23 replies to this topic

[Steve Heard]

After several years of steep declines in Folsom resale housing inventory, the numbers are starting to rise.

Although housing inventory usually does increase as we head into the spring/summer buying season, the last 2 years saw inventory fall in the first quarter.

The increase is off-set, however, by growing demand.

While 61 homes came on the market in March, for example, 68 closed sale and 101 went pending.

Today, there are 85 homes on the market in Folsom, and 109 have gone pending this month.

Draw your own conclusions, but I think buyers believe we've seen the bottom of the market and perhaps interest rates as well, and are buying now to secure their future.

Your thoughts?

[4thgenFolsomite]

In my neighborhood, people are actually stopping people in front of their homes asking if anyone wants to sell or if any houses are coming up. These are buyers, not real estate agents. It does seem like the demand is increasing. At the same time, neighbors who are leaving aren't selling. Instead they are renting out their homes in our neighborhood and then buying a bigger place somewhere else. So its frustrating for people who want to buy and there is some concern among our neighbors of what the neighborhood will become with a bigger renter base.

[Steve Heard]

In my neighborhood, people are actually stopping people in front of their homes asking if anyone wants to sell or if any houses are coming up. These are buyers, not real estate agents. It does seem like the demand is increasing. At the same time, neighbors who are leaving aren't selling. Instead they are renting out their homes in our neighborhood and then buying a bigger place somewhere else. So its frustrating for people who want to buy and there is some concern among our neighbors of what the neighborhood will become with a bigger renter base.

Not much we can do about current owners turning their places into rentals, but I do know that some sellers are preferring to sell to people who want to live in the home rather than investors.

I know of 2 homes recently where the sellers have cited owner-occupancy as a deciding factor, and both Fannie Mae and Freddie Mac give owner-occupant buyers first priority, accepting only those offers during the first couple of weeks they have their properties on the market.

[4thgenFolsomite]

yes, its true. I don't think any of us object to them doing whatever is right. I only mentioned it because it might be a trend where people who have felt underwater are now confident their original homes are going to appreciate close to what they bought them for, so they don't want to lose out on that (thus they rent them out while they gain in value rather than sell) and at the same time, they don't want to lose the opportunity to buy a bigger house before those prices go up too.

[Steve Heard]

yes, its true. I don't think any of us object to them doing whatever is right. I only mentioned it because it might be a trend where people who have felt underwater are now confident their original homes are going to appreciate close to what they bought them for, so they don't want to lose out on that (thus they rent them out while they gain in value rather than sell) and at the same time, they don't want to lose the opportunity to buy a bigger house before those prices go up too.

This is definitely happening. I have recently sold 2 homes to 'move-up' buyers who are keeping their existing homes as rentals. One is about even, and the other is under water by over $100K, and both are going to just keep them and hope that they continue to appreciate.

[caligirlz]

I'm getting bombarded by realtor letters fishing to see if I want to sale. uh NO! some say they are returning to the business since the market is so hot....not exactly the type of realtor I would ever choose anyways. But, they are making on kinds of promises for things....like calendars with their logo!!!!! Sure, sign me up!!! idiots.....

[4thgenFolsomite]

I'm getting bombarded by realtor letters fishing to see if I want to sale. uh NO! some say they are returning to the business since the market is so hot....not exactly the type of realtor I would ever choose anyways. But, they are making on kinds of promises for things....like calendars with their logo!!!!! Sure, sign me up!!! idiots.....

Aww, don't be too hard on them. It's a competitive field and they are doing what they think they think is good marketing. Plus you might get a nice calendar!

[caligirlz]

LOL, but I don't want to sell. I just got here!

[cw68]

Creeping? Nope. Shooting is a better word! I believe that the market is somewhat correcting itself - recent prices were abnormally low - but I think it might be overcorrecting itself, which creates a frenzy. The unsupportive cycle may be starting all over again...

[Steve Heard]

Creeping? Nope. Shooting is a better word! I believe that the market is somewhat correcting itself - recent prices were abnormally low - but I think it might be overcorrecting itself, which creates a frenzy. The unsupportive cycle may be starting all over again...

Creeping? Nope. Shooting is a better word! I believe that the market is somewhat correcting itself - recent prices were abnormally low - but I think it might be overcorrecting itself, which creates a frenzy. The unsupportive cycle may be starting all over again...

I am speaking specifically of the number of homes being listing creeping up. Prices, on the other hand, are nuts.

For example, I just listed a house last week in Roseville. We had a one-day showing at an open house. 26 people showed up, and the seller accepted an offer of $385,000. He bought the place last year for $273K.

Overall, Folsom home prices are up about 18% from last year, and I can't imagine that continuing.

In the mean time, many people who were upside down and thinking about doing a short-sale or walking away, are now finding themselves with equity.

[rip]

Interesting stuff. So Steve, if you had to look into your crystal ball what would you anticipate for the up coming year? Seems the market is out of whack again, this time on the low supply/steep appreciation side. Would you think things will become more balanced (increasing inventory/moderating appreciation) in the next 6-12 months or will the run up continue? My family and I will be relocating to the Folsom area this time next year and have to say the current market makes me a little uneasy. Seems a bit bubbly. Thoughts?

[Carl G]

Just watching homes around here, it appears they seem to be staying on the market longer and/or not selling well. I wonder if there was pent up demand and when nicely maintained homes came on the market they were snapped up. Because of this demand, home prices shot up. Now that more homes, presumably not a well maintain are hitting the market, they cannot attract the offers for this more elevated pricing and are sitting on the market longer.

[Steve Heard]

Interesting stuff. So Steve, if you had to look into your crystal ball what would you anticipate for the up coming year? Seems the market is out of whack again, this time on the low supply/steep appreciation side. Would you think things will become more balanced (increasing inventory/moderating appreciation) in the next 6-12 months or will the run up continue? My family and I will be relocating to the Folsom area this time next year and have to say the current market makes me a little uneasy. Seems a bit bubbly. Thoughts?

Who the heck knows? It is so goofy, all of the predictions about a flood of shadow inventory causing a further decline, the fixed period expiration on adjustable notes causing rates to shoot up, the banks doing mass foreclosures starting in January; none have come true.

Banks have learned that they make more money on their properties by trickling them out than by flooding the market with them.

The fixed period expiration resulted in lower rates for most people, not higher.

With prices rising, fewer people are upside-down and many are hanging on to their properties.

The rich guys, who know more about money than I do, are dumping their money into rental-grade properties.

Lots of first-timers are coming into the market, and these folks were not burned by the crash. Remember, the peak was 2005. Many of today's buyers were in high-school or college, and they don't have the memory of the pain of that era. All they know is that they can afford to buy their first home and that prices are going up.

A friend listed a house in Elk Grove. They had 70 offers. That means there were 69 disappointed buyers. I'm assuming most are still interested in buying.

Another had an open house scheduled, and she posted a photo of the line of people waiting to see it when she arrived.

I can't imagine another 18% increase for next year, but who the heck knows?

With rates around 4%, even a $400,000 mortgage is within reach of a family making $75K per year.

My best guess is that more sellers will be putting their homes on the market, and the frenzy will cool a bit, and we'll see modes gains of 3 to 5% per year, which is more 'normal'.

I know of someone who is planning to move to California next year. She's buying now and turning it into a rental because she too is worried that rising prices and perhaps, interest rates, will price her out of the market.

Just watching homes around here, it appears they seem to be staying on the market longer and/or not selling well. I wonder if there was pent up demand and when nicely maintained homes came on the market they were snapped up. Because of this demand, home prices shot up. Now that more homes, presumably not a well maintain are hitting the market, they cannot attract the offers for this more elevated pricing and are sitting on the market longer.

There are 78 active listings in Folsom today (plus 3 short-sales). Only 17 have been on more than 30 days.

The average days on market for Folsom sales last month was 16.

So, while there are a few homes lagging behind, the ones which are priced correctly, regardless of condition, are selling quickly, with multiple offers.

Just because a house has a sign on the lawn doesn't mean it is still active. Most sale contracts have a 30 to 45 day escrow, so a house can go into contract quickly, but the sign remains until the sale has closed, which may give people the belief that the house has not sold.

Among the by-products of this market are anger and distrust among buyers. They are angry that they can't get a deal done as quickly and easily and cheaply as they'd like, and when they aren't getting listings sent to them by their Realtors, they don't trust them and start driving around.

I frequently get the 'You said there aren't any available but I just drove past this one and that one. How come you didn't send me that one?'

Invariably, the house is pending sale and/or not accepting any more offers.

That's usually followed by the question, "Then why is there a 'for sale' sign in the lawn?!"

[rip]

I know of someone who is planning to move to California next year. She's buying now and turning it into a rental because she too is worried that rising prices and perhaps, interest rates, will price her out of the market.

My wife and I actually considered this ourselves. However, the logistics of trying to find and buy a house when we are 700 miles away is a bit daunting. As fast as homes are selling we'd likely be in a position we'd have to make an offer on something we hadn't seen in person. I'm okay being aggressive, but can't say buying a house I've only seen online makes me very comfortable. Add to that trying to manage a property long distance, we decided it just didn't make sense for us.

The core issue for me is whether or not this is simply a correction in the market, or the beginning of Housing Bubble version 2.0. The level of activity of big institutional investors (ie: Blackstone) makes me instinctually suspicious. It seems the same Wall Street money that fueled the last bubble,(on the mortgage end) may be funding a new one from the other (supply) side.

Edited by rip, 30 April 2013 - 02:41 PM.

[Darth Lefty]

some say they are returning to the business since the market is so hot....not exactly the type of realtor I would ever choose anyways.

If they were construction workers who lost their jobs in 2008 would you welcome them back to employment or call them filthy opportunists? It wasn't realtors who caused the crash.