Lots of Indicators
Copy for Real Estate Guide Column for 4-28-06 (458 words)REAL ESTATE PATTERNSBy Ken DuVall Lots of indicatorsLeading experts say new and existing home sales will have their 3rd best year ever in 2006. Prices will maintain steady rates of increase over the course of the year. The U.S. median price for existing homes should climb 6.4% with new homes forecast at 2.3%. California has always done far better. New homes only account for 20% of the overall market. Sacramento goes high rise: In 3 days last week, 75% of the 265 luxury condos sold in the 38-story “Aura” planned for the Capitol Mall priced from the high $300’s to $1.24 mil. A 54-story project 2 blocks away has 804 condos priced up to $6 mil! A hotel chain will operate the first 12 floors. Next door will be a 50-story condo/office complex, plus a 31-story office building nearby. Have you noticed the enormous new commercial development going on all over Chico? There are several hundred new homes now in our permit pipeline. This indicates a lot of confidence in the Golden State. Sales of vacation/investment homes set new records last year, accounting for 40% of ALL residential transactions. There were 3.34 million 2nd home sales in 2005, a huge number. Baby Boomers are driving these sales. They’re at the point in life when they become interested in 2nd homes, and they’re also at the peak of their earning capacity. They are making lifestyle choices for pleasure, buying primarily near water and golf courses. The outlook is very favorable as more people move into their prime 2nd home buying years. Currently, there are 36 mil people in their 50’s, and 45 mil people in their 40’s. That younger segment will be the driving force in the 2nd home market over the next decade. Don’t bet against this trend.The economy added 2.1 mil jobs year-over year from March 2005. The labor market, potential home buyers, is expected to continue adding 190,000 jobs per month through year end. Personal incomes in the U.S. reached $10.6 bil, up 5.6% over this time last year. Last month new home sales dropped as expected, but construction was up 6.9%, while existing home sales rose an unexpected 4.7% to an annual rate of 6.06 mil units. It’s amazing how housing keeps chugging along in the midst of world chaos. Home ownership is a true port in any storm. But, according to the L.A. Times, for an affordable home, steer clear of “Lotus Land”, population nearing 10 mil! A 1500 SF house in South L.A., an area you wouldn’t drive through let alone get out of your car, now costs $500,000. Our first house in North Hollywood that cost $27,000 in 1963 is now worth $813,000! Oh, how I wish I still owned all the properties I’ve ever bought and sold.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.
Housing Market Stabilizing
Copy for Real Estate Guide Column for 4-21-06 (447 words)REAL ESTATE PATTERNSBy Ken DuVall Housing Market StabilizingToday is my birthday! Even at my age, I still look forward to each one because the alternative is so bleak! I’m so old now that my word processor runs on steam! Pending sales, in escrow but not closed, which gauge sales activity for the upcoming months based on the number of transactions, signal that the market is returning to its more traditional mode. According to the Nat’l Assn of Realtor’s (now 1.2 million strong, the world’s largest trade organization) Chief Economist, “We can expect a historically strong housing market moving forward, earmarked by generally balanced conditions across the country and fairly stable levels of home sales, even with some month-to-month fluctuations. This normalization is healthy because it takes a lot of the pressure off the decision process for both buyers and sellers, pressure that was driving abnormal rates of price growth across much of the U.S. over the last few years.” Another positive sign: The rate of monthly construction spending is nearing $1.2 trillion, topping the $1 trillion mark for the 20th consecutive month in February 2006, up 8.5% over February 2005. The California median home price is now at $535,470. The highest median in the state is in Santa Barbara at $1,160,000. They had 2 recent sales on Padaro Ln., one for $21 mil, the other for $35 mil. Of the 366 active home listings last week in Chico, the median was $359,000. Mortgage rates are somewhat over 6% for a 30-year fixed rate loan. Chico prices are firming up as indicated by the ask-to sold prices in our MLS database. Prices were softer for awhile, but are now holding steadier. Question: Is our economy too dependant on real estate? Answer: Real estate has fueled 75% of all job growth over the last 5 years and has affected not only construction but also furniture sales, home improvements, etc. Most bullish economists see any slowing of housing as only a mild drain on the economy. Real estate is like the old “Timex” ad, “takes a licking and keeps on ticking”. Real estate funds are a better bet than individual stocks. In the first quarter of 2006, real estate funds returned 13.7% on average, easily beating every other category of domestic stock fund. Since 2000, real estate funds have posted a cumulative return of 237%, versus the S & P 500 stock index which lost 2.82% in the same time period. These funds rose to prominence following the market crash of 2000 that saw many investors shy away from tech and growth stocks in favor of commercial real estate investments. If real estate funds weren’t a winning proposition, the smart and rich money wouldn’t be going there. 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.
The Good, the Bad & the Ugly!
Copy for Real Estate Guide Column for 4-14-06 (435 words)REAL ESTATE PATTERNSBy Ken DuVall The Good, the Bad & the Ugly!Between my bud, Clint Eastwood, “Make my day!”, and The Governator, “I’ll be baack!” it’s all over the board lately. Who knows which way to turn? Everyone has an opinion or a guess as to where housing is headed. Bottom line: the market prognosticators are all nervous. I’m not. Let me put it in perspective for you: We’re never going to be able to provide enough housing inventory to meet the demand: translation- not enough inventory means more buyers than sellers, meaning over time values increase, period. They always have. There will never be enough chunks of Planet Earth to go around. Every day another 200,000 people, net births-over-deaths, are being added to the population. There are now 140 billionaires worth $2.6 trillion. That’s peanuts compared to real estate. The U.S. housing market is valued at $20 trillion! It’s the PRIME global commodity.All the news, real estate and national/world, continues to be very disturbing. We’re in the midst of monumental upheaval. The world seems to be gearing up for a gigantic shoot out at the O.K. Corral! “Sales are up, sales are down, housing starts are up, they’re down, it’s good, it’s bad, it’s hot, it’s not”, political venom and corruption, war everywhere, the border situation, on and on. (French rioters are looting but we must refer to them as “undocumented shoppers”!) Thomas Jefferson: “It is neither wealth nor splendor, but tranquility and occupation which give happiness.” I’ve been doing this since 1963. Find a job you like and you too will never “work” another day in your life. Bottom line: Just own/buy a house and keep on doing your thing. “Give us this day…” Don’t wallow in negativity. Whether we can all see it clearly through today’s murky view, things WILL ultimately evolve in the appropriate manner. All you have to do is give away enough time. A relocation client in from NJ last week told me their property tax rate is 4%! That’s $12,000 a year for a $300,000 house, versus our 1% $3000 tax for that same house in CA. Count your blessings. Sales figures are fluctuating in different markets across the country. Interest rates are going up, which was inevitable. But housing is simply returning to a normal market, where annual home prices rise a little faster than the inflation rate. What more can a reasonable person ask? We’re not looking for a miracle here, simply fundamental growth and security. You just have to know where you’re at in the game. Take the long view. Chico is doing just fine. Give thanks you don’t live in L.A! Keep the Faith.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.
