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Summer Home Buying Season Is Over


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#1 Steve Heard

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Posted 28 September 2010 - 08:25 AM

Funny you should ask.

Summer's over, kids back in school, and traditionally, housing sales slow down and inventory drops.

Looking at the latest numbers, we get mixed signals:

Inventory-wise, there were only 3 more listings in August than July, but the sheer number of homes on the market in Folsom is the highest since February of 2009, when there were 306 on the market.

There were 6 more closed sales in August than July. That's good news, but at 58, it's not the kind of volume to get all tingly about.

The strongest number, and best for hopeful sellers, is that there were 103 homes which went 'pending sale'. This number is higher than back in April when buyers were scrambling to get in before the tax credits expired. This means that people are still buying.

As for prices, they are all over the map. Price per square foot seems to be the favorite number for the folks who track them. In August, the average price per square foot dropped for the 4th consecutive month, to $163. Interesting to note, however, that 20 of the homes sold during the month of August sold at or above listed price, and overall, homes are selling for 99.8% of listed price.

What's your place worth? Don't go by the average. Age, size, condition, amenities, location and other factors affect your value, so each home has to be looked at differently.

What's it all mean? It's all open to interpretation. With rates and prices low, buyers are looking at the market and seeing bargains. For example, $300,0000 mortgage at 4.25% has a payment of $1476. That's affordable for a lot of people. For that, you can get a 3 bed 2 bath home of 1700 to over 2000 sq ft.

What's on the horizon? The dreaded 'shadow inventory'. That's the name given for the homes the banks foreclosed on but haven't released for sale yet.

Rumors have been going for over 2 years that the banks were going to dump this inventory on the market and that while investors and other eager buyers would snap them up as deals, prices would plummet further.

On the other hand, if the banks do 'dump' the homes, and prices do drop, the fear is that more people would throw in the towel and walk away from their homes, so the banks would be wise to keep their 'trickle' or measured approach as they have been doing.

For now, we have to deal with the market as it is. Lots of pessimism from home owners who've seen their home values drop, and lot's of optimism among people who can finally afford a pretty nice home.

What do you think?

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#2 Dave Burrell

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Posted 28 September 2010 - 09:01 AM

I think we're in a 10 year housing cycle - I've seen it before going high and low - then back up again.... hopefully if we can wait it out we'll all be fine.

I plan to stay in my house as long as I can afford to - hopefully all the way until I retire (if there is such a thing), then I'll give it to my kids and move to the country.. I've always wanted to have some acreage...

One thing I've noticed lately that is interesting is the houses that have gone up for sale on Woodsmoke Ave (street of dreams) are finally all selling. Some had been on the market for a long time, others not so long but it seems every single one has sold or has a sale pending right now. I see that as a good thing, high priced mcmansions have got to be a lot harder to sell then regular family sized homes ?

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#3 Bill Z

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Posted 28 September 2010 - 09:13 AM

I plan on retiring and eventually dying in my current home, so I really don't worry how the market swings it's value (prop 13 protects me from the tax impact of such swings). My wife & I have done a lot of work remodelling our home. We've paid for some stuff to be done by contractors, but we also did an awful lot our selves. I have no interest in installing crown-molding and new baseboards in another home and I don't want to pay someone else to do it either. So I'll just continue to enjoy our home the way we have made it.

When I actually read the title of this topic, I was expecting it to be on the smaller purchase items, not the largest and rarer of markets (i.e. people by groceries, toilet paper, etc far more often than they buy homes). So I was expecting to read about how the Walmarts, Targets, Raleys, etc were doing economy wise. I may be wrong, but I would expect the economy of consummables would be a larger and quicker indicator of overall economy than the home market.
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#4 Steve Heard

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Posted 28 September 2010 - 02:22 PM

I see that as a good thing, high priced mcmansions have got to be a lot harder to sell then regular family sized homes ?

Just like so many other things affecting the economy, it's about perception.

The folks who can afford the bigger, more expensive houses hadn't been buying, and the prices kept falling. Now, many seem to feel comfortable with moving forward and making the big purchases. They can still get great rates on Jumbo loans, and although many people doubt we've seen the bottom, lots of people seem to take the 'so what? I got a good deal and I won't be selling for a while' approach.

I think that in turn gives others confidence when they see the bigger dollars being spent. Maybe we assume they have that kind of dough so they must be smart!

Steve Heard

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#5 SacKen

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Posted 29 September 2010 - 10:44 PM

...
When I actually read the title of this topic, I was expecting it to be on the smaller purchase items, not the largest and rarer of markets (i.e. people by groceries, toilet paper, etc far more often than they buy homes). So I was expecting to read about how the Walmarts, Targets, Raleys, etc were doing economy wise. I may be wrong, but I would expect the economy of consummables would be a larger and quicker indicator of overall economy than the home market.

Not really because, for the most part, you keep buying those "habit" consumables in good and bad times. Your choices may change a little (go for the sandpaper T.P. instead of the Charmin), but usually not enough to indicate very much statistically. Most people continue to buy the same products they are comfortable with unless things get real bad.

The real indicator of economic strength is what people are doing with their extra money, and whether they even have any. Those unnecessary purchases are the first to get cut back when things head south and the first to come back when things get better.

Your point does have some merit, though. For example, the shift in how busy the Raley's parking lot is compared to WinCo, versus that same comparison 5 years ago. However, when things improve for yourself, you won't necessarily stop going to WinCo now that you are comfortable with it and it is your new "habit". Instead, you spend that extra cash on cars, vacations, houses, etc.
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#6 Steve Heard

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Posted 30 September 2010 - 06:12 AM

Not really because, for the most part, you keep buying those "habit" consumables in good and bad times. Your choices may change a little (go for the sandpaper T.P. instead of the Charmin), but usually not enough to indicate very much statistically. Most people continue to buy the same products they are comfortable with unless things get real bad.

The real indicator of economic strength is what people are doing with their extra money, and whether they even have any. Those unnecessary purchases are the first to get cut back when things head south and the first to come back when things get better.

Your point does have some merit, though. For example, the shift in how busy the Raley's parking lot is compared to WinCo, versus that same comparison 5 years ago. However, when things improve for yourself, you won't necessarily stop going to WinCo now that you are comfortable with it and it is your new "habit". Instead, you spend that extra cash on cars, vacations, houses, etc.

Agreed. We tend to become more efficient when times get tough, buy cheaper stuff and less of it and then carry those habits forward even after things get better. At least, that's how it should work.

A stat was presented at a recent meeting, that 47% of buyers surveyed this year are first-timers. They didn't say how many of the rest are 'move-up' buyers, but I know that for the past couple of years, I've had very few. Lately, however, I've had inquiries from and sold homes to people who are doing just that, moving up. These are generally folks who bought more than 7 years ago, have been paying down their loans, and are now ready to take advantage of the market.

I've even had a couple asking about vacation properties.

I'm no economist, but to me, those are signs of consumer confidence.

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#7 Darth Lefty

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Posted 30 September 2010 - 01:07 PM

Saving right now for a down payment next summer. Not looking for an Investment but for a Home... this "crisis" has been a blessing for those of us who feared we were priced out forever by the boom.
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#8 Johnny_come_lately

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Posted 01 October 2010 - 11:32 AM

I try to read as many different articles as I can....I thought this article/blog was an interesting read. Let's hope he's not right.

http://www.oftwominds.com/blogsept10/housing-bottom09-10.html?source=patrick.net

Housing Prediction: Bottom in 2014, Then a Decade of Stagnation

Take a wild stab at when housing will bottom, and you can find an analyst's opinion to support your guess: one respected housing expert sees a bottom in six months, while equally experienced observers see a bottom in 2013, followed by a decade of slow improvement.

#9 Bill Z

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Posted 08 October 2010 - 07:16 PM

Well, my latest update from Zillow.com shows my home dropped another 2.4% since last month so I don't think the market has bottomed out yet.

I also heard that with the freezing of foreclosures by major banks, this will have another negative impact on the real estate market.
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#10 Steve Heard

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Posted 08 October 2010 - 09:46 PM

Saving right now for a down payment next summer. Not looking for an Investment but for a Home... this "crisis" has been a blessing for those of us who feared we were priced out forever by the boom.


So many people feel the way you do, and perhaps that may be why, according to one survey, 47% of home sales in the past year have been to first-time buyers. I sold a 5 year old, 2500 sq ft house to a 25 year old young man this year for $268,000. He said he doesn't care if prices fall, he got a great deal and a great interest rate and he knows that some day, his house will be worth more than he paid for it. In the mean time, he has tax benefits and he owns a great home.

I just sold a home in Orangevale today to a 40 year old single mom who though she'd never be able to buy. $183,500 for a 1300 sq ft home in a nice neighborhood, in excellent condition, and an interest rate of 4.5%. Her payment will be about $1200 per month, which is about $250 more than her current rent. She cried at the signing.

I try to read as many different articles as I can....I thought this article/blog was an interesting read. Let's hope he's not right.

http://www.oftwominds.com/blogsept10/housing-bottom09-10.html?source=patrick.net

Housing Prediction: Bottom in 2014, Then a Decade of Stagnation

Take a wild stab at when housing will bottom, and you can find an analyst's opinion to support your guess: one respected housing expert sees a bottom in six months, while equally experienced observers see a bottom in 2013, followed by a decade of slow improvement.


Yes, I've read lots of articles and listened to many experts. In one day, one client sent me an article which stated the worst was over and we'd start seeing small increases. Another sent me an article the very same day, which stated that we wouldn't see prices rebound in our lifetimes!

With all the predictions, some day, someone's gonna be right.

Well, my latest update from Zillow.com shows my home dropped another 2.4% since last month so I don't think the market has bottomed out yet.

I also heard that with the freezing of foreclosures by major banks, this will have another negative impact on the real estate market.


Zillow isn't the most accurate source, but it's free and readily available. I can run comps and show you what it might be worth if you like.

As for the negative impact of the foreclosure freeze, here's an article that asks the question of whether it will actually help the market. Will Foreclosure Freezes Fix the Housing Market?
http://rismedia.com/2010-10-05/will-foreclosure-freezes-fix-the-housing-market/

I guess it's anyone's guess.

Steve Heard

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#11 Bill Z

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Posted 09 October 2010 - 06:24 AM

Zillow isn't the most accurate source, but it's free and readily available. I can run comps and show you what it might be worth if you like.

As for the negative impact of the foreclosure freeze, here's an article that asks the question of whether it will actually help the market. Will Foreclosure Freezes Fix the Housing Market?
http://rismedia.com/2010-10-05/will-foreclosure-freezes-fix-the-housing-market/

I guess it's anyone's guess.

Hi Steve,

I'm not selling, I know zillow isn't the most accurate, heck, they have no idea what upgrades I've done inside my home, but I do feel they likely have a pretty good grasp on the direction the market is moving as they get the data on what has actually sold and for how much.

as for your link, well, it's a real estate website, so I think they are a biased opinion on the matter. Only time will tell what real impact this will have, but it is a well known fact, financial uncertainty usually doesn't bode well for the real estate market.
I would rather be Backpacking


#12 Steve Heard

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Posted 09 October 2010 - 08:43 AM

Hi Steve,

I'm not selling, I know zillow isn't the most accurate, heck, they have no idea what upgrades I've done inside my home, but I do feel they likely have a pretty good grasp on the direction the market is moving as they get the data on what has actually sold and for how much.

as for your link, well, it's a real estate website, so I think they are a biased opinion on the matter. Only time will tell what real impact this will have, but it is a well known fact, financial uncertainty usually doesn't bode well for the real estate market.


Bill, I know it's a real estate site, but real estate sites are just as likely to predict gloom and doom as is mainstream media. I've found articles predicting good and bad on this foreclosure freeze. Just as with many other market issues, no one knows for sure how it will affect things. Time will tell.

Steve Heard

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#13 Redone

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Posted 09 October 2010 - 11:04 AM

I plan on retiring and eventually dying in my current home, so I really don't worry how the market swings it's value (prop 13 protects me from the tax impact of such swings).


Good point about Prop 13 , but also realize Prop 13 is portable.

Prop 60 would allow you to transfer your tax basis within county.
Prop 90 would allow you to transfer your tax basis to another county willing to accept you.
El Dorado Co just started accepting these in Feb 2010. (speak with your tax professional)




Steve, foreclosure freeze most likely will slow down the natural market cycle that needs to happen.
Stop picking the scab , it only will bleed again !

#14 Bill Z

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Posted 09 October 2010 - 12:44 PM

Good point about Prop 13 , but also realize Prop 13 is portable.

(speak with your tax professional)

I don't need to speak to my tax professional. Besides, then someone might think I've gone crazy talking to myself. But if you read the rest of my post, you would realize prop 13 isn't the only thing keeping me from wanting to sell & move.
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