Tuesday, February 23, 2010

Does Two Months a Trend Make?

Popular wisdom posits that high end home prices still have a ways to fall in California. The short version of the story goes, that sub-prime loans went bad first, so the lower end homes have more or less hit bottom, but the Alt-A and Option ARM loans which were sold as "affordability products" to purchase more expensive homes have yet to sour/reset en masse.

Last month I noticed that sales were up in the two zip codes I tracked. These two zip codes are generally considered higher end for Sacramento. The January DQ numbers just came out, and it appears this trend has continued and was rather pervasive.

To test this hypothesis, I compared the year-over-year change in sales, with median home price for all the reported zip codes in the Sacramento Metro Area. The results confirmed what I observed, a positive Y-o-Y increase in sales was correlated with higher priced zip codes, +.27 correlation. When I removed zip codes with very few sales (less than 5), the results were even better (removing big % swings due to small numbers). For zip codes with 5 or more sales in the month of January, the correlation with median home price was even higher, +.34.

I realize two months isn't a trend....but December and January are notoriously some of the worst months in real estate. I am now anxiously awaiting February sales numbers to see if the trend holds.

Monday, February 22, 2010

One Year Market Assessment

We bought a new home a year ago last week. As one who follows market trends, I was well aware of the continued downside potential in the Sacramento housing market, so our decision still causes me a bit of anxiety.

However according to the latest DQ stats, so far the damage isn't that bad. As of January 2010, the number of homes sold in El Dorado Hills is up (29%), median price is only down 3.4% and price per sqft is only down 1.3%. Stats for Folsom are fairly similar. Of course three numbers can masks a lot of undercurrents. But other stats are looking favorable as well......the number of NODs in the two zips continues to fall and foreclosures have held fairly steady despite the earlier surge in NODs.

At the same time, my own neighborhood, a new development, is slowly starting to crack. There are many short sales currently on the market and at least two foreclosures now. However Zillow only shows a drop in value of 3.4% (perhaps tied to the median price decline as opposed to comps?).

On a personal note, so far we have been absolutely delighted with our decision. We love the neighbors, we love the neighborhood, we love the house, and we especially love the drive into and out of our neighborhood. On a clear day you can see the snow capped Sierras on the way in, or the entire Sacramento Valley on the way out.

Our only disappointment has been that our builder, Pulte, did a super crappy job landscaping our front yard, and laying the drainage. I will report more on that in a later post.

Tuesday, February 9, 2010

Report from the East Coast

I spent last week on the East Coast. Scraping ice off my car in 17 degree weather, and spending an hour on the toll road to drive 5 miles on my commute to work, are just two of the reasons I was so thrilled leave and return to Northern California.

However the market for both residential and commercial real estate is strong there. No for sale signs (even in high end neighborhoods) or vacant store fronts.

It's a stark contrast to what I see around here.