Lots of Indicators

Copy for Real Estate Guide Column for 4-28-06 (458 words)

REAL ESTATE PATTERNS
By Ken DuVall

Lots of indicators

Leading 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.