Thursday, January 31, 2008

The Weekly Screen Scrape - What Goes Up.....

Inventory took a nice jump this week. As for prices, well my averages and medians seem to be holding steady for now, but since inventory in my search has grown so much (it now stands at 137 homes in Folsom & EDH), it masks a lot.

Some interesting price trends.....there are now 19 homes over 2000 sqft priced at or below $400k. Almost half are pending. There are 26 homes at or below $175 a square foot, and almost half of those are pending as well. For a bit of comparison, of all 137 homes, only around 25% are pending.

To pull the trigger on one of these homes I am looking have my fully loaded monthly rent vs. buy calcs within +/- 10%, as well as come within a reasonable range on the inflation adjusted price (from '00 or '01) +/- $20k ........and of course a seller to accept that offer. In other words, first I am looking to figure if the transaction makes financial sense for us, and second, we want to be reasonably heged against further drops in price. I really want to purchase before my oldest starts kindergarten....which means close to bottom will have to be good enough for us.

Wednesday, January 30, 2008

With Each New Day, A New Story

With a sick kid and a broken dishwasher, I figured RE was going to be on the back burner for the day. But low and behold a story walked right though my door this afternoon (the nice guy fixing the dishwasher).

He had like 6 calls in the first 5 minutes of showing up (and boy was he late...but I work at home so its not as aggravating). I overheard him say on the 4th or so call that he can't work late cause he is meeting his Realtor tonight. I couldn't help myself...and had to ask if he was buying or selling. His response, "I'm one of the subprime folks".

He and his wife bought a home for a price that automatically gave them $60k in equity according to the appraisal in 04 or 05 (can't remember exactly), but now it is worth less than he paid. Interest only loan, and about to adjust. Sounds like they will be moving to somewhere in TX where they can get more home for half what they paid here. He said his payment is $3000 a month. Yikes (waaay more than our rent).

I didn't get many details since he kept getting phone calls and I didn't want to pry.

Have I mentioned how much I like our landlord? Really nice guy, and got right on the dishwasher thing!

Tuesday, January 29, 2008

Civic Duty Reminder

Please don't forget to vote!

If you don't participate in the democratic process, you have no right to complain about the results (opting out is a copout).

I love the mail ballot option in El Dorado County. I also love being back in California because they actually send you information on what you are being asked to vote on.

Sacramento Settlement Patterns and the Desirability Debate

A while back I gave a commenter a hard time when they made the following statement: "homes in the hills generally are more desirable and valuable than those in the 'flat lands.'"

I asked for something to back up this claim, because based on my knowledge of historical settlement patterns, the opposite seemed true. (Granted I am making some sweeping generalizations here with no research to back it up….so feel free to take a shot at me.)

Let me explain. In my field (aviation), supply tends to be a reflection of demand. For example, airline schedules tend to reflect passengers ‘desirability” (frequent flights between desired destinations and lots of flights in the morning and late afternoon to accommodate business schedules).

Now let’s apply this same logic to settlement patterns in the Sacramento Metro area. Initially I believe settlement patterns, and hence desirability, was based on 2 major factors. The first was access to a source of water, which our rivers provide. The second was transportation networks; originally the rivers, and later rail and major highways. These two factors appear to be fairly universal; hence most of the world’s major cities are located on major rivers, and coastal areas. Historically hill settlements tended to be the exception, only when no flat lands were available, or because of defense needs (easy to see the enemy coming).

Fast forward a hundred years or so, and many of the most desirable flat lands have been settled. Thus building began in less desirable suburban locations. However, the less desirable locations were often balanced out by the fact that the suburbs were newer, and the infrastructure in parts of city centers was starting to decay.

In Sacramento this phenomena seems a bit more dynamic because flood risk added additional criteria to the desirability. However, contrary to the belief of some, the entire Sac Metro area is not in danger of flooding. There are many respectable neighborhoods, not in the hills, that have a minimal risk of flooding. Of course, the high grounds nearest the city center were settled first. Eventually that was all filled in leaving, high grounds with a long commute (Rocklin/Roseville/Folsom etc), or areas in a flood plain with a shorter commute (say Natomas).

As for the desirability of the foothills themselves, it isn’t easy to build large swaths of affordable housing in hills. So by definition they tended to have custom homes initially. Thus the foothills appealed to those who could afford a custom home and were willing to live far from the city, and thereby bringing an air of exclusivity to the foothills.

In the last 7 years or so, what has made the foothills more accessible to the masses is better technology. Technology has enabled people like me to “work” without commuting into Sacramento. It has also made it relatively easier to build homes on a larger scale on hillsides. Of course the original “exclusivity” has been seized upon and nurtured by builders for marketing purposes. The newer infrastructure (schools, roads etc) is also very attractive when compared to many of the older parts of Sacramento.

So there you have it. I can’t really come up with any inherent arguments in favor of “hills” versus “valleys”, except perhaps a nice view. Based on observed behavior, valleys seem to win almost every time (until recently). Of course, I prefer the hills to the valley, but if I had to commute to work, a short commute would vastly outweigh any desirability the hills had to offer.

Monday, January 28, 2008

Hitting Home

I am rather melancholy today. This weekend I heard some sobering news which caused a great deal of internal reflection on my part.

For some reason it is not as morally challenging to desire inexpensive clothes and other consumer items. Most are made overseas, and I don’t witness the sweatshops, the environmental degradation, and the child labor that results from my purchasing habits.

Real estate on the other hand is very local, and the desire for a reasonably priced housing market is directly affecting several people I know and care for. I believe our local economy has now passed the point of containment (only affecting those directly involved in a transaction). There are many good people out there who are likely to suffer due to the consequences of the housing bust, and the resulting reduction in state and consumer spending. In hindsight some of the decisions by people I know may not have been the best, but I don’t believe that good people “deserve” to have bad things happen to them.

While I am relieved to see that homes are becoming more affordable here in Sacramento, at the same time I am very ashamed of this quest of mine because of the financial ramifications for so many hardworking families. My primary solace is to think in terms of future generations. I would hate to think that my generation, as well as all those that come after me would truly be “priced out forever”.

Of course my sympathies do not extent to anyone on Wall Street whose six and seven figure salaries will be untouched, even though their “innovative financial products” have caused mass hardship. I strongly believe one of the reasons all the experts and pundits didn’t see this coming is because they are so incredibly out of touch with your average American. They had no idea how far people had to stretch to buy a home, how much fraud was occurring by people associated with the REIC, and how people had become dependant on their home equity maintain their lifestyle. No amount of employment, income or consumer sentiment data can really tell this story……Wall Street analysts do not know of the lives behind the Main Street data.

Friday, January 25, 2008

The Waterfalls of El Dorado Hills

Completely off topic for all you real estate hounds.

My daughter who will be four in March is absolutely taken with all the "waterfalls" around here. She has assigned many of them to our immediate family. For instance, my waterfall is the one at the corner of Silva Vally and Serrano Parkways (the one near the Library). Dad's waterfall, is actually the fountain at the Raley's shopping center. And her little brother's waterfall is the one in front of the Safeway Center off Green Valley.

My daughter gave her waterfall to me after the one at the corner of Latrobe and White Rock was built. But once they built it they rarely turned it on, as they are still completing the buildings. Every day on the way home from daycare she notes whether it is on or not. And I attempt to explain. In the mean time, when hers is off, I am asked to share my waterfall.

The really funny part came when we went to Yosemite this summer. The waterfall you can see from the valley floor wasn't flowing because there was so little water last of course my daughter concluded that the waterfall was turned off. Try explaining that one to a 3.5 year old!

For the Record (RSVP)

Instead of an attendance poll, I thought it would be fun to have folks go on record with their guess as to how spring will shape up (inspired by Calculated Risk).

So I will buy a drink of choice for the person with the RSVP closest to inventory as well as the person closest to median price (as measured by housing tracker on the week of April 7th). Just to make sure we are all on the same page, as of 1/21/2008 inventory is at 15,190 and median prices is at $324,900.

My guess, inventory at 16,780 and median $317,300.

So please comment/RSVP with your estimate for our get together at Dos in April. Those not coming can still participate but, please indicate that your are not RSVPing.

I will put a link to this posting on the sidebar, in case you want to change your estimate. Estimates recieved after the 30th won't count toward drinks.

Thursday, January 24, 2008

Invitation to a Preemptive Anniversary Smashing

As some may recall....back in July I put out an early invitation to a housewarming in 2008. So far things aren't looking real I thought we could have a preemptive smashing instead (as per semloh's suggestion =)

Wanted to put this on your calendar's early, cause if your life is like mine, weekends fill up fast. I tried to find a place that is on the western edge of Folsom so it wouldn't be to far for those in other parts of Sac (but close enough so that Mr. BT can retrieve me if I get a little loopy).


Where: Dos Coyotes (a Sacramento institution that I dearly missed while living back East) in Folsom right off Folsom Blvd. They serve wine, beer and margaritas and have a great patio.
When: April 13th (the anniversary of Average Buyer blog, 2 days till tax deadlines, and well into the spring "selling season").
What time: 2:30pm till ?

I will try and get a head count later (I think blogger has a polling feature somewhere).

Faltering Food Chain

Was at the Rocklin High School Crab feed (my first crab feed) last Saturday. Ended up seated next to a friend of a friend. He is a contractor, so I got some nice insider scoop from him....(he doesn't know about my secret life as a blogger).

He seemed pretty knowledgeable about industry trends and news. And had some very interesting rumors to report (which he didn't want spread and I respect that). He knows many of the local builders, so we mainly asked him about which ones are the most reputable.

He's been around for a long time, and seems to think this is one of the worst downturns. If I remember correctly he was thinking mid 2009 for things to start looking up. But I had already had 3 margarita's by then so my memory of this conversation is rather murky =)

The rumor was a pretty juicy one, so I do remember that.....will be sure to report if it pans out.

Wednesday, January 23, 2008

And Now Comes the Lawsuits!

Since I didn't see much mention of this story on the other blogs, thought I would post the link and some commmentary.

The New York Times ran a story yesterday on a couple in Carlsbad CA that is suing their Realtor.

Sounded like a bit of a shady deal to me, as the Realtor was also the mortgage broker and wouldn't show the couple the appraisal. The Realtor seems to be arguing that the couple should have done more research and due diligence.

I'm a bit confused by the Realtor's argument, isn't it the Realtor's job to help the couple determine if a house is a good buy, and provide them with information to support that claim? I mean, if a Realtor can't do that.....what purpose do they serve?

Of course, I am not saying the couple is faultless, they probably should have used a different broker....and they are squabbling over $100,000 on a $1.2 million home (approximately 8%).

Tuesday, January 22, 2008

What a Difference a Zip Makes

Since its the slow season, thought I would do a status check to see where we are in relation historical data. The SacBee has monthly data by zip all the way back to August 2002. So I compared the median price from December 2007 to the August 2002 data. I threw out any zips that didn't have more than 5 sales in either period. There is also an inflation adjusted column (this time I got true inflation data from, as well as a change from peak column to see what ground we have covered so far. I spot checked the data, for the zips I know, to make sure things look right, but this is by no means a professional job.

The table below is ranked by the Nominal change since August of 2002. Of course its not always wise to make comparisons based on medians (since its a quirky little stat) and the mix of home in some of these zip codes has changed considerably over the last 6 years.

I was rather surprised at how few zips have escaped the downturn. Only a handful showed drops less than 20% from peak.

Not that I am one to have regrets in life, but I should have invested in RE in the South Lake Tahoe area instead of spending all my hard earned $$ (and some of Sallie Mae's) on graduate school.

Monday, January 21, 2008

December/January Month's Inventory

Below is month's inventory for the Sacramento area. As most know, this time of year tends to be the slowest when it comes to real estate, so its no surprise that inventory and sales have declined. Sales come from the SacBee via DataQuick (SFH resales), and inventory is gathered from ZipRealty for resale SFHs.

In Folsom month's inventory took a big jump up, but in EDH it dropped.
Some have postulated that once credit started to thaw that home sales would gain momentum, but I think the momentum is from distressed inventory and not buyers with new credit. I did some checking into this, because EDH sales were actually higher in December compared to November, but distressed sales doubled (short or REO) in El Dorado County in that time (from 20% to 40%). Currently distressed sales now make up 23% of all listings in El Dorado Hills, Cameron Park, and Folsom.

From here on out, I think sales stats are going to be up and down, since last year was so bad.
This month communities are ranked by total sales (from high to low).

Sunday, January 20, 2008

Special Taxes without Special Privileges?

At a dinner party on Friday I came to find out that you have to register your child for kindergarten. I also learned that if you don't get in line early enough, your child may not make it into the local elementary school, and they will have to go to a school where there is room.

This turned my whole world upside down, since I just assumed my kids will go to the district we are in. Isn't that what the whole, school maps are for? At least it was where I grew up (in California).

So basically people paying the special impact fees for the local school, may not end up enjoying the services they are being asked to pay for! To me this is rather outrageous.

I was not opposed to Mello Roos under most circumstances. It made sense to assess the newer developments for the new roads and schools. But my major assumption was that the people in the new development would be the one who most heavily use the infrastructure the Mello Roos is paying for. Apparently there is no guarantee. With that in mine, I am not nearly as willing to sign up for a home with those additional taxes.

So for all you who have school aged children around here.....if your kids don't get into the local elementary school, are the parents expected to provide transportation to the assigned alternate school? If so EDH, Folsom and CP have just lost a lot of their luster in my eyes.

Friday, January 18, 2008

A Paradoxical Median

Speaking of the SacBee, the same article mentioned in the earlier post had the DataQuick December stats by county.

For El Dorado, the median resale was down -7.3%, the median new home was down 17.3%, but the total was only down -2.8% (147, 18, and 165 sales repsectively). A weighted average of the two drops would be -8.4%.

I know medians can be a bit wacky to work with, but it still seems odd that both the components show stronger drops than the whole. I'm sure its possible, but if anyone has access to some real data, I would love to see how this happened. I never work with medians in my line of I am not as familiar with their quirks and perterbations.

A Good Start

Kudos to the Sac Bee for putting a nice spin on the recent DQ news. They featured a couple that had been patiently renting till they could afford a house. She is a consultant and he is a lawyer. They recently bought a home at the end of 2007 for half of what it was listed at previously.

When professional DINKs (Dual Income No Kids) can afford a home in Sacramento, that is a good start. However I think it will be a little bit longer till its DITO's turn (Dual Income Two Offspring).

The same article noted that previously only 2% of homes were under $200,000, but now 12% are. Using a somewhat generous 3x income estimate.....first time home buyer's will have to have an income of $66,000 and a savings of $40,000 to purchase a home at that amount without overextending themselves. When entry level homes are priced at $150,000 on average, I think we will start seeing some market stabilization.

If future generations are going to be able to afford a home here in California, we need to see additional price drops. Otherwise we will be visiting all of them somewhere in the Midwest.

Thursday, January 17, 2008

The Weekly Screen Scrape - How its Done

Wow, I can't believe it. There are 14 homes over 2000sqft and under $400,000 in Folsom and El Dorado Hills now (okay 4 are pending sale, but that's still 10 homes).

As promised, below is a description of the process....I'm sure it's way more detail than desired....and a firsthand look at how crazy obsessive I am.

Each week, around Thursday, I enter my criteria into I actually have to do two queries since I am looking at two different counties. I use Metrolist, because they show homes that are Pending Sale (a key leading indicator if you ask me). I also use my true price range, not my browsing range (I browse higher to see what is in the pipeline =)

I copy the tables, and paste them into a new Excel file. Then reformat listings into single rows (price, address, city, beds, bath, sqft, and status). If you don’t know Excel very well, this could be really difficult.

I open my Excel screen scrape data file in a separate sheet and paste in the results from above. I compare the new week’s listings to the previous week’s listings using the “match” function on the address field. Once I have old and new listings lined up I can tell what the delta is. Homes that were PS but were not in the new list go onto my “escrow” sheet. Homes that just disappeared go onto my “unsold” sheet. And I also have a “stats” sheet to keep track of weekly totals; since my main list gets updated. I also do a comparison of the prices (using the “if” function), to see if there were price changes (increases are more common than you think).

At first it took quite a while to do this, but I now have it down to 20-30 minutes or so, and that’s only because the listings have increased so much. To look for trends you have to keep the same exact search criteria from week to week.

Basically I look at inventory and Pending Sales ratio. When inventory consistently starts going down and Pending Sales steadily going up….to me that’s a sign the market is finding its equilibrium. Note: This may not be a good indicator if you have a lower limit to your price range, because homes may fall off the bottom.

One additional thing to look for, people withdrawing their listings. To me that’s a sign that there is pent up demand to sell (which no one really talks about, although some become rentals).

Nothing fancy….just very tedious….but it’s not that different from my day job =)

Wednesday, January 16, 2008

Unconventional Thinking: Finding Help

As many observed in an earlier post, a good realtor is worth every penny (or close to it depending on the price of your house). So if you are new to an area, like we essentially were… do you go about finding a great realtor?

It’s not easy. Apparently our approach was highly unconventional (and unfortunately it didn’t yield any results).

By January of last year we had three Realtors in mind that we meet by various means: one via a mom’s group I had just joined, one via a recommendation from a recommendation, and another from an open house.

Because our buying experience in D.C. was so bad, we were determined not to make the same mistakes twice (we used a Realtor a friend had used to sell their house). So we decided to interview the agents, instead of wasting their time and ours going to several homes….only to figure out we didn’t really see eye to eye on things. We found out at the interviews that this was incredibly uncommon, and they hadn’t ever really been on an interview to be a buyer’s agent (only sellers). As a side note, we interviewed almost five agents till we found one we liked to sell our house in D.C.

I told all three of them (some brought in their partners) I like numbers and data. Show me samples of the data you can provide. I don’t remember any of them bringing analysis of the local market. They mostly provided local demographic info, most of which is easily found on the internet.

The Interviews:

I mentioned some neighborhoods to try and see how much local information they knew (like about the inadequate wind standards in Stonebriar etc).

We more or less asked the same questions in all three interviews…below are some samples:
---Will they double end a deal? (Mr. BT takes it as a sign that they don’t have the buyers interest truly at heart if they will double end a deal)
---What is their market outlook? (As if in harmony…..they replied, great time to buy …do it now before the market takes off again)
---What did they know of building, construction and architecture? (To find out if they could provide insight on a homes construction or potential problems down the road)
---Given our interests, what neighborhoods would be worth checking out? (To find out if they really listening to us and what we are looking for?)

All three had some local knowledge which was a plus in my book. But in the end, none of them really seemed to offer any insight or factual analysis would lead me to believe their market predictions, let alone want to pay them thousands of dollars to open doors of 10 or so homes. I highly doubt any of them read anything other than what the NAR fed them.

By the time it was all done, I was feeling increasingly uneasy about jumping into the Sacramento market, despite what all the pundits and RE professionals were saying (the rent/buy spread was just too big for comfort). I prayed about what to do. I searched the internet, and lucky for me, I stumbled across Lander and Max’s blogs (which made much more sense, in terms of fundamental economics, than what the “professionals” were saying).

Mr. BT wasn't excited about any of the agents, but he was interested in purchasing sooner than later. Thus we struck the deal that I would closely monitor the market (the weekly screen scrape) to determine if the market really was on its way up again. Eventually I decided to start sharing all the data I was collecting, and thus another bubble blogger was born.

Tuesday, January 15, 2008

Making Apples to Apples Price Comparisons

Many of the new developments in the foothill communities tack on additional monthly fees for HOA and have special tax assessments (Mello Roos). These can add up very quickly. Here in Serrano for instance, according to their website, the two fees typically come to $296 a month.

I believe this is why we are seeing so many home priced “below market” in this Serrano now. Once you include the present value of these additional fees and taxes, the homes are at or slightly above market value.

Below is a quick chart I use help determine the tradeoff between extra fees and home purchase prices. The monthly fee/tax value is on the left, and the present value of those fees/taxes over 30 years is at the intersection with the interest rate. So for example in Serrano, the $296 a month at 6% interest could have bought you around $50,000 more home elsewhere, or adds $50,000 to the home price if you are looking at in Serrano. Of course you do get something for the HOA, like front yard maintenance, so you might want to use a slightly lower figure, but this may be offset by future increases in the HOA.

If you use excel you can estimate this easily using the PV function (but don’t forget to divide the interest rate by 12 or multiply your payments by 12 so that your interest rate and your payments are in the same increment).
On a side note, recently spoke with a mom who lives in Serrano. She actually works in an RE related field, but the developer was not upfront with them, and they didn't find out about all the extra fees unitl it was too late. Developers hold all the cards and all the be very very carful when purchasing a new home!

Monday, January 14, 2008

Care and Feeding of My Obsession

There is soo much information on the Internet.......the major limitation in my life is time.

I have been attempting to keep my obsession in check by limiting my blog habit the local Sacramento sites......but based on several recommendations, I recently started following Calculated Risk. Wow, amazing stuff....CR and Tanta wrap up all my favorite things, economics, housing, tons of data, and current events!

Anyways, are there other gems out there like Calculated Risk that offer insight and analysis? If so let me know (new aggregation doesn't count).

Sunday, January 13, 2008

Asking Price Distribution

I needed a reality check. Looking at Folsom, Cameron Park and El Dorado Hills real estate prices can get rather depressing. So I used ZipRealty's map to look at the distribution of asking prices in the entire metro area. It gave me some nice perspective. Contrary to what they try and have you believe (in all the local adds), 800k is uncommon.

Results are below. It might be a bit confusing at first because it shows the percent of prices that are above a certain price point. Its a nice compliment to the inventory graph, and I may try and update it each month. But due to the nature of how I gathered the data, I don't think it will be directly comparable each time. The hope is that the distribution will become more concentrated, with a long skinny tail. Total inventory in the sample was 12488.

January Change in Inventory

Inventory data was collected from ZipRealty for single family homes. While homes might be dropping their prices and thus adding to my screen scrape inventory, overall inventory is down 8% from December.

Saturday, January 12, 2008

Food for Thought

Went to the Towne Center in El Dorado Hills last night. Businesses seem to be leaving just as fast as they are coming in.

My 2 cents on what we desperately need around here - Healthy, relatively inexpensive (under 20$ for a meal), take out. Examples would be, Baja Fresh, Panera, Dos Coyotes etc.

With two working parents, lots of families around here (especially mine) are looking for food that is fast and fresh that doesn't break the bank. Basically something between fast food (we have 3 of those) and sit down. Currently we have Stix, and Beach Hut which more or less fit the bill but I like a little variety.

Ohh I have an bout drive through sushi? How yuppie is that! Although sushi is usually a splurge for us. Rolls seem to start at 5$ each around here.

Thursday, January 10, 2008

The Weekly Screen Scrape Gets a Makeover

Last January was when Mr. BT and I got serious about our home search. We interviewed agents and started to troll the real estate listings. For a bit more history, see my earlier post.

I was rather disappointed, once I realized how little home our $$ would buy us here. So I started the weekly screen scrape to keep an eye on things in our price range. There was very little of interest, since most of the homes in our price range were smaller dilapidated fixers.....and so I couldn't justify moving out of our spacious rental.

Over the course of the year I have seen a huge growth in listings that meet our criteria, and many of them are fairly new tract homes in good condition.

So with the new year, I decided to change my search criteria to reflect what we really want. January is the time for new beginnings, and an especially slow RE market, so it seemed like the ideal time to make the change.

In a nutshell, my search criteria now has a higher sqft minimum, and a lower bedroom minimum (since bigger homes tend to have offices). The number of homes in my criteria actually took a substantial jump with this change.

As for trends, inventory is already rising, as I had several more homes this week than last week.

News n Notes

Bit short on time here are some links and news.

All about Sacramento Weather from NOAA

Find out if the neighborhood your are considering has any obnoxious neighbors nearby: Rotten Neighbor
(I was very surprised at how many listings there were for this area.....the RE section in one of the local papers recently discouraged people from reporting since it would drive their home value down...tsk tsk...seems like rather selfish advise).

And lastly the big breaking new for our area courtesy of the Sac Bee....looks like Doolitte is set to retire. What caught my eye was this quote from the article "in one of the most conservative districts in California." Mr. BT tried to make me feel better by noting that conservative for CA is different than conservative elsewhere (cause he is on Doolittle's side). Sigh, its a shame that Davis is completely unaffordable.

Wednesday, January 9, 2008

About this Site (Boring Disclaimer)

I maintain this blog for my own personal use as an online journal in my home buying process. I report on what I have learned in my conversations with others, so the conclusions and comments based on those conversations are my own. For example, information presented in the “good buys” section does not constitute a recommendation to others. It is merely my personal assessment based on information I have gathered. I am not a professional in the real estate field, so my comments should not be construed as professional advice.

Material posted on this blog is for informational purposes only, and no warranty is made as to its accuracy. You should never rely solely on the information posted at this blog to make serious financial decisions, e.g. obtaining a mortgage, purchasing a home, and filing for bankruptcy or any other serious financial decision that has long-term consequences and affects your income, standard of living and financial health. Using the information, tips and sample language is at your own risk.

I advise you to discuss important financial matters with an accountant, attorney, real estate agent or other industry professional before making major decisions. The information contained on this blog may not be applicable to your individual situation and may be in conflict with the laws and standard business practices in the particular state in which you reside. In addition, new federal and state laws may be enacted or revised that render the information at this website obsolete or invalid.

In no event shall Average Buyer be liable to any user or any third party for any damages whatsoever resulting from the use of information on this blog. If you are dissatisfied with any blog content or with these terms and conditions, your sole remedy is to discontinue use of the blog.

Through this blog you are able to link to other websites which are not under the control of Average Buyer. I have no control over the nature, content and availability of those sites. The inclusion of any links does not necessarily imply a recommendation or endorsement of the views expressed within them.

Tuesday, January 8, 2008

Black n Blue and Red All Over?

Incredibly interesting unconfirmed rumor posted on Lander's site yesterday. Wanted to repost since it involves the Blackstone development which I have been keenly interested in. I tried to look the info up on the web but was not able to find anything to support the claim. However I believe he is an industry insider and has posted fairly reliable material in the past.

UPDATE: I called the county and the woman I spoke with said that Lennar was current with all their permits. So I have deleted the rumor (if you want to see it, go to Lander's Water Cooler for January). I'm not a very good investigative reporter, so if someone knows who else I should call to check on this please let me know. I called the EDH permit office across from the development.

Personally I am very glad. Its a really nice development, and I would like to buy there one day if they could just reduce their fees or their home prices by another 50K-100k.

Monday, January 7, 2008

December Melissa Data for Folsom and El Dorado Hills

Things seem to be more or less on track as forecasted earlier. Neither Folsom or EDH are seeing the 30% from peak declines for the Sac Metro area.....but there is no doubt they are still experiencing the effects of the housing market slowdown.

As you can see from the graphs, sales have cratered in both zips. According to the MelissaData average prices in Folsom have responded, down 21% from the MelissaData Peak of Nov 2005. Surprisingly, EDH seems much less affected (down 12% from the MD peak of May 2007) even though the months inventory is much greater than Folsom.

While these declines might seem substantial to some folks, keep in mind Folsom's average price is still up 64% from January of 2002, with EDH up 68% over the same time frame (41% and 45% adjusting for 3% annual inflation).

House Swap?

Looks like desperate times call for desperate measures. I spoke with my dad over the holidays (who doesn’t know about my secret life as a RE blogger), and he was telling me how they were trying to work out a “house swap” with someone in El Dorado Hills.

Background: Dad sold his home in Stockton, and moved to Puerto Vallarta to retire about 6 years ago. They have been trying to sell their home in PV for the last 2.5 years. With the proceeds, they want to buy a cheep home in the states for summers (they were looking in Pollock Pines) and one in Mexico for the winters. If they were to do the swap, they would simply move back to the States.

Luckily, my dad has found some of the online tools like Zillow, and has realized that these people are still asking 2005 prices for their home. All of the folks he has been in contact with are underwater on their homes and looking for a way out.

Saturday, January 5, 2008

Scoring a Better Mortgage

How quickly time flies. January means its time to look up my free annual credit report. I try to remember to do it every January once all the holiday bills have been paid off.

Monitoring your credit, and improving your FICO gives us something do do while we wait out the downturn in housing (not to mention its just plain smart in this day and age of rampant identity theft).

In the end you will be glad you did, and so will your wallet. In case you don't have the link.....Free Annual Credit Report

I'm hoping to break 800 this year.

Friday, January 4, 2008

Hiring Help

The pros and cons of different Realtor types, as I see it:

Knows the area well, and has seen the inside of many local homes, so has a better idea what to expect in terms of local comps. Knows or has network to find out any special circumstances about a home (such as Paul mentioned in yesterday’s comments….eeeewwww). May be too narrowly focused to realize there are other neighborhoods that fit a buyer’s needs which are less pricey. Likely biased toward particular developments.

If you aren’t tied to a particular area (i.e with kids in a school district) a generalist might be able to give you a broader view of the market. Generalists tend to have a better idea of overall market trends, and can likely spot signs of good vs. troubled neighborhoods more easily. Because they know what money can buy in various parts of the region, they know a good deal when they see one.
Side note: I’ve never really understood why a specialist couldn’t help someone looking in a different area. When we first moved here a friend had referred us to their family friend who specializes in East and Midtown Sac. What exactly is so specialized about the process that they can’t unlock doors in a different neighborhood?

For folks who are tech savvy go-getters and have a strong sense of what they are looking for (probably not first time buyers), this option is great.

Go it Alone:
Not sure there is any incentive to do this. A buyer’s agent’s commission is written into the seller’s contract. In this case, hiring a discount broker would be better, since they would return some of the commission to you.
Only time this might be a good strategy, is if the seller is not working with an agent. Then both parties can save money by cutting out the middle man (i.e. if we were to purchase our rental from my landlord, we know the home and the area well so an agent would be of minimal assistance….but an RE lawyer would still be a good idea).

Thursday, January 3, 2008

Braving the Elements

With a big winter storm heading our way, this topic seemed relevant.

Things I pay particular attention to when looking at a houses in the foothills:

1) If house is on the down slope, is there sufficient drainage so that it won't get localized flooding? 2) Is the hill the house is built on stable, or has it shifted so that the foundation needs attention? 3) Is the house built to sustain wind damage (I know the Stonebriar development south of 50 has had to do massive retrofitting due to faulty standards)?

I haven't heard much about items 1 or 2 since I have been here.

Where I grew up on the Central Coast, my grandmas driveway was on a slight down slope, and when it rained really hard, she would get flooding where here garage was. I would imagine this must happen, at least with some of the older homes here in the hills.

I have heard that in CA the sellers must disclose all this should help (they don't do it that way in VA, much to our chagrin. We found a totally rotten wall in our townhouse that the owner must have known about, caused by the neighbors drainage and soil level).

Wednesday, January 2, 2008

A brief look back

Time for the obligatory year in review.

Almost a year and 231 posts later, Average Buyer has had over 25,500 visits (approximately 1/4 of them unique), and over 44,400 pageviews (not including my visits and views =). Two thirds of my traffic comes from Lander's site. He "outed" my obsession pretty early on.

I often speak in slightly hushed tones when I tell my close friends, that I have a secret online life as a local blogger. Its both embarrassing and exhilarating at the same time. Some look at me like I just told them I am from outer space, and other more tech savvy friends pop in for a visit every once in a while. Mr. BT has gotten used to me sneaking off when household chaos is contained, to check and see if there are any new blog comments. In all honesty, I don't see this obsession as all that different from my little brother's fantasy football obsession (instead of sports scores, I check the housing blogs).

In general the blog has made it very tough to talk real estate with local friends, especially ones that are involved in the business somehow. When it comes to real estate, everyone thinks they are an expert if they have ever bought or sold a home. So telling people I run a local real estate blog is like telling them I can touch my tongue to my nose (i.e. it has absolutely no impact on my credibility or expertise).

Of course, now that the market is playing out more, or less, how many of us BBs had expected, the initial thrill is somewhat diminished, and has been replaced with the disgruntled resignation that this situation will take a long time to fully unfold.

Tuesday, January 1, 2008

A Year of Unrequited Offers?

I should have something wonderful and prophetic to say today....but to tell you the truth....I am kinda bummed out.

We found a wonderful home in my favorite neighborhood.......and the response we got back from the agent when we put in a verbal offer.....they would be better off letting it go back to the bank. (I think they are bluffing....but will keep my eye out just in case it they aren't.)

Sigh. Is that a sign of things to come for the New Year? I guess we will have to wait and see.

January 2008 Good Buys & Offers

Please post homes you think are a good buy or any offers you know of that were accepted, especially to builders. It will help give others negotiating leverage when they are ready to buy.

Even just letting people know what type of builder incentives they can expect would be helpful since its hard to tell if they give everyone the same incentives.

Pieces of data to include: Zip Code, MLS or Development Name, List Price, Incentives, Offer (if any), house details (sq ft, garage size, lots size etc).

Feel free to post info for homes anywhere in the Sacramento Metro area. Just cause I tend to confine my search to the Gold River, Folsom, El Dorado Hills, Cameron Park areas doesn't mean others have to.