75 replies to this topic

[Steve Heard]

I was watching a news story the other night about the housing market and how bad things are, how bad things have been and how much worse they're going to get.

Looking at the local numbers, it just doesn't seem true. While prices continue to trend downward little by little, the news folks would have us believe that that inventory is growing, no one can get financing, and no one is buying.

While the days of bidding wars happening the day properties hit the market may be over, and the buyers using stated income, 100% financing may be over long gone, the fact is that people continue to buy homes and the pace is picking up, and lenders are eager to loan money to people with decent credit.

The graph below shows inventory, pending, and sold for the past year. As you can see, pendings and closings have been rising for the past few months, while inventory continues to decline. Of the 88 sold last month, 20 were short-sales and 23 were bank-owned. That leaves 45 successful traditional, or 'equity' sales.

I'm not saying that we're experiencing a boom, nor that there won't be more foreclosures, but looking at current trends, if you've got a home to sell in Folsom, you've got buyers willing to buy. You won't get 2005 prices, but you'll get it sold.



This graph shows months of inventory. Most experts consider 5 to 6 months of inventory 'normal' or healthy. We've got less than 3 months.



The graph below shows average price per square foot. It continues to trend downward, though the drops are not severe.



What are your thoughts? Are you surprised? Do you think we're seeing a healthy trend? Temporary spike? Waiting for the other shoe to drop?

[Dave Burrell]

I'm glad to see any and all positive information regarding our real estate market. Thanks for posting these market updates Steve!

[supermom]

Steve,

Whom do those numbers represent?

Folsom? County? State? Nation?

[Steve Heard]

Steve,

Whom do those numbers represent?

Folsom? County? State? Nation?

Sorry I wasn't clear. These numbers represent Folsom. I changed the topic title to reflect that.

[Sonny]

With real estate doesn't it happen in Folsom about a year before it happens to the rest of the country?

[Steve Heard]

With real estate doesn't it happen in Folsom about a year before it happens to the rest of the country?

Well, there is a belief that California leads the market in whichever direction it goes, and Sacramento leads California, but today the market is so fragmented, it's hard to tell.

I do know that the region in general is up, and from personal experience, I can tell you it's getting frustrating when I write and submit offers only to find out that we're a day late and a dollar short.

Buyers are back.

[Robert Giacometti]

I think everyone needs to keep in mind May numbers are trailing data, meaning these deals may have originated back in March/ April. Also its important to look at the whole picture and include the number of foreclosures when forming your opinion regarding trends in the markets.

I know of a home that recently sold at auction it was 2250' really nice and was sold at auction for $270,000 or about $120 per foot. I know the neighbors who owe about $440,000 and have been struggling to keep their home. After this news they realized its in the best interests, to let their home go and start over. So now there will be another foreclosure dumped into the markets creating additional downward pressures on prices.

Another person I know works with a major lender and they said banks are wholesaling houses as fast as they can with distressed properties because they are fearing an additional 20 % projected declines ovee the next couple of years. They said its better to cut losses now with distressed properties rather see them depress further, while unloading nonpreforming loans. There is a major bank far more in trouble than most realize because of this.

Most articles are projecting the Sacramento region as one the worst in recovery of any real estate values in the near future. Most are predicting further declines due to the challenges Governments are facing with their budget shortfalls.

I've come to realize that we can't wish our challenges away with rose colored glasses while using style over substance. Providing false optimism only makes the problem worse because it misleads, preventing a majority from understandning the core root of the problems and making those fundamental changes to correct the probelms.

Until there is job growth creating jobs with decent wages the demand for housing will be flat. Folsom should remain more desirable that other communities within the county, but that alone won't keep our values from declining.

[Steve Heard]

I think everyone needs to keep in mind May numbers are trailing data, meaning these deals may have originated back in March/ April. Also its important to look at the whole picture and include the number of foreclosures when forming your opinion regarding trends in the markets.

I know of a home that recently sold at auction it was 2250' really nice and was sold at auction for $270,000 or about $120 per foot. I know the neighbors who owe about $440,000 and have been struggling to keep their home. After this news they realized its in the best interests, to let their home go and start over. So now there will be another foreclosure dumped into the markets creating additional downward pressures on prices.

Another person I know works with a major lender and they said banks are wholesaling houses as fast as they can with distressed properties because they are fearing an additional 20 % projected declines ovee the next couple of years. They said its better to cut losses now with distressed properties rather see them depress further, while unloading nonpreforming loans. There is a major bank far more in trouble than most realize because of this.

Most articles are projecting the Sacramento region as one the worst in recovery of any real estate values in the near future. Most are predicting further declines due to the challenges Governments are facing with their budget shortfalls.

I've come to realize that we can't wish our challenges away with rose colored glasses while using style over substance. Providing false optimism only makes the problem worse because it misleads, preventing a majority from understandning the core root of the problems and making those fundamental changes to correct the probelms.

Until there is job growth creating jobs with decent wages the demand for housing will be flat. Folsom should remain more desirable that other communities within the county, but that alone won't keep our values from declining.

Very interesting points. Yes, the numbers for CLOSED sales are trailing, as they are ones which went 'pending' a month or two prior, but also note the rise in pending sales. They are growing each month.

Yes, we can all cite cases where people we know bailed on their homes and we've all read the articles about how bad it is and how much worse it's gonna get. In fact, I think those warnings started coming about 2003 or 04. Just like those who predict the end of the world, some day they'll be right.

In the mean time, buyers are seeing that they can purchase a home, enjoying the security, tax benefits and pride of home ownership, for in many cases less than they can rent.

Investors know that they can actually get positive cash flow on rentals, so they'r buying, too.

The ones with the means are buying, and with low prices and low rates, housing affordability is at an all time high.

All this despite the predictions of gloom and doom we read daily.

Home ownership isn't for everyone, but a growing number of people are buying homes.

That's what the numbers tell us.

[Redone]

The news just likes negativity or blood/guts.

All of the "Strategic Defaulters" will start jumping back in soon since most of them have jobs.
Once prices rise there will be a feeling of wanting to buy in at the bottom which will cause annual double digit bounce up for 2-3 years.

[caligirlz]

from personal experience, I can tell you it's getting frustrating when I write and submit offers only to find out that we're a day late and a dollar short.

Agreed

In the mean time, buyers are seeing that they can purchase a home, enjoying the security, tax benefits and pride of home ownership, for in many cases less than they can rent.

Investors know that they can actually get positive cash flow on rentals, so they'r buying, too.

The ones with the means are buying, and with low prices and low rates, housing affordability is at an all time high.

IMO, I don't think the "buy" costs are less than the "rent" costs in Folsom. I know a lot of Folsom renters who are still sitting on the sidelines. I also think that putting 3.5% down is akin to "no or very little skin in the game." These are the same people who will be more likely to walk when the prices dip again.

Folsom will be affected by the economy, but it just seems to be affected much slower because folsomites, IMO, have greater reserves, and are willing to hang on longer because Folsom is a great community.

As noted, not all realtors or economists are as optimistic as you, Steve.

[Robert Giacometti]

Very interesting points. Yes, the numbers for CLOSED sales are trailing, as they are ones which went 'pending' a month or two prior, but also note the rise in pending sales. They are growing each month.

Yes, we can all cite cases where people we know bailed on their homes and we've all read the articles about how bad it is and how much worse it's gonna get. In fact, I think those warnings started coming about 2003 or 04. Just like those who predict the end of the world, some day they'll be right.

In the mean time, buyers are seeing that they can purchase a home, enjoying the security, tax benefits and pride of home ownership, for in many cases less than they can rent.

Investors know that they can actually get positive cash flow on rentals, so they'r buying, too.

The ones with the means are buying, and with low prices and low rates, housing affordability is at an all time high.

All this despite the predictions of gloom and doom we read daily.

Home ownership isn't for everyone, but a growing number of people are buying homes.

That's what the numbers tell us.

I agree with what you are saying. I simply want to make the point that with so many homes changing ownership through foreclosures at auctions, the information you provide through activity through the MLS isn't as accurate of a barometer as it may have been in the past. We really need to consider ALL transactions to get a clearer picture of what is happening in the real estate market.

The Bottom line is until there is job growth in the region, the demand for housing will remain flat and values will probably decline. With the sad news of the budget cuts in Sac City and County regarding public safety, this will encourage people to consider moving to safer neighborhoods....like Folsom.

There will ALWAYS be buyers in any market. With so many people underwater with their homes, they really can't trade up or down without walking away or trying the impossible of a short sale, so this is having an limiting influence on the number of homes on the market as well.

All in All we are living in very extraordinary times. Until the fundamentals are in place that will support an increase in demand for housing, we will probably see further declines in values. However as we both have said in the past, if one has a good stable job and likes their house or the one they are buying, there isn't any reason to get too worried abot the values if they are in it for the long term.

This period very well maybe one of the best buying opportunities out there for some, because of the challenges others are facing.

The biggest concerns we should have is the declining revenues to agencies based upon declining property values, as this may decrease our services therefore decreasing our desirability as a community to live and work.

I do appreciate you providing the information you do for everyone.

[Steve Heard]

IMO, I don't think the "buy" costs are less than the "rent" costs in Folsom. I know a lot of Folsom renters who are still sitting on the sidelines. I also think that putting 3.5% down is akin to "no or very little skin in the game." These are the same people who will be more likely to walk when the prices dip again.

Folsom will be affected by the economy, but it just seems to be affected much slower because folsomites, IMO, have greater reserves, and are willing to hang on longer because Folsom is a great community.

As noted, not all realtors or economists are as optimistic as you, Steve.

'Depends on what you're looking for. While you can find a $500 rental in Folsom and you can't buy much for that, there are many rentals in Folsom going for $1400 to $1800 per month which you can buy for $1200 to $1500 per month.

I know there are lots of renters on the sidelines, and many of them should remain there, but that's what's driving rents up. There are more of them out there and fewer properties to rent.

Mike Hamburg of Home Run Rentals manages a number of rentals here in Folsom and tells me that for every rental that comes on the market, they get 10 good quality renters ready to sign up.

I know that not everyone is as optimistic as I am, but my natural optimism is boosted by the fact that I am having success and I watch the numbers constantly.

If a Realtor tells me that no one is buying, I just look at the numbers and say, 'no, you're not selling!'

I agree with what you are saying. I simply want to make the point that with so many homes changing ownership through foreclosures at auctions, the information you provide through activity through the MLS isn't as accurate of a barometer as it may have been in the past. We really need to consider ALL transactions to get a clearer picture of what is happening in the real estate market.

The Bottom line is until there is job growth in the region, the demand for housing will remain flat and values will probably decline. With the sad news of the budget cuts in Sac City and County regarding public safety, this will encourage people to consider moving to safer neighborhoods....like Folsom.

There will ALWAYS be buyers in any market. With so many people underwater with their homes, they really can't trade up or down without walking away or trying the impossible of a short sale, so this is having an limiting influence on the number of homes on the market as well.

All in All we are living in very extraordinary times. Until the fundamentals are in place that will support an increase in demand for housing, we will probably see further declines in values. However as we both have said in the past, if one has a good stable job and likes their house or the one they are buying, there isn't any reason to get too worried abot the values if they are in it for the long term.

This period very well maybe one of the best buying opportunities out there for some, because of the challenges others are facing.

The biggest concerns we should have is the declining revenues to agencies based upon declining property values, as this may decrease our services therefore decreasing our desirability as a community to live and work.

I do appreciate you providing the information you do for everyone.

I do appreciate and expect your replies. I know that homes which are sold at auction aren't reported through MLS, but that only adds to number of sales.

Based on the MLS data, the number of homes being purhased through MLS are increasing despite the lack of job growth and other economic indicators.

What do you think is driving that?

[rpo]

I think everyone needs to keep in mind May numbers are trailing data, meaning these deals may have originated back in March/ April. Also its important to look at the whole picture and include the number of foreclosures when forming your opinion regarding trends in the markets.

Or, if it is my home, it has been pending for 13 months.......

[caligirlz]

Depends on what you're looking for. While you can find a $500 rental in Folsom and you can't buy much for that, there are many rentals in Folsom going for $1400 to $1800 per month which you can buy for $1200 to $1500 per month.

I know there are lots of renters on the sidelines, and many of them should remain there, but that's what's driving rents up. There are more of them out there and fewer properties to rent.

Mike Hamburg of Home Run Rentals manages a number of rentals here in Folsom and tells me that for every rental that comes on the market, they get 10 good quality renters ready to sign up.

$500 rental in Folsom???? for what, a room? a trailer? on Wales?

Home Run Rentals handles high-end rentals in Folsom. I've never seen anything on that website in Folsom for less than $1800/mo. Just saying...

And lots of renters are those who have lost their homes to foreclosure or short sale, so they aren't buying right away anyways.