We’ve all been reading the conflicting headlines.  Some say 2010 will have its challenges.  Others say 2010 will be the start of good things to come.  But what’s the truth?  How can we read through the pessimism and for that matter, the rose colored glasses, to determine what is the truth?

Well, as we all know, only time will truly tell.

But in this forum, I have the ability to offer my insight and share what I believe the coming year will bring.  Together, we’ll weed through the headlines and I’ll offer my honest, unbiased opinion.  And a year from now, we’ll look back on this edition of Weekly Market Watch to determine if my hunch was correct or if I should’ve kept my opinions with the rest of the weeds.

  • Overall. I think 2010 will be the year we begin to build a foundation.  Many experts are predicting that the recession is nearly complete, if it isn’t already as measured by a decline in negative growth.  But the recovery is going to depend on stimulus spending and doing more to facilitate job growth.  As Leslie Appleton Young said, “If we don’t create more direct policies to get people back to work, this could go on much longer.”
  • Let’s start with foreclosures. No, I don’t think we’re out of the woods yet.  I think we have a lot of work ahead of us and much of that has to do with the state of the overall economy.  Unemployment is still high and while I think we’re better, we’re not healed.  The latest U.S. Bureau of Unemployment Figures show that unemployment rates were higher in November 2009 than for the same period in 2008 in all 372 metropolitan areas.  What happens when people lose their jobs?  They typically aren’t able to pay their mortgages.  There are also many people out there with adjustable rate mortgages that just haven’t yet adjusted.  If the government doesn’t step in and those mortgages adjust, many people will find themselves in a short sale or foreclosure situation.  Fortunately the good news is that the government is putting more pressure on the banks to work with homeowners and my hope is that if that, combined with the government’s own work to help homeowners in trouble, I think we’re on a better path with these foreclosures than we were a year ago.
  • Interest rates. There are a lot of schools of thoughts with relation to the future of interest rates.  I tend to agree with many economists who believe that last year’s record low interest rates, where some were able to secure a 30 year fixed rate mortgage for under 5%, may be a thing of the past.  Do I see them taking a surge in 2010?  No, probably not.  CNBC Reporter Diana Olick wrote, “Unless the government decides to extend its Fannie-Freddie purchase program or do something else to juice the credit markets, mortgage rates will rise steadily, probably leveling off somewhere around six percent” and I tend to agree with that philosophy.  Still a good place to be.  But having said that, I encourage you to review my February 2009 Reality Check piece in which I shared how increases in purchasing power can affect a buyer’s purchasing power.  I have updated it with the latest numbers and if you are considering buying, you may want to consider doing so before interest rates start making their way up.  Even a small hike in rates can dramatically affect your purchasing power.
  • Housing Prices and Sales. I tend to agree with the California Association of Realtors price and sales theory for 2010.  They’re calling for a 3.3% increase in median home price.  They’re also calling for a 2.3% decline in home sales.  I think these are accurate predictions.
  • The hottest market? The entry level market is by and large the hottest segment of the housing market right now and in all honesty, probably will continue to be in 2010.  But, it was also the first to experience the downturn so it is certainly easy to suspect that it would be the first to recover.  What we know about the entry level market is this:
    • Homes saw a great deal of depreciation in this market
    • This market was most affected by foreclosures and short sales
    • Affordability is especially high in this market
    • The inventory is low in the entry level market in many areas

I don’t see much of this changing in 2010.

I do see a trickle affect coming from the entry level market into the move-up market.  Many homeowners are looking to take advantage of the $6,500 home buyer tax credit as well as the opportunity to cash in on a buyer’s market in the entry level and a seller’s market in the move-up region.  It really is a perfect storm for this group and I hope more move-up buyers will consider that.  Fortunately, we have our Move-Up Marketer program which helps to educate move-up buyers about the opportunities in today’s market.

The luxury market is a very different market indeed.  It was the last to be affected by the market changes and in all likelihood it will be the last to recover.  Having said that, there are some very interesting pockets of success.  It really depends on the house, the neighborhood and the overall demand for that market.  We’ve seen instances where a million dollar home comes on the market only to be snatched up within a few days.  Then, others, just sit.  It really comes down to what the market will bear.

Sorry to be so long-winded but I wanted to give you a really good glimpse at the coming year.  Now, let’s take a look at this week in real estate:

Auburn:

Inventory is on opposing sides: while listing inventory remains very low, the sales inventory has picked up slightly- we saw three multiple offers and nine ratified offers.

The activity has picked up some and we had several great floor calls/walk-ins the weekend after Christmas.  One of our current challenges is appraisals.  We had an appraisal come in $5,000 over purchase price but in underwriting they took $15,000 from the price.  We had 3 new homes to tour yesterday and agents have several listing appointments scheduled for the next week.  ENERGY IS GOOD.

As we’ve had requests already for seven new Broker Price Opinions for bank owned assets, it’s a sign that we have some new inventory on the horizon.

On a positive note, Kim Tuttle, our new Coldwell Banker Home Loans mortgage advisor, helped one of Debi’s clients that was not approved by another lender with a VA loan and was able to get a FHA loan approved and funded in 2 weeks!

El Dorado Hills:

Inventory is about half what it was 18 months ago and 1/3 of those listings are short sales. REO inventory is very low. Sales activity seems brisk for the first week of the year with one sale (double end) over a million dollars. Clients are searching the Internet for agents, looking at the CAMoves website, personal websites and Googling agents for more information.

Elk Grove:

The listing inventory for the Elk Grove is decreasing while the sales inventory is holding steady.  We saw eight multiple offer situations for the reporting period along with 14 ratified offer.

Since we just came out of the holiday period, we only had four open homes held open.  The good news is that our office has recently received more REO assignments.  Agents who have relied on this as a source of business are focusing on building their core business.  Short sales continue to be approved at an increased pace.

Over the holidays, we experienced very high levels of activity.  Inventory remains extremely low and buyers are very active.  Prices appear to have stabilized on the low and mid range.  Bare land still seems to be stagnant.

Fair Oaks:

The real estate market at our office has been slower of course through the Holidays. But as of January 1, activity has blossomed. We are taking a lot more listings actually real sellers and a few more REO listings and Short Sales.

The buyers are out in droves but the problem is the inventory is still low.  Agents have been writing offers and have been getting accepted- yeah!  Multiple offers are also on the rise, due to the inventory.

The activity level of the agents is very positive. We have been working with the move up marketers program, technology training on myREcafe.com and how to analyze market trends- all of these tools are preparing our agents to have a great success this year!

Agents are also spending more time on writing personal notes, door knocking and geographical farm areas. Going back to the basics and the traditional real practices I feel very strongly that this will be the success of our agents in 2010

Metro:

This office is in the heart of Sacramento, and sees inventory in all price points; fortunately the listing inventory is increasing and the sales inventory is holding steady.

With that said, the bank owned assets and short sales continue to be a big source of our business.

Our office featured a very good marketing and preview tour of current available properties in our core areas this past week- will these be gone soon?  Our agents are also excited about our office’s annual kick-off meeting next week- it will be interesting to see what type of activity is sparked!

Placerville:

El Dorado County in general is very short on inventory. Everyone is wondering where the shadow inventory might be hiding. Floor time has been brisk with several walk in listings with sellers reasonable about their price and not distressed. We got approval on two short sales with closings in less than seven days.

Roseville-Granite-Bay

Listings are slow at this time.  Sales starting in January are up—10sales so far, Opens were slow first week, There is a lot information about the market so far this year. The agents in our office have a new mission statement this year, “CAN-DO ATTITUDE”. Everyone is excited about the new year and the opportunities that come with it!

Rocklin/Lincoln

The listing inventory is low but our agents have several listing appointments scheduled.

Sales are doing very well for this month- we had 18 ratified offers.  There are buyers that are qualified and ready to buy.  Perhaps the interest inching up a little is getting them off the fence.  We ended the month of December very strong and the agents are very busy, just need more inventory.

Light traffic for the few open homes that we had, but once again qualified buyers and the homes held open after Christmas had several groups and the agent received a couple of leads.  New years weekend was slow but one agent has a couple of new leads from the open house

We have continued to have meetings as usual and the agents have discovered that there is business out there during the holidays.  We are going to end the month doing very well with sales and closings but not as well as desired with listings.  ENERGY IS VERY GOOD and most of the agents had a good December.  We are having our Kick-Off meeting for Auburn/Rocklin-Lincoln next Tuesday, Jan. 12 with a guest speaker that helps with MEMORY and recall.  We have some new agents that have qualified for CB designations as well as made Master’s Club for the first time!!

Sierra Oaks

Shortage of inventory continues to be one of our biggest problems, and at the same time, our biggest opportunity.  Activity over the December period was seasonably slow, but we have seen a LOT of buyers in our area that are looking for properties.  These two factors have even led to bidding wars over some properties. Those that are not REO or Short Sale, and the ones that have been properly staged and/or priced right have had very fast selling periods.  In addition we are seeing the sell at asking price or above. Our Office goal is to get more listings and gain a much bigger market share in the coming year.

One glaring statistic from our Weekly Statistics Review shows that Sacramento County listings are down approximately 57% from last year (3268 vs.7575).  To this end, we are seeing a lot of our agents being a lot more aggressive and being more active at our Monday morning training classes.  In fact one of our newer agents has had a fantastic Month so far (only 1 week into the new year).  She already has 2 new sales and just closed 2 other sales.  On top of that she has picked up several new buyers and a listing opportunity.  To quote her, “my goal was to sell an average of 2 houses per month, but now maybe it should be 3”.  The key to her success has been her “work ethic” and opportunism.

Our REO specialist(s) reports banks/lenders are still holding properties and probably won’t be releasing any significant number of listings until March. However, they have begun releasing more than in the past several months.  In all, REOs inventory has shrunk close to 80% from a year ago, while short sales inventory remains about the same and represents about 40% of our inventory.  While a number of uncertainties remain, there still seems to be a pervasive optimism among our agents and their clients with regards to the New Year and the new decade.

North Lake Tahoe-Truckee Region

2009 ended with a flurry as the last half of the year resulted in 692 properties sold or 62% of the total sales in the market.  The combination of high inventory, lower sales prices, excellent interest rates and increased consumer confidence yielded greater sales than in 2008 for the Tahoe-Truckee real estate market.  While 2010 will continue to be a challenging year for real estate, we envision continued buyer interest in our market in taking advantage of the lowest home prices we have seen since 2003 and plentiful inventory.  Now is the time for buyers to consider an investment in a vacation home or investment property.  Conversely, it is an ideal time for homeowners to consider selling their property and buying up to a home or location of their dreams.

The active listing inventory for the Tahoe-Truckee market dropped 8% from the previous week to its lowest point for the year.  Currently there are 1,567 active listings – 1,065 residential properties and 502 lots and land listed for sale.

Of the active listings, there are 159 properties listed as short sales, (10.1%) and 59 properties listed as REO sales, (3.8%).  Overall, REO’s and short sale inventory pales in comparison to state and nationwide averages for our market.

Based on the current inventory and sales for the previous 30-day period, the market has a little over 14-months of inventory available.  The inventory of homes and land at today’s prices continues to favor the buyer interested in an investment property, vacation home or moving up to a bigger home or better location in the Tahoe-Truckee market.

For the year 2009, there were 1,112 properties sold in the market as compared to 1,023 for the same period in 2008 which is an 8.7% increase year over year.

For properties sold in 2009, 185 were REO’s, (16.6%), and 97 were Short Sales, (8.7%) which results in 25.3% of the properties sold being a short sales or REO.

For 2009, there were 645 properties sold priced below $500,000, 357 properties sold between $500,000 and $1,000,000 and 110 properties sold over $1,000,000.  The under $500,000 market realized 58% of the sales and was the most active relative to buyers.

Median and Average Sales Prices 2009 Vs 2008:  The median sales price for properties sold in 2009 was $450,000 while the average sale price is $576,310.  For the same period in 2008, the median sales price was $497,000 and the average sales price was $713,704 which is an (9.5%) and (19.3%) reduction in price respectively for one year.

For the last week of 2009, sales went up slightly from the previous week to 24 closed properties.  Of the properties sold last week, two (2) of those sold at a price above $750,000.  While homes under $600,000 are selling more rapidly than most, homes above $600,000 are still selling which points to the fact that homes priced right are being purchased by savvy buyers.

Vacaville:

Obviously you have heard this a lot, but 2009 was an interesting year for real estate- the boom of bank owned properties, changes in title, lending and appraisals caused some rough bumps, but quickened approval of short sales helped a bit with the inventory.

The HAFA program is going to be a benefit to our market in helping make homes more affordable and hopefully expedite the short sale process further, and also create an opportunity for those buyers to buy again sooner.

Our agents are primed and ready to go- we are working with our Move-up Buyer program that was launched here in September.   We saw five new listings already this week on the REO side- with increased inventory we’re sure to see increased sales.

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