Is December a Month to Remember?

Below is a short summary of housing statistics for Folsom and El Dorado Hills. The data come from two separate sources. The top set only included stats for existing single family homes, while I believe the bottom includes new home sales too (note the bottom set also uses average, and not median).

December's numbers surprised me quite a bit. Double digit increase in sales, and only single digit drops in price. Typically December is a really slow time of the year for real estate, and I figured it would be even worse with government subsidies drying up.

Could this be the end of free fall, or is it just a dead cat bounce?

EID Rate Hike

In case you haven't heard (thanks to all who forwarded e-mails), El Dorado Irrigation District is proposing a huge rate hike (80% over the next 5 years). Up till now I was hesitant to post anything about the protest, since I was worried they might default on their bond obligations. The literature I read made it sound like they needed the money to pay for infrastructure projects etc.

Well, now I am pissed off. I just saw today that the proposed rate hike is not all about covering the cost of water projects. Apparently there were some massive pension increases (35%) approved back in 2004. This seems really irresponsible to me. Times have changed. I understand that forecasts were calling for continued revenues, but revenues have changed drastically. Everyone should be asked to sacrifice, not just the rate payers.

Copied below is the e-mail I received from several folks explaining the situation:

EID is proposing a series of rate hikes starting with 35 percent in 2010, 15 percent in 2011 and concluding with 5 percent raises for the following three years, 2012-2014. The notices began arriving last week in your bill. Altogether it compounds out to an 80 percent increase in five years. The first rate hike is planned to go into effect a week before February, 2010.

The notices start a 45-day deadline for ratepayers to mail written protests to EID. Protests must include the assessor's parcel number of the property in which the person signing the protest letter has an interest, either as the owner or a tenant paying the utility bills. Only one written protest per parcel is counted.

Under the terms of Proposition 218 if 51 percent mail in objections to the rate increase within 45 days the rate increase is defeated.

Investing with Neutral?

After complaining about the beige and neutral colors of our rental home for several years, you would think I would be jenny-on-the-spot with a splash of color. Oddly, now that I have the option, the desire has left.

But this got me to thinking about wall color. With our first home, we were careful not to choose wall colors that were loud or bright. We didn't plan to stay there long term, so Mr. BT was always concerned about resale value.

Since moving back to California, I have noticed that wall color is not very common in the homes we have looked at. In fact, rentals and MLS write ups often tout neutral colors as a selling point.

So this brings me to my question, is wall color simply out of fashion, or are people still thinking of their home as an investment (i.e. don't want to personalize the home and risk making it less appealing)? If it's actually the latter, paint sales would be a great indicator that the market has finally returned to normal.

As for me, I'm thinking of trying out some textured wall paper in the bathrooms. (Anyone know of a good selection in the Sacramento area?)

Cresting Wave or Holiday Respite

Back in November, I suggested that the wave of NODs in the two zip codes I track may be cresting. A month and a half later, it sure does appear that way. However, I'm starting wonder if there could be something else is afoot.

Around this time last year we saw a significant drop off in fillings due to state legislation, coupled with a holiday reprieve by some of the government agencies (not sure if it only applied to foreclosure or if it applied to NOD filings as well). So I'm starting to wonder if the wave is actually cresting, or if it's just a temporary lull to avoid the potential bad PR of throwing a family into the streets during the holidays. It's hard to know for sure. I'm curious to hear other's thoughts.

In any case, I do think the number of foreclosures will slowly creep back up, as the NODs run their course. To be honest, I expected to see a lot more foreclosures by now. Fewer NODs are resulting in foreclosures (at least according to the data I track). Perhaps banks are more willing to negotiate short sales, perhaps there is shadow inventory, who knows.

Only a Sucker will Sacrifice

There are plenty of stories swirling about the blogs that make me feel like a sucker for having played by the traditional rules. The worst is the story that goes something like this.....a couple buys a home with no money down, extracts thousands of dollars in equity, which is then used to purchase exotic vacations and cars, then they stop paying their mortgage and bank the savings for a year while the bank slowly processes the foreclosure, or better yet get a permanent mod with a principle reduction.

The one I have actually experienced first hand, more than once, is related to short sales. The story goes like this, we walk into a nice home, with furnishing worth 8 to 10 times ours, the house is adorned out with all the latest electronics (massive flat screen TV, home theater stereo), toys galore (often high end car or boat in the garage), and of course the built in BBQ in the backyard, only to find out the house is a short sale. If they sold off even 1/5th of their possessions, they would have enough money to make the mortgage for the next year or so. Then Mr. BT and I leave feeling like we played the game all wrong.

So yes, I am bitter and venting a little, please bear with me (I just spoke with another friend who is now planning a short sale/walk).

I realize there are plenty of people who played this game and lost everything......but at the same time there are way too many who played it and hit the jackpot (heads I win, tails you lose). The way I see it, without skin in the game, it will be played over and over with the same result (the 3.5% FHA down payment loans are perpetuating this game).