With the expiration of the federal tax credit, the housing market is facing a key inflexion point as we head into the thick of the summer vacation season. The government stimulus has certainly helped spur a rebound in the real estate market, but the recovery is fragile and observers are watching closely to see if the market can grow without the support of government aid.

Several key economic announcements out this week could bolster the nascent recovery. On Thursday, mortgage finance giant Freddie Mac announced that U.S. mortgage rates have fallen to a record low. Rates for 30-year fixed loans declined this week to 4.57 percent from 4.58 percent. That is the lowest since Freddie Mac began tracking rates in 1971.

While the overall level of real estate activity has eased in recent weeks with the expiration of the tax credit deadline, many economists believe that low mortgage rates will spur growth in the market by reducing borrowing costs for home buyers.  Mortgage interest rates have tumbled in the past two months as concern that a debt crisis in Europe may spread boosted demand for the safety of bonds, including mortgage-backed securities.

Meanwhile, Reuters recently reported that consumer sentiment rose in June to its highest level since January 2008 while reports of job losses were down sharply from a year ago.

The Thomson Reuters/University of Michigan’s survey of consumers, a key gauge of consumer sentiment, rose to 76 from 73.6 in May. The figure was above the median forecast of 75.5 among economists polled by Reuters.  At the same time, reports of job losses fell by half since last June, from 65 percent of respondents to 29 percent, the survey showed.

“The June 2010 survey recorded the most favorable news heard by consumers about jobs in five years,” Richard Curtin, director of the surveys, said in a statement.  But he cautioned that consumers “do not anticipate significant declines in unemployment during the year ahead.”

Consumer sentiment is seen as a proxy for consumer spending, which fuels around 70 percent of the U.S. economy.  Positive consumer sentiment is particularly critical to the housing market. If buyers are more optimistic about their future, they’re more likely to take out a mortgage and buy a home.

So where does this all leave us as we look at the local housing picture? As reports from our local offices indicate, the market continues to be steady in most communities. But the recovery from last year’s recessionary lows will likely be a gradual one with its share of fits and starts along the way. Unemployment levels will play a key role in the recovery, as will the health of the stock market and the overall national economy.

While there are certainly economic challenges right now, for buyers with a long-term view, the current market provides an attractive opportunity to invest in real estate while mortgage rates are at historic lows and homes are priced very competitively.  Savvy buyers are taking advantage of this great combination of home prices and interest rates.

Now, let’s take a look at this week in real estate:

El Dorado County: El Dorado Hills and Placerville:

Our markets have unexpectedly slowed down- likely due to the expiration of the tax credit in April.  Although the inventory is low, it isn’t for lack of trying; one agent has taken three listings within the last week that is a traditional listing rather than a short sale or bank-owned asset.  Additionally, our agents are opening escrows that are a direct result of Coldwell Banker’s proprietary web based consumer rapid response system- Leadrouter.  Although I can’t be sure if these leads have been incubating for sometime, or were actuated from currently available properties, both the agent and the clients have found a great partnership!

Placer County: Auburn and Rocklin/ Lincoln:

Listings are down considerably, not just with our company, but competitors as well.  This obviously doesn’t bode well for buyers, but our agents are doing all that they can!

We are also seeing appraisal issues for homes not appraising to value- in fact one came in $15,000 too low.

We’ve seen very slow open houses in Auburn, but  in Rocklin, as many as 15 solid sets along with leads- not sure rhyme or reason behind the activity!

Bank owned properties are slow but we did close several short sales during the month of June.

As far as agents are concerned, according to MLS numbers, the agent count is 1,100

Sacramento County:  Sierra Oaks:

Our market in the central Sacramento area is beginning to realize a definite positive turn.  Our activity level is quite high with more agents working on new listings and with more buyers.  Even though we are seeing more bank owned properties being listed with our agents, we are seeing a nice increase in “traditional sales and listing opportunities.”

Pricing is still very much a key in the current market.  We are seeing Sellers becoming more realistic and taking much needed price reductions to levels that are finally bringing offers and sales.  Even sales in the higher price ranges are starting to take place, and they are driven by jumbo loans being available and at great interest rates.  One of our agents was fortunate enough to quickly double-end a $1.2 million home.

While these are definitely positive signs, there continues to be a shortage of homes for sale in our market.  Short sales are still a major factor, and even though banks are claiming to be improving their processing time on short sales, we are not experiencing much of a change.  Recently, one of our top agents had a negative experience.  The Buyer of her short sale listing was purchasing with an FHA loan, and had a rate lock that was about to expire.  Even though it was getting close to closing, the file was re-assigned to another negotiator, and time extended.  Our listing agent, after being contacted by the Buyer’s mortgage broker, tried calling the bank and even resorted to asking for a supervisor who is “suppose” to be more responsive and help improve the situation.  Instead she was more difficult to work with and responded with the line that she was sorry, that she has at least 100 files ahead of them and 100 files behind, and that they will get to it when they can.  After our agent explained that this lack of responsiveness could cost the loss of the sale, she responded by saying that she was sorry, but that was the way it had to be.  Frustration in that market continues with little change.

We continue to be cautiously optimistic about the next 12 months, and feel that an overall change is beginning to happen.  The big hurdle in the way continues to be high unemployment which has lead to buyers and seller being more cautious.  Regardless, sales are there for the realistic sellers and the hard working agents.

Solano County: Dixon and Vacaville- Fairfield:

Listing Inventory is increasing while sales inventory is slow; this equals very, very busy open houses!  There is a large amount of REO, short sale, referrals. Open house traffic was good and with qualified buyers.

More homes are coming available which equals more choices for the buyers.  We are seeing a bit of a break on the sales sides.  Approximately 30% of our inventory in the Vacaville/ Fairfield market is traditional sales; and going forward, our agents are focusing on the “Move-up” buyer segment- those that have equity and that will sell.  Relocation also seems to be a trend right now.

North Lake Tahoe-Truckee Region

For the first six months of the year, residential and lot sales are up 70% from the previous year and all indications point to continued brisk sales as we enter the summer months.  We continue to see robust sales as a result of more advantageous sales prices as compared to the previous year.

The median sales prices have decreased by 14% to $395,000 and average sales prices have decreased by 5% to $530,677.  With the higher than expected number of sales and lower sales prices, it points to the fact that astute buyers continue to show strong interest in Tahoe-Truckee real estate which is priced in some cases at 2001 price levels.

The hottest segment of the market is homes priced under $500,000 as roughly 65% of the sales have occurred in this segment.  Additionally, distressed properties, REO and Short Sales represent roughly 36% of the sales.  However, there is still considerable interest in non distressed properties as many are priced at levels that are too good to pass up.

Active Listings: The active listing inventory for the Tahoe-Truckee market increased for the ninth consecutive week.  Listings increased by 4% from the previous week as more homeowners are putting their homes on the market for the summer season.  Currently there are 2,077 active listings in the market; 1,465 residential properties and 612 lots and land listed for sale.  Coldwell Banker has almost 15% of the active listings in the market.

REO-Short Sale Listings:  Of the active listings, there are 156 properties listed as short sales, (8%) and 70 properties listed as REO sales, (3%).

Months of Inventory:  Based on the current inventory and sales for the previous 30-day period, the market has roughly 18-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 larger home or better location.

Sales Summary:

Total Sales 2010 Vs 2009:
For 2010, there have been 606 properties sold in the market as compared to 357 for the same period in 2009 which is a 70% increase in sales.

Of the properties sold, 128 were REOs, (21%), and 88 were Short Sales, (15%) which results in 36% of the properties sold being a distressed property.  In 2009 for the same period, there were 47 REO sales and 37 short sales or 24% total.

For the year, there have been 393 properties sold priced below $500,000, 157 properties sold between $500,000 and $1,000,000 and 56 properties sold over $1,000,000.

Median and Average Sales Prices 2010 Vs 2009:  The median sales price for properties sold year to date is $395,000 while the average sale price is $530,677. For the same period in 2009, the median sales price was $459,950 and the average sales price was $560,330 which is an (14%) and (5%) decline in price respectively year over year for the same period of time.

Last Week’s Sales:  For the week of June 21st a total of 29 properties sold which was highest week of sales since the middle of April.  Of the properties sold last week five (5) of the properties sold was over $750,000.

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