you are already tracking a house and it goes for auction and you stick to your reserve price or below.
They are closing the process today, August 3rd….but at least this time they have pictures which does reduce the search costs of determining the condition of each house.
“The Sellers have decided to allow prospective buyers the opportunity to submit offers at or above the original high bid amount….The Sellers will review the offers they receive on a first come first serve basis and notify the prospective buyer if they are willing to consider the buyers offer. The Seller reserves the right to, in its sole and absolute discretion, reject any and all offers as well as remove the property from sale at anytime.” On the other side is a list of 36 properties and their high bids. The highest bid is $470k with most high bids under $200k.
I want to know how this is any different than accepting offers through an agent. Seems to be the same, just the "agent" is attempting to organize all the potential buyers in one spot and gather the offers all at once...so the process might go a bit quicker.
Of course in addition to the bid a buyer must pay 5% buyer premium, 5% of highest bid earnest money, agree to a 30-day closing, and property taken “as-is”, cash contract, no contingencies.....Yikes, this is certainly not a gig for your Average Buyer. I think the only way this process might pay off, is if you are already tracking a house and it goes for auction and you stick to your reserve price or below.
They are closing the process today, August 3rd….but at least this time they have pictures which does reduce the search costs of determining the condition of each house.
Thursday, August 2, 2007
$150 a Month isn't Bad?
Many months ago we decide to look for another rental when our lease was up. We had lined up our neighbor's place across the street who was planning to move in early summer. Well its now late fall, and he is finally getting around to moving (but the timing is bad for hubby and I work wise). In the mean time. the house next door to us also came up for rent.
So we figured it would be worth a try to renegotiate with the owner of our current rental, using the options above as a little leverage. Surprisingly, he agreed to lower the rent $150 a month! Its not the $350 a month we would have saved moving across the street, but I am also being optimistic, and hope we won't be in the current rental more than a year. If we had planned to rent for 1.5 years or more, I'm pretty sure we would have moved.
We are only signing a 6 month lease, since it will give us more flexibility. He would have dropped the price another $50 a month if we had been willing to stay longer term. But I didn't think the penalties for breaking the lease were worth the $50 savings in case we found our dream house.
Sigh...glad this ordeal is over. This whole thing took a lot longer to play out than we had expected.
So we figured it would be worth a try to renegotiate with the owner of our current rental, using the options above as a little leverage. Surprisingly, he agreed to lower the rent $150 a month! Its not the $350 a month we would have saved moving across the street, but I am also being optimistic, and hope we won't be in the current rental more than a year. If we had planned to rent for 1.5 years or more, I'm pretty sure we would have moved.
We are only signing a 6 month lease, since it will give us more flexibility. He would have dropped the price another $50 a month if we had been willing to stay longer term. But I didn't think the penalties for breaking the lease were worth the $50 savings in case we found our dream house.
Sigh...glad this ordeal is over. This whole thing took a lot longer to play out than we had expected.
Weekly Screen Scrape - The Wrong Direction
For the last three screen scrapes I have seen many substantial price reductions (between $5k and $20k). However the average price of homes for sale has continued to rise (now at $220)! We are almost back at early spring levels by my calculations.
No surprise, the average price per square foot of homes under contract is much lower, at $207.
It looks like the new listings who start out way above average price per sq ft are driving the trend. The ones actually trying to sell their house eventually start dropping prices. Again this week there were a lot of new listings, and many expirations.
No surprise, the average price per square foot of homes under contract is much lower, at $207.
It looks like the new listings who start out way above average price per sq ft are driving the trend. The ones actually trying to sell their house eventually start dropping prices. Again this week there were a lot of new listings, and many expirations.
Wednesday, August 1, 2007
Pet Peeves
In today's market, why do Realtors enter a house into the MLS without the pictures? Its not like houses are selling like hotcakes. So why don't they wait until they can complete the listing?
With all the notification services out there, this practice actually hurts a listing. Best I understand, these services sweep the MLS database for a buyer's criteria on a regular basis then send notifications that there is something new. This is a listings big chance to shine and make a first impression. When listings don't have pictures to accompany them.....they have basically forfeited their prime "face time."
Its also annoying for a buyer getting all these new listings in your e-mail without photos.....which are the real sellers (aside from price of course). I think ZIPRealty has a notification service....but I haven't signed up for it.
With all the notification services out there, this practice actually hurts a listing. Best I understand, these services sweep the MLS database for a buyer's criteria on a regular basis then send notifications that there is something new. This is a listings big chance to shine and make a first impression. When listings don't have pictures to accompany them.....they have basically forfeited their prime "face time."
Its also annoying for a buyer getting all these new listings in your e-mail without photos.....which are the real sellers (aside from price of course). I think ZIPRealty has a notification service....but I haven't signed up for it.
More This n That
Short on time today.....so just a couple interesting resources and facts courtesy of my favorite paper (WSJ).
-- Affordable Suburbs Still Outdraw Hip Cities: An economic study recently showed that "educated professionals who are drawn to urban areas..... in their 20s still seek more affordable markets typified by the suburbs..... by the time they reach their 30s and have children." Another study apparently cites that suburbia provides strong community life as opposed to the city. (They could have saved a lot of money by asking what an average home buyer thought...I would have told them exactly the same thing. We lived in D.C. till we were in our late 20s, then moved to the Northern Virginia suburbs, where we had kids....and obviously relocated to the to Sacramento suburbs shortly after looking for more community and a slower pace.)
-- Assessing Environmental Hazards: Since asbestos is such a hot button topic around here I figured I would post these resources, courtesy of the Journal, for uncovering toxic conditions that may affect a potential home. I haven't vetted them...so feedback is always appreciated if anyone has used them.
www.epa.gov/enviro
http://www.scorecard.org/
http://www.edrnet.com/
Additional Note: So it looks like my newspaper is being sold to News Corp. Not sure how I feel about this. I know they plan to beef up advertising. One of the reasons I trust the WSJ when it comes to housing related news, is the revenue from the housing industry (agents, mortgage bankers, developers, and other housing related services), comprises just a small fraction of their advertising, as opposed to papers like the SacBee (see yesterdays post on Sacramento Landing), VillageLife, and the Folsom El Dorado Hills Telegraph. With the WSJ, I don't have to worry (as much) about their potential bias or influence on housing issues. Of course, the WSJ has its failings, their editorial section is soo monotonous....lower taxes, lower taxes....yadda yadda yadda. But that section is easy to ignore.
-- Affordable Suburbs Still Outdraw Hip Cities: An economic study recently showed that "educated professionals who are drawn to urban areas..... in their 20s still seek more affordable markets typified by the suburbs..... by the time they reach their 30s and have children." Another study apparently cites that suburbia provides strong community life as opposed to the city. (They could have saved a lot of money by asking what an average home buyer thought...I would have told them exactly the same thing. We lived in D.C. till we were in our late 20s, then moved to the Northern Virginia suburbs, where we had kids....and obviously relocated to the to Sacramento suburbs shortly after looking for more community and a slower pace.)
-- Assessing Environmental Hazards: Since asbestos is such a hot button topic around here I figured I would post these resources, courtesy of the Journal, for uncovering toxic conditions that may affect a potential home. I haven't vetted them...so feedback is always appreciated if anyone has used them.
www.epa.gov/enviro
http://www.scorecard.org/
http://www.edrnet.com/
Additional Note: So it looks like my newspaper is being sold to News Corp. Not sure how I feel about this. I know they plan to beef up advertising. One of the reasons I trust the WSJ when it comes to housing related news, is the revenue from the housing industry (agents, mortgage bankers, developers, and other housing related services), comprises just a small fraction of their advertising, as opposed to papers like the SacBee (see yesterdays post on Sacramento Landing), VillageLife, and the Folsom El Dorado Hills Telegraph. With the WSJ, I don't have to worry (as much) about their potential bias or influence on housing issues. Of course, the WSJ has its failings, their editorial section is soo monotonous....lower taxes, lower taxes....yadda yadda yadda. But that section is easy to ignore.
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