I must have missed this tactic last week, as I was a bit preoccupied with work...but oh its a good one.
I noticed this week (and it was there last week as well)...that the dismal pending sale numbers are actually worse than I thought. Turns out, almost 20% of those pending sales (4 out of 21) are actually new homes. To make matters more interesting....turns out new homes don't seem to be listed until they are under contract (there are none listed in the MLS....and we know they have spec home inventory)!
Why is this so important? Seems builders are trying to game the numbers by beefing up contract activity, and minimize inventory numbers in the MLS. Is this done on purpose? Who knows....but it sure was an interesting find....it means contract activity is really in the toilet around here.
Thursday, September 27, 2007
Wednesday, September 26, 2007
Immobility
I started forming a theory (not
If the housing bubble doesn't burst, the economy is still in for it because there is a good chance the high price of homes will end up limiting the mobility of the workforce, thus causing a drag on the economy. In other words, those in the more expensive areas who were fortunate enough to have purchased several years ago, can stay or move to less expensive areas.....so its like trickle down housing (as opposed to economics). If you live in the middle of nowhere, forget about getting out....you don't have many options unless you made a fortune running an internet business!
One of the things our economy depends on is a dynamic labor force. Cost of living has become a huge limiting factor....the only people who can afford to move to places like the Bay Area are very well paid professionals and people coming from comparably prices metro areas. This means the companies that are located in the expensive metro areas will start having trouble recruiting at current salary levels. Eventually salaries will have to rise or, due to the lack of influx of people, home prices will have to depreciate. The other option is that companies start moving out of the more expensive metro areas.
I wish there were some statistics I could look at to buttress this theory (that people are increasingly stuck where they are, thus shrinking the available labor pool).
Friday, September 21, 2007
The Price we Pay for Quality Public Education
Thought I would leave you with some really interesting data before I head to D.C. to present my research.
Recent comments had me wondering about the premium we pay to live in areas with "high quality public schools." So I put together some publically available data to see just what that premium is. The weighted average API score is 6.5 for all the zipcodes on a scale from 1-10.
One strategy hubby and I have discussed is buying in an area where housing is less expensive and using private schools. Otherwise we end up "paying" for a quality public education out of our home premium and annual real estate taxes. I plan to run some numbers on a break even scenario at a later date.
Methodology:
Took the weighted average (the number of valid students multiplied by a school's 2006 API score) summed it up and derived a single API school score for each zip code. I compared this with median June 2007 housing prices from DataQuick via Sac Bee to get a better feel for the "quality school" premium. (You can't just average all the schools scores for a zip code because the number of students can vary so widely from school to school.)
It is obvious, that aside from select areas, there is a pretty high correlation between higher median home prices and better schools (median home prices over 400k are highlighted). From what I remember of CA school funding, this is a bit of a catch-22, since schools are largely funded with real estate taxes (so more money to give to schools where real estate prices are higher which gives schools more resources to perform well).
Recent comments had me wondering about the premium we pay to live in areas with "high quality public schools." So I put together some publically available data to see just what that premium is. The weighted average API score is 6.5 for all the zipcodes on a scale from 1-10.
One strategy hubby and I have discussed is buying in an area where housing is less expensive and using private schools. Otherwise we end up "paying" for a quality public education out of our home premium and annual real estate taxes. I plan to run some numbers on a break even scenario at a later date.
Methodology:
Took the weighted average (the number of valid students multiplied by a school's 2006 API score) summed it up and derived a single API school score for each zip code. I compared this with median June 2007 housing prices from DataQuick via Sac Bee to get a better feel for the "quality school" premium. (You can't just average all the schools scores for a zip code because the number of students can vary so widely from school to school.)
It is obvious, that aside from select areas, there is a pretty high correlation between higher median home prices and better schools (median home prices over 400k are highlighted). From what I remember of CA school funding, this is a bit of a catch-22, since schools are largely funded with real estate taxes (so more money to give to schools where real estate prices are higher which gives schools more resources to perform well).
Thursday, September 20, 2007
Weekly Screen Scrape - Bucking the Trend
Even though inventory in the Sacramento Metro area has begun to decline, the inventory in my weekly screen scrape has continued to increase. Again I believe this is because prices are dropping, so there is a greater proportion of existing inventory showing up in my criteria. There has also been a slight uptick in contract activity (see graphic below). However buyers have wised up. The average list price for houses under contract is $8 below the average list price for those still available.
The graphic below is based on data compiled on houses in Folsom and El Dorado Hills that show up in my weekly search. This search helps me get a better feel for the amount of activity occurring in the market which in turn helps set my purchase expectations.
The graphic below is based on data compiled on houses in Folsom and El Dorado Hills that show up in my weekly search. This search helps me get a better feel for the amount of activity occurring in the market which in turn helps set my purchase expectations.
Wednesday, September 19, 2007
Shiller: Housing Market Creates Significant Recession Risk
Apparently Shiller is not optimistic about the direction of the economy.
Based on Shillers view's a look at our personal situation.......
Are our jobs recession proof? Not sure. Both hubby and I work with government clients (federal and state).
If a severe recession were to hit, how would we fare? I think it depends on inflation. We have a reasonable sized down payment as sizable 401k savings. Without a mortgage or student loan debts we can easily downsize our lifestyle. Lack of a mortgage also makes us extremely mobile, so we could move to find work if it were necessary.
Is purchasing a house with a recession highly probable a good idea? Not at this point. While interest rates and home prices are looking favorable, I am keen to wait and see how the economy as a whole weathers the bursting of the housing bubble. There isn't much out there to suggest we are at bottom, at this point there is nothing to lose by waiting.
What can we do to prepare for a recession? Not sure.
Based on Shillers view's a look at our personal situation.......
Are our jobs recession proof? Not sure. Both hubby and I work with government clients (federal and state).
If a severe recession were to hit, how would we fare? I think it depends on inflation. We have a reasonable sized down payment as sizable 401k savings. Without a mortgage or student loan debts we can easily downsize our lifestyle. Lack of a mortgage also makes us extremely mobile, so we could move to find work if it were necessary.
Is purchasing a house with a recession highly probable a good idea? Not at this point. While interest rates and home prices are looking favorable, I am keen to wait and see how the economy as a whole weathers the bursting of the housing bubble. There isn't much out there to suggest we are at bottom, at this point there is nothing to lose by waiting.
What can we do to prepare for a recession? Not sure.
Tuesday, September 18, 2007
Waiting it Out
In a society that thrives on instant gratification.....patience is not always rewarded. Luckily, when it comes to the Sacramento housing market, patience is being rewarded.
Prices are dropping and so too is the cost of borrowing (assuming you have a down payment and good credit....otherwise you might not be able to find a loan at all).
We made a bet that the housing market could not continue to appreciate and it appears to be paying off. Others made a bet that it would, including individuals who feared they would be priced our forever, speculators and investors.
I'm not sure how long our patience will last. After we hit bottom, I believe there will be a fairly sustained period with no appreciation before the market starts to climb again. I am looking for bottom, and ideally waiting till I see some modest appreciation.....but in all honesty, I think we will pull the trigger somewhere in between.
Prices are dropping and so too is the cost of borrowing (assuming you have a down payment and good credit....otherwise you might not be able to find a loan at all).
We made a bet that the housing market could not continue to appreciate and it appears to be paying off. Others made a bet that it would, including individuals who feared they would be priced our forever, speculators and investors.
I'm not sure how long our patience will last. After we hit bottom, I believe there will be a fairly sustained period with no appreciation before the market starts to climb again. I am looking for bottom, and ideally waiting till I see some modest appreciation.....but in all honesty, I think we will pull the trigger somewhere in between.
Friday, September 14, 2007
Month's Inventory by Zip for Aug/Sep
Freshly prepared gnocchi slowly rise to the top when put in boiling water, and so to do almost all the zip codes in my month's inventory. Just a few hold outs left below the 6 month line (equal footing between buyer and seller) mainly downtown. Unfortunately, DQ didn't have the August sales data for Yolo county this month....
I'm doing my happy dance now......cause even Folsom is above the line now. El Dorado Hills has been cooked for a while now.....and prices have been dropping pretty steadily when owners want to actually sell the house they have listed.
I called on a house today that has been on the market for over 169 days, and has dropped its price over $150k......not a singe offer since it was first put on the market (and that offer was considered low at the time.....but it was still $100k more than they are currently asking....that's what happens when you are greedy/stubborn....cause they don't owe very much on it).
Existing single family home sales are from the Sacramento Bee's website and are gathered by DataQuick each month. The inventory numbers are for SFH that were listed on ZipRealty's website.
I'm doing my happy dance now......cause even Folsom is above the line now. El Dorado Hills has been cooked for a while now.....and prices have been dropping pretty steadily when owners want to actually sell the house they have listed.
I called on a house today that has been on the market for over 169 days, and has dropped its price over $150k......not a singe offer since it was first put on the market (and that offer was considered low at the time.....but it was still $100k more than they are currently asking....that's what happens when you are greedy/stubborn....cause they don't owe very much on it).
Existing single family home sales are from the Sacramento Bee's website and are gathered by DataQuick each month. The inventory numbers are for SFH that were listed on ZipRealty's website.
Thursday, September 13, 2007
Weekly Screen Scrape - Increases and Decreases
Not much to report, but inventory in my screen scrape is still increasing even though total inventory in Folsom and El Dorado Hills is not. Prices are dropping, which accounts for some of the inventory increase....part new listings starting out at lower prices, and part old listings dropping into our range.
We have seen some nice looking homes in our price range lately...and are very encouraged. Might have to get a new letter from our mortgage broker so we can start shopping in two months (one month into our 6 month lease already. Conceivably in two more months we could make an offer to close escrow in 2 months, giving us a whole month to tidy up the new place and move in).
We have seen some nice looking homes in our price range lately...and are very encouraged. Might have to get a new letter from our mortgage broker so we can start shopping in two months (one month into our 6 month lease already. Conceivably in two more months we could make an offer to close escrow in 2 months, giving us a whole month to tidy up the new place and move in).
Smaller Homes will Fix the Problem?
According to yesterday's WSJ, it looks like the builders are responding to the market conditions by building smaller homes. The thinking is, they will be more affordable if they are smaller and contain less amenities.
They noted that the average size of a newly completed home was 2,248 sq. feet. Thinking in terms of my average sized family of 4 (no pets), that is approximately the size of home we would like to purchase when they finally come down into our price range (and some have already started). I know we should be able to get by in a much smaller home, but I work full time out of the house and require a separate office (don't want to work in my bedroom).
They noted that the average size of a newly completed home was 2,248 sq. feet. Thinking in terms of my average sized family of 4 (no pets), that is approximately the size of home we would like to purchase when they finally come down into our price range (and some have already started). I know we should be able to get by in a much smaller home, but I work full time out of the house and require a separate office (don't want to work in my bedroom).
Wednesday, September 12, 2007
I knew there was something wrong with the housing market when......
My epiphany came when we were at an open house near our daycare provider's home (this was early 2005 back in Virginia) and ran into another couple whose daughter attended the same daycare. The mom was a lawyer in D.C. and dad was a mortgage broker. Just like us, they were young professionals who couldn't afford a reasonable sized house, in an older but reasonable neighborhood, pretty far from the city center (Fairfax County where we lived would probably be akin to Placer or El Dorado County's distance to downtown Sac), using reasonable financing mechanisms (30yr fixed rate) with 5%-10% down.
After that we began to watch the market carefully for signs we should sell. Several months before we learned we would be moving back to Sacramento, we had decided to sell our house and rent for a while (around July 2006). We probably would have tried earlier in the year, but my son was born in March of 2006 so that had us a bit preoccupied =)
After that we began to watch the market carefully for signs we should sell. Several months before we learned we would be moving back to Sacramento, we had decided to sell our house and rent for a while (around July 2006). We probably would have tried earlier in the year, but my son was born in March of 2006 so that had us a bit preoccupied =)
Inventory Growth by Zip for Sept 2007
Not much change since August in SFH inventory. A 0.8% drop in inventory overall. Both raw numbers and percentages are presented (as the percentage change can be a bit misleading in zips where inventory is below 100). Guess this means August was our peak this year. Although if we included the upcoming auction inventory we might still be higher this month.
Tuesday, September 11, 2007
LA Times Opinion Piece is Right On
LA Times piece by Peter Viles September 4, 2007 captured much of what I struggled to articulate earlier. (I know this is old news in blog land, but I just got around to reading the article).
"And yet now, just as the market is starting to cool and possibly provide buying opportunities, many of these folks -- especially those patiently waiting out the bubble -- find themselves crashing a pity party for the very buyers who priced them out of the market. They are furious that the government appears interested in supporting overextended borrowers and high prices, and they cite data to support their position. According to the California Assn. of Realtors, 41% of first-time California home buyers in 2006 put no money down. The median down payment for first-time buyers was just $10,000. No wonder LA Land commenter "jbunniii" writes: "No bailout is needed -- most of the borrowers in trouble didn't put any money down in the first place, so they will lose nothing by walking away."You don't have to accept all of these arguments."
"There is no doubt that some big lenders confused and, in some cases, defrauded borrowers, with the tacit approval of Congress, the Bush administration and regulators. It's also notable that "bubble bloggers" are not disinterested parties. Many are hoping that prices will fall so they can buy."
"But it's striking how little attention the views of the anti-bailout bears have gotten. Politicians, by rushing to the defense of recent home buyers, give the appearance of endorsing price stability at historically high levels. This makes little sense in Los Angeles, which ranks among the least affordable markets in America when housing prices are matched against income levels. Why should government favor today's owners over tomorrow's buyers?""
"I make nearly 100K and cannot afford a home in California," "JK" wrote on LA Land. "Using my tax dollars to help irresponsible people keep homes they can't afford, while at the same time keeping me out of the market, will be enough to send me over the edge.""
"And yet now, just as the market is starting to cool and possibly provide buying opportunities, many of these folks -- especially those patiently waiting out the bubble -- find themselves crashing a pity party for the very buyers who priced them out of the market. They are furious that the government appears interested in supporting overextended borrowers and high prices, and they cite data to support their position. According to the California Assn. of Realtors, 41% of first-time California home buyers in 2006 put no money down. The median down payment for first-time buyers was just $10,000. No wonder LA Land commenter "jbunniii" writes: "No bailout is needed -- most of the borrowers in trouble didn't put any money down in the first place, so they will lose nothing by walking away."You don't have to accept all of these arguments."
"There is no doubt that some big lenders confused and, in some cases, defrauded borrowers, with the tacit approval of Congress, the Bush administration and regulators. It's also notable that "bubble bloggers" are not disinterested parties. Many are hoping that prices will fall so they can buy."
"But it's striking how little attention the views of the anti-bailout bears have gotten. Politicians, by rushing to the defense of recent home buyers, give the appearance of endorsing price stability at historically high levels. This makes little sense in Los Angeles, which ranks among the least affordable markets in America when housing prices are matched against income levels. Why should government favor today's owners over tomorrow's buyers?""
"I make nearly 100K and cannot afford a home in California," "JK" wrote on LA Land. "Using my tax dollars to help irresponsible people keep homes they can't afford, while at the same time keeping me out of the market, will be enough to send me over the edge.""
Monday, September 10, 2007
Why Others like Sac
SF Chronicle article on why Sac is a great place to live. Most of these points were covered in my earlier post....but they bear repeating. Sacramento is a great place to live despite the fact that housing is ridiculously expensive.
Obsession Interrupted
Going to put my obsession on hold for a month while I crank out all our end of the fiscal year products.
Our 6 month lease starts this month, so it gives me another good excuse to pull back from my obsession. Will at least try and post the inventory bu zip so I can continue to do the month's inventory calculation. And of course the weekly screen scrape will continue, since that is why I started collecting data in the first place.
If I am at all successful at curbing my obsession, I may parlay into the healthy attitude into the new FY and attempt to exercise during my lunch break instead of obsessively reading the local housing blogs.
Our 6 month lease starts this month, so it gives me another good excuse to pull back from my obsession. Will at least try and post the inventory bu zip so I can continue to do the month's inventory calculation. And of course the weekly screen scrape will continue, since that is why I started collecting data in the first place.
If I am at all successful at curbing my obsession, I may parlay into the healthy attitude into the new FY and attempt to exercise during my lunch break instead of obsessively reading the local housing blogs.
Friday, September 7, 2007
Another Pet Peeve
Its not like Realtors are all that busy these days.....you would think they could take the 20 seconds out of their day to respond to an e-mail inquiry on one of their listings.
Isn't that one of the listing agents main function?
Perhaps they just didn't want to answer.....I asked if there had been any offers on a house (its been listed for a really long time....and the price has dropped significantly). But at least a courteous acknowledgement even if they don't want to answer would be in order.
Isn't that one of the listing agents main function?
Perhaps they just didn't want to answer.....I asked if there had been any offers on a house (its been listed for a really long time....and the price has dropped significantly). But at least a courteous acknowledgement even if they don't want to answer would be in order.
The Weekly Screen Scrape - All Time Low
In line with recent reports of national contract activity, the number of houses pending contract in my search criteria is at its lowest point ever. While I have not been through an entire RE cycle here in Sacramento (we moved here in late Oct early Nov), I can't imagine this is normal. Of the 100 houses that meet my search criteria on the market right now, only 17 are pending.
And they said Folsom and El Dorado Hills wouldn't be affected....ha. Can't wait to see the next month's inventory data for these zips (95630 & 95762)!
Since I started keeping overall stats on my weekly screen scrape (early May) the number of for sale homes that meet my criteria has increased by over 100% (doubled). Meanwhile inventory in those two zips has only increased around 20-30% during that time (I don't have those exact stats....darn it). I like to think this is a good sign....as a percentage more of the homes coming on the market are in my price range.
And they said Folsom and El Dorado Hills wouldn't be affected....ha. Can't wait to see the next month's inventory data for these zips (95630 & 95762)!
Since I started keeping overall stats on my weekly screen scrape (early May) the number of for sale homes that meet my criteria has increased by over 100% (doubled). Meanwhile inventory in those two zips has only increased around 20-30% during that time (I don't have those exact stats....darn it). I like to think this is a good sign....as a percentage more of the homes coming on the market are in my price range.
Thursday, September 6, 2007
Top 5 ways to know its a distressed listing.....
Okay....time to have a little fun. I'm no marketing expert....but some of these REO listings are just downright pathetic. I guess they assume the price will sell the house. Little do they know, there is a lot of competition in that arena...so making their REO stand out from the crowd would be worth their time.
Top 5 ways to know its a distressed listing.....
1) The listing only has one picture of the front of the house, with weeds visible if you look carefully.
2) The description is anemic and pithy. At most two lines.
3) The term "as-is" is used in the description.
4) The real estate agency is one you have never heard of and sounds very mysterious (i.e. .......although this one might be legit...but you gotta love the mysterious name)
5) The term "bank-owned" is advertised.
Update: The name of the company in item 4) has been removed due to the receipt of several nastygrams using accusatory words like slander and defamatory. I had never heard of the company and their name sounded very mysterious...so I am not sure exactly what part was offensive....but I am certainly not trying to piss people off. Just convey the facts as I see them.
Top 5 ways to know its a distressed listing.....
1) The listing only has one picture of the front of the house, with weeds visible if you look carefully.
2) The description is anemic and pithy. At most two lines.
3) The term "as-is" is used in the description.
4) The real estate agency is one you have never heard of and sounds very mysterious (i.e. .......although this one might be legit...but you gotta love the mysterious name)
5) The term "bank-owned" is advertised.
Update: The name of the company in item 4) has been removed due to the receipt of several nastygrams using accusatory words like slander and defamatory. I had never heard of the company and their name sounded very mysterious...so I am not sure exactly what part was offensive....but I am certainly not trying to piss people off. Just convey the facts as I see them.
Wednesday, September 5, 2007
September Good Buys
Not too many "good buys" last month. However I think we are seeing many more, "better than before" buys ....but still very few truly "good buys".
Technically there were only 2 listings posted in August....so let's see if we can find at least 3 this month (will re-post the September comments made in the August section).
Check out the ground rules for posting. Next time will try and post this section on time (was out of town for the long holiday).
Technically there were only 2 listings posted in August....so let's see if we can find at least 3 this month (will re-post the September comments made in the August section).
Check out the ground rules for posting. Next time will try and post this section on time (was out of town for the long holiday).
August MelissaData for Folsom and El Dorado Hills
Hmmm.....while sales continue to plummet, the average sales price has risen 2 months in a row for both EDH and Folsom. The increased average price could be a result of fewer home sales in the lower ranges (which is why most reports use the median price). These results are not very consistent with my weekly screen scrape, which is why I don't see the trend holding.
In the coming months we should see if the effects of the jumbo loan financing squeeze start to bring these averages back down.
In general the data for EDH is looking very erratic, partially because the sample size has shrunk dramatically. All my usual caveats for MelissaData still apply.
In the coming months we should see if the effects of the jumbo loan financing squeeze start to bring these averages back down.
In general the data for EDH is looking very erratic, partially because the sample size has shrunk dramatically. All my usual caveats for MelissaData still apply.
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.
Tuesday, July 31, 2007
Market Comparison
We have started to branch out beyond Folsom and EDH in our home search. So of course, the first thing I wanted to do, was look at the stats for Shingle Springs, Fair Oaks, Granite Bay, and Orangevale (I wanted to do Gold River too, but I think the zip includes most of Rancho). I pulled the historical data from SacBee's DataQuick monthly charts. This data is frequently revised, but for trend purposes the original numbers work.
Below are graphs of the main areas we are considering. One graph displays median sales price and the other, median price per square foot. Note the big clump on the square foot chart, but the spacing on the sales price chart. To me, that signals the average size house is much bigger in the more expensive zips. I can't really think of another explanation (so if someone has one...do tell). Not all periods were pulled for the chart, and some months are missing data from their website.
Below are graphs of the main areas we are considering. One graph displays median sales price and the other, median price per square foot. Note the big clump on the square foot chart, but the spacing on the sales price chart. To me, that signals the average size house is much bigger in the more expensive zips. I can't really think of another explanation (so if someone has one...do tell). Not all periods were pulled for the chart, and some months are missing data from their website.
Side note: I went to subscribe to the SacBee, since I was feeling a little guilty using their data so much. But their prices are pretty high. Best I can tell, on an annual basis they charge more than the world renowned WSJ. And for what...news on the latest murder and mayhem. The WSJ reports what I consider to be real news. Freeway accidents, fires, and crime are what I consider current events. Important, but not healthy to read about on a regular basis if you want to keep your faith in the goodness of humanity.
Monday, July 30, 2007
Blackstone - Environmentally Friendly McMansions
Hubby and I have anxiously been awaiting the opening of Blackstone, a master planned community in El Dorado Hills (off Latrobe). They were scheduled to open early Spring, but Centex and Lennar didn't open till recently. Lennar is apparently running the show at this development. They have three communities, and Centex has one. The other developers haven't opened yet.
Our assessment as follows:
Pros:
Location: Great location. Convenient to the freeway and all that El Dorado Hills has to offer.
Community Center: There will be a large complex with swimming pools, gym facilities, and other ammenities that is the focal point for the community. Not slated to open till December 2007, but at the rate they are going, it will probably be spring of 2008.
Solar: All houses will have solar roof panels. Lennar claims their solar is better than Centex's. Also good, is this isn't their first experience with a solar community, they have one in Roseville.
Cons:
Fees & Taxes: We have been getting mixed stories on all the fees and taxes. The HOA fees do not cover yard maintenance but do cover the clubhouse. I think those run around $136 a month (per Centex). Lennar said they have a different HOA depending if the community is gated or not. The district taxes seemed really high, and slightly confusing (Centex said $147 a month, but Lennar made is sound like it would be twice that much). I need to get clarification on all the taxes still. The sales guys are still learning all the ins and outs of their community (so they are fuzzy on the CCRs and other details).
Very Limited Customization: While the base models all come very nicely "appointed," you cannot "have it your way." There is a very limited amount of choices, aside from the actual house model, that are offered. This is contrary to my understanding of the "new house purchase." I thought one of the most appealing parts of buying a new house was the fact that you get to pick everything out. In the case of Blackstone, especially Lennar, it has already been decided. All three Lennar developments will have the exact same cupboards, floors, etc. Hello.....we not drones....or are we? Neither developer has models that are finished. I find some of this hard to swallow, so I may go back and get clarification once the sales people have been on the job a little longer.
Price: While the prices are reasonable compared to resales right now, when you include the HOA and taxes it is still above what I consider a good value. We visited the Centex development in Roseville this weekend (we had never been to Roseville before) to look at the models since they are the same. The Roseville Avonlea development is less expensive, by 10-20k per model and doesn't have HOA. Unfortunately the two Lennar developments that were even close to our price range are both gated. The third high end development is not gated...go figure.
Personal Perspective: If I am going to buy a new tract house, this is probably where I would do it. I like the idea of a community center where I can take the kids swimming, and where they can hang out when they are teenagers. Our daycare center is also very close by. However hubbby is really turned off by the fees. In the current market, I'm sure it will take a long time to sell all they have to offer (especially at current prices), so I have plenty of time to decide.
For previous post see here.
Our assessment as follows:
Pros:
Location: Great location. Convenient to the freeway and all that El Dorado Hills has to offer.
Community Center: There will be a large complex with swimming pools, gym facilities, and other ammenities that is the focal point for the community. Not slated to open till December 2007, but at the rate they are going, it will probably be spring of 2008.
Solar: All houses will have solar roof panels. Lennar claims their solar is better than Centex's. Also good, is this isn't their first experience with a solar community, they have one in Roseville.
Cons:
Fees & Taxes: We have been getting mixed stories on all the fees and taxes. The HOA fees do not cover yard maintenance but do cover the clubhouse. I think those run around $136 a month (per Centex). Lennar said they have a different HOA depending if the community is gated or not. The district taxes seemed really high, and slightly confusing (Centex said $147 a month, but Lennar made is sound like it would be twice that much). I need to get clarification on all the taxes still. The sales guys are still learning all the ins and outs of their community (so they are fuzzy on the CCRs and other details).
Very Limited Customization: While the base models all come very nicely "appointed," you cannot "have it your way." There is a very limited amount of choices, aside from the actual house model, that are offered. This is contrary to my understanding of the "new house purchase." I thought one of the most appealing parts of buying a new house was the fact that you get to pick everything out. In the case of Blackstone, especially Lennar, it has already been decided. All three Lennar developments will have the exact same cupboards, floors, etc. Hello.....we not drones....or are we? Neither developer has models that are finished. I find some of this hard to swallow, so I may go back and get clarification once the sales people have been on the job a little longer.
Price: While the prices are reasonable compared to resales right now, when you include the HOA and taxes it is still above what I consider a good value. We visited the Centex development in Roseville this weekend (we had never been to Roseville before) to look at the models since they are the same. The Roseville Avonlea development is less expensive, by 10-20k per model and doesn't have HOA. Unfortunately the two Lennar developments that were even close to our price range are both gated. The third high end development is not gated...go figure.
Personal Perspective: If I am going to buy a new tract house, this is probably where I would do it. I like the idea of a community center where I can take the kids swimming, and where they can hang out when they are teenagers. Our daycare center is also very close by. However hubbby is really turned off by the fees. In the current market, I'm sure it will take a long time to sell all they have to offer (especially at current prices), so I have plenty of time to decide.
For previous post see here.
Subscribe to:
Posts (Atom)
Posts
