Copy for Real Estate Guide Column for 11-4-05 (463 words)

REAL ESTATE PATTERNS
By Ken DuVall

The Road Ahead

Chico’s definitely slowing down: more inventory (322 current listings, median $439,000); price reductions; longer market times. Last week we had 40 new home listings on MLS Tour. Nearly half were retours (unsold in their first month), many were vacant (owners already moved), and several price reductions. But hey, that’s the deal this time of year. More supply and less demand equals all of the above. You think we’ve got problems now? I clearly remember the “81 Dilemma”: interest rates were 18%, the year was ‘81. Just reverse the numerals. That’s when Realtors learned about “creative financing”. But it didn’t stop the presses. Actually, we’re just heading back towards “normal” now. Chico year-to-date sales: 970 homes, $342 mil volume; median price, $325,000; average days on market, 54.
NATIONALLY
Total September existing home sales came in at a seasonally adjusted rate of 7.28 million units, 7.2% over a year ago. New home sales too, surprised with a 2.1% gain. Housing starts hit 2.19 mil units, up 7.4%. Yet the supply of available homes shot up to a record 493,000 at the end of September, surpassing August’s 478,000. The median home sales price actually dropped from $220,000 to $215,700. Ironically, the huge volume of home sales in areas surrounding the hurricane zones more than offset declines in the zones themselves. The underlying housing fundamentals are solid. Sales will stay strong but will trend downward modestly. Conversely, construction costs are on their way up, and a population growing faster than we can build homes for means appreciation will continue until the balance between buyers and sellers equalizes. Chico is part of “national” too.
CAALEEFORNEEYA
The September median price is up 17.3% over a year ago to $543,980, but down 4.3% from last month, while sales grew 3.9%. Closed escrows totaled a huge 650,780 on an annualized basis. We should again set new 2005 sales and prices records. But all tiers of the market are appreciating more slowly than a year ago. Consider this mind blower: the median price homes (from highest to lowest) in Palos Verdes, Manhattan Beach, Burlingame, Los Altos, Newport Beach, Saratoga, Carmel, and Hermosa Beach, run from $1.5 mil to $1.2 mil!
THE NEW GATEKEEPER
Ben Bernanke, the 51 year-old new Fed Chair nominated to replace Greenspan is a summa cum laude Harvard grad, doctorate from MIT, econ prof at Princeton, is already on the Fed Board. He is the leading monetary mind of the last 25 years. The stock market shot up 170 points on the announcement last week. He’s a convincing, compelling, straight shooter. He does not buy into the “housing bubble” theory. As a hard liner on inflation, interest rates should stay in check with Big Ben at the helm.

Ken owns Ken DuVall & Associates, Realtors at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at http://www.kenduvall.com/ and call Ken at 345-3700 for all your real estate needs. Free consulting.

Copy for Real Estate Guide Column for 10-28-05 (451 words)

REAL ESTATE PATTERNS
By Ken DuVall

A Cool Wind Bloweth

These are clearly tough and unsettling times: political turmoil, replete with scandals and free-for-all dogfights over spending and taxes; a sure deadlock over congressional budget cuts will push the deficit even higher; Iraq costs running over $6 billion a month; Katrina spending- plus Wilma now- equals many more billions; huge energy cost increases looming; immigration policies, or the lack thereof, with 10 million illegals in the U.S. so far; near-perfect counterfeit driver’s licenses, on and on. It’s a grim picture. Every element impacts property values in one way or another. As Elvis used to say, “I’m (we’re) all shook up.”
BUT WE’RE NOT BLOWN AWAY
Nonetheless, the housing market is still warm, even as unsold inventory approaches a 5 month supply, the highest in 5 years. Houses are taking longer to sell, particularly at the high end. Yet demand and momentum continue as experts anticipate record sales, for the 5th consecutive year, of over 7 million units. New escrows just set another record. Projected construction spending has topped $1 trillion, up 9%. Analysts see worker productivity rising 2.5% annually over the next decade, meaning the gross domestic product could go up 3.6% without fanning inflation, currently at 3.2%. Long term interest rates are still not expected to exceed 6.75% by year-end 2006. Read: stability.
MORE PRESSURE
Building costs will spiral due to supply shortages and increased material and labor costs. Try to get a contractor out to your house. They’re all booked up. Some won’t even call you back they’re so busy. Demand over the next decade will soar. China’s drain on raw materials is just the tip of the iceberg. India, Pakistan, Brazil, etc. will further strain all resources as urbanization gains pace in developing countries. Chico’s annual growth rate is 4.3%. Bottom line: figure on our existing home price appreciation and new home costs to continue upward. That’s the way to bet.
BIG TIME
Housing is one of the largest single sectors of the national economy, accounting for $2 trillion in transactions and providing millions of jobs and $100’s of billions in economic activity. It accounts for fully 22% of the entire U.S. gross domestic product. It’s not going away under any conceivable circumstances.

I’m pleased to say that public opinion of Realtors has reached an all-time high for the 3rd consecutive year. Public support for Realtors along with the value we bring to the real estate transaction is higher than ever. The beliefs about us that improved the most in this year’s survey included being the best qualified to promote the sale of a home, conducting business with professionalism, ethics, and integrity, and getting the job done! Yes!! Thank you very much everyone. It’s nice to be appreciated.

Ken owns Ken DuVall & Associates, Realtors at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

Copy for Real Estate Guide Column for 10-21-05 (456 words)

REAL ESTATE PATTERNS
By Ken DuVall

Soft Landing

Thanks to current strong economic fundamentals, only two things could derail housing: A; an interest rate increase of 2 or 3 percent, or B; a sharp recession, along with a loss of jobs in the 4% to 6% range. Either would dampen demand leading to increased inventory and softening prices. Fortunately, neither appears to be in the cards. Interest rates still hover around 6% and job creation is going well. The Katrina-associated losses will be largely offset by reconstruction spending. We enormously resilient Americans will always find a way to profit. An estimated 28,000 Realtors lost their homes and businesses to Katrina. Realtors have now contributed $4.8 million to those victims. Last week we added the Pakistan earthquake, and flooding back east, to the mix. Hurricanes and wild fires weren’t enough, right? And now the Amazon River level has dropped 6’ due to no rain (in the rain forest!) for 4 months. People there have been cut off from supplies. We need a break.
BOTTOM LINE
The most likely scenario is a classic soft landing. Prices will decline a little, primarily in hot coastal markets. However, most areas will rise but at a sustainable pace. Rates will continue their gradual increase, inhibiting demand, increasing inventory, causing appreciation to taper. It’s happening now: buyer traffic, including Chico, is slowing while seller traffic (319 Chico home listings last Friday vs. 130 last spring) increases. Even so, overall sales should stay close to record levels this year.
THE GOLDEN STATE
Emphasis on “Golden.” Here’s what last week’s record median prices mean to consumers: the minimum income to buy the $568,890 median priced home is $133,800. Only 14% of Californians qualify. In contrast, the minimum income for the $220,000 U.S. median home is $51,740. Continuing bottleneck: California only builds some 200,000 units annually, so we run 50,000 homes short of the 250,000 demand. Still scary to economists: the many no-down, interest-only loans out there that could come home to roost. There’s no free lunch.
THE PLANET
The U.S. is not alone. Home prices are recording annual double-digit gains around the world. Hong Kong up 21.2%; South Africa, up 17.6%; New Zealand up 16.5%; the U.S. up 15.8%; France up 14.5%; Spain up 13.7%; Denmark up 12.2%. Of 22 countries monitored, increases have remained positive in 19 for 2 years. Only Germany and Japan recorded negatives. England’s increase of 17.8% has dropped to only 1.8%. From the dawn of time, every war has been fought over only one thing: control of the land. It’s a primeval thing. Ask your dog! In the meantime, chunks of the earth become more and more dear. My advice: buy a home any way you can, to offset becoming old and poor at the same time.

Ken owns Ken DuVall & Associates, Realtors at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

Copy for Real Estate Guide Column for 10-14-05 (459 words)

REAL ESTATE PATTERNS
By Ken DuVall

THE CHANGING TIMES

Ever feel like our illustrious government is just one enormous committee- which can be a group of the unwilling, picked from the unfit, to do the unnecessary? Consensus: has been defined as the absence of leadership. All we see are perpetual meetings, hearings, and investigations probing this, that, or the other. We all somehow share the blame. We live in troubling and polarizing times. Result: recent reports are all over the board. They’re good, bad, up, down, sideways, in or out, or back and forth. Basically, it’s still lookin’ pretty good, even though Chico inventory is seasonally way up; sales have tapered accordingly. Here’s my forecast for the near future. Don’t forget I do keep an actual crystal ball on my desk!
NATIONALLY
Pending sales are the highest ever but new home sales did fall last month in the wake of the hurricanes, lowered consumer confidence, higher gas prices, and a slight up tick in interest rates. Yet existing home sales were up to their 2nd highest pace ever. Against a backdrop of a growing population and favorable affordability, sales are continuing at very healthy levels. We should continue to see above normal price appreciation for the predictable future. The existing home median price was up 15.8% over a year ago to $220,000 in August. Late Katrina news: insurance losses expected to exceed $34 billion, a huge hit. The fallout from the disaster continues.
THE STATE
August existing home sales were up 7% over July, while the median hit an all-time record $568,890, up 5.2% over July and up 20.1% over a year ago. Notwithstanding Alan Greenspan’s cryptic, cautionary remarks to the contrary, experts do not anticipate declines in either sales or prices, except in some overheated markets. Most analysts are still predicting a 5th straight record setting year for both new and existing home sales. California Assn. of Realtors Chief Economist Leslie Appleton-Young just pegged the 2006 home price appreciation rate at 16%.
$1 MILLION HOMES NOW A DIME A DOZEN
How about popping a cool $1 mil for a 2 BR 1050 SF New York upper west side apartment? That’s $952 a SF for a plain, no frills crib, no doorman and a $1000 a month homeowner’s fee. A Brooklyn “Bed Stuy” section (similar to South Central L.A.) brownstone now goes for $975K. Another record: there are over 1,000,000 U.S. homes worth $1 mil or more vs. 394,878 in 2000. California has the most, 4.1%, or 1 in every 25. S.F. alone has 20,000 of them, another 46,000 in Orange County. Did you see all those gigantic mansions threatened by the San Fernando Valley fire on TV? Even in land-rich cities like Phoenix, AZ, $1 mil won’t even buy you a building lot. Count your blessings, Chico!

Ken owns Ken DuVall & Associates, Realtors at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.