19 replies to this topic

[Steve Heard]

After 3 months of declining sales, falling prices and increasing days on market, the Folsom housing market has come roaring back.

 

According to the latest statistics from Metrolist, the average price had fallen by 7% to an average of $194 per square foot, between November 2013 and January of this year. Days on market, the time it takes to sell a home in Folsom, had risen to 49 days.

 

February statistics show, however, that prices spiked by 10%, to $214 per square foot, the highest level in over 6 years.  Final numbers for March won't be out for a few weeks, but so far, the average price sold this month is at just over $210 per foot, and the average time on market has fallen to 29 days.

 

What's causing this? The usual suspects; the start of the spring buying season, fear of rising interest rates, fear of missing the boat, and the fact that for many people, buying can be as cheap or cl0se to it, as renting.

 

Take for example, a $360,000 home for sale in Folsom. Bankrate is showing * edit * 5/1 ARM (fixed for 5 years) rates at about 2.5%.* On a $300,000 mortgage, that's a payment of about $1100 plus tax and insurance. Let's round that up to $1500.  That same house is fetching $1650 per month in rent.

 

As always, we have to take a wait-and-see attitude when discussing the market, but looking back, one thing we know for sure is that the bottom of the market was February 2012, when prices averaged just about $150 per square foot, and though there have been a few dips, they've been on a fairly steady climb since.

 

Whether you bought back then, or purchased your home years ago and have been waiting for the prices to come back, congratulations, it's paying off.

 

If you need or want to sell, it's a pretty good time right now, and if you're considering buying, prices are still far below the peak of 2005, and rates are much lower than they were back then, too.

 

Home buying isn't for everyone though, so if you're comfortable renting, keep on, but know that rents have risen in Folsom about 10% in the past year or so.

 

 

That's it from the cheap seats. 

[Dave Burrell]

Things are heading in the right direction, this is good to hear.  Thanks Steve!

[Rich_T]

<<  What's causing this? The usual suspects; the start of the spring buying season, fear of rising interest rates, fear of missing the boat, and the fact that for many people, buying can be as cheap or cl0se to it, as renting.  >>

 

I think it is indeed the usual suspects - especially the spring "buying season" and the fact that buying makes more sense than renting for some people.

[The Average Joe]

As a contractor, I'm still not seeing money flowing into residential work. People seem pretty reluctant to spend on home improvements, especially with all the economic and housing market uncertainty. The only residential work I do anymore is "specialty" or custom (and honey-do). Hopefully, things will turn and people will feel more comfortable with their economic situation. Maybe then I will shift focus back from commercial, governmental and property management type work.

[Steve Heard]

Joe, my contractor friends say that business is really picking up. I have friends who do landscape, cement, kitchen remodels, pretty much everything, and they are seeing people refinishing their homes. Not too many adding on, but lots of upgrading. 

 

It is definitely spreading. 

 

If I hear of anyone with a need, what's your specialty? 

[mac_convert]

Where can you find a free standing home for $360,000 for sale in Folsom?

[rip]

In light of the low sales volume in February, think I'd be a bit hesitant to put too much emphasis on the price spike.  Doesn't take too many high end home sales to skew the data when few houses sold.  

 

As far as rental parity, you can always get there if you make the down payment large enough.  Not sure how you are getting the numbers in your example Steve?  When I run a 360k home with $60k down (300k mortgage) I get: $1520 P&I, roughly $350 taxes, $70 insurance and a guestimate of  $110 in PMI.  That's right around $2000 per month. And let's be honest, for $360k in Folsom these days you are getting nice 1500ish square foot starter home.  Most folks I know shopping for their first home aren't walking around with large down payments.  They are using FHA loans and putting very little down.  If we run the same hypothetical house with a 5% down, that payment jumps to nearly $2400 per month. Even a 10% down nets a payment of around $2200. That $1650 rent is looking pretty affordable.   Now obviously, there are some tax advantages to having a mortgage which can help level the field a bit.  Even factoring that in however, at this moment, it is substantially cheaper to rent than to buy.  

[ducky]

Where can you find a free standing home for $360,000 for sale in Folsom?

They are out there In the older section.  There's some for $299,000 or less on Market, Price, Dean.  There was one on School St. that just sold.  They were asking $299,000, but I'm not sure what it sold for.  

For newer places: In the real estate section of The Folsom Telegraph, there's one in Diamond Glen(active seniors community) for $315,000.  On Vessona Circle there's one for $285,000 (I don't think there's much yard though).

[AMETHYST PRODUCTIVITY]

There's one on the north section of Willow Creek for 380 right now. It does need a new roof and specifies no FHA or VA loans due to the fact that the seller cannot complete any other needed repairs right now. It's over 2000 ft.² with a pool.

[Gern Blansdon]

There's a single-story home listed at 350K on Chadwick in Lex Hills.  Priced low because it needs a roof/heating/air.  I saw the sign a couple of weeks ago.  There's also another one, 2-story on the same street.  Not sure what it's listed at.  Steve, can you shed some light on that?

[rip]

According to the public MLS, there are some where between 150-160 homes on the market right now in Folsom. Of those, there are around 30 single family homes for sale under $375k.  Not a huge part of the market, but they are out there. 

[Steve Heard]

Wow! Y'all have been busy! 

 

In light of the low sales volume in February, think I'd be a bit hesitant to put too much emphasis on the price spike.  Doesn't take too many high end home sales to skew the data when few houses sold.  

 

As far as rental parity, you can always get there if you make the down payment large enough.  Not sure how you are getting the numbers in your example Steve?  

 

I'm always a little cautious when it comes to price data, and that's why I said we have to take a 'wait and see', but right now we're tracking close to February's numbers, and predictions are that we'll see anywhere from 3 to 8% price increases for the year (I'm going with 5%). 

 

As for my numbers on the mortgages, thanks for pointing that out to me. I have to eat some humble pie here. I was on Bankrate looking at advertised rates of different types. In order to get that $300,000 mortgage for about $1100 per month, you'd have to take a 5/1 ARM, meaning it would be fixed for 5 years, not 30. A very important distinction.

 

I'll fix it in the blog post. 

 

 

There's a single-story home listed at 350K on Chadwick in Lex Hills.  Priced low because it needs a roof/heating/air.  I saw the sign a couple of weeks ago.  There's also another one, 2-story on the same street.  Not sure what it's listed at.  Steve, can you shed some light on that?

 

The single story is pending sale, and was listed at $355K when it went pending. Won't know what it ends up at until it closes. The 2-story is almost 3100 sq ft and is listed at $585K.  

 

 

According to the public MLS, there are some where between 150-160 homes on the market right now in Folsom. Of those, there are around 30 single family homes for sale under $375k.  Not a huge part of the market, but they are out there. 

 

Right now, there are 146 active listings of homes for sale in Folsom (8 are condos). Of the total, 27 are priced below $360K, and another 5 priced in the $360K's. 

 

They range in size from 1012 sq ft 2 bed 2 bath in Bentley Square, to a 2410 sq ft condo/townhome in Folsom Bluffs.  

 

There's another also 48 under $360K pending sale.  

 

Interesting to note what some of these properties used to go for. I sold a house on Rathbone, a 3 bed 2 bath 1457 sq ft property for $249K on July 2011. In September of last year, the same model, same street, sold for $350K.

 

I'll continue to monitor and report on the market. Stay tuned.   

[rip]

Thanks for clarifying Steve.  Thought something didn't seem right in those numbers.  I do think it's telling that to get to rental parity one needs to use a 5/1 ARM.  A lot is made of current affordability.  As you mentioned in your first post, prices and rates are lower than the 2005/06 peak.  However, the assumption is during the bubble people then (as they are now) were using standard 30 year fixed mortgages.  The majority (upwards of 70% in California) were not.  They were using Option ARM's, interest only, reverse amortization and a whole host of other non traditional mortgage products.  Why?  Because they could not afford the monthly payment on the inflated home prices with a regular mortgage.  With the incredible appreciation in the last 18 months (along with a full point jump in interest rates) we are once again seeing the appearance of these types of loans, and for the same reason.  I just hope it doesn't end in the same way.

[mac_convert]

I'd like to move out of my 2 story 4/3 in Empire Ranch into a single story 4/2 or 3/2 with a three car garage in Empire Ranch. The single story homes are hard to find and then they're priced high so they sit on the market for a few months.

[The Average Joe]

Joe, my contractor friends say that business is really picking up. I have friends who do landscape, cement, kitchen remodels, pretty much everything, and they are seeing people refinishing their homes. Not too many adding on, but lots of upgrading. 

 

It is definitely spreading. 

 

If I hear of anyone with a need, what's your specialty?

My specialty? Why customer satisfaction of course! Hehe.

 

I have been a licensed general contractor for 25 years. During that time, I focused mostly on finish trades. Somehow, I ended up doing a lot of flooring, so I acquired a C15 (flooring) license as well.  I do all the standard flooring materials (carpet/vinyl/wood/laminate/LVT), as well as specialty materials like Marmoleum, commercial non-slips, medical, and PVC. I also do coving and mechanical (heat) welding of vinyl. I don't do ceramic or sand and finish wood floors.

 

I do like custom work, so hopefully, as housing comes back around I will shift focus once again. I have done a lot of property management over the last 6-7 years, and while it pays the bills, the mantra is usually not "do it right," but "do it cheap." I prefer to do it right.

 

Enough of this unpaid advertisement (I generally don't advertise at all, but you asked.)