Don't Worry, Be Happy

Copy for Real Estate Guide Column for 8-25-06 (464 words)

REAL ESTATE PATTERNS
By Ken DuVall

Don’t Worry, Be Happy

There’s a ton of chaos out there, but Chico is holding its own just fine. Our new residential listings, about 40 or 50 a week lately, vs. the sales, are about cancelling each other out. Last week we had 590 active listings with 150 home sales currently pending in escrow, representing 25% of the available inventory. All the other metro areas should be so lucky. Any sign of price weakness always attracts buyers, but at the same time creates healthy competition and negotiation.

Yes, there’s been a drop in sales volume but not in overall prices, as sellers are mostly holding firm, while at the same time offering incentives to both Realtors and buyers alike. Guess what: weekend open houses are back. You didn’t need them last year because Chico houses were selling so fast.

Hooray! Buyers are finally coming off the fence and are back looking for bargains. I see good deals in Chico being snapped up every day. Well-priced home sales are cushioning the fall. As always, prices must reflect market conditions. In the Bay Area dot-com bust we saw price declines. Then demand kicked into gear and it was business as usual. Look for the same pattern as we go forward into 2007.

The Nat’l Assn. of Realtors says home sales were down 7% in 28 states over last year at this time. But sales were UP in 20 others, led by Alaska, up a whopping 48%. Of 151 metro areas surveyed, prices were down in 26 of them but 37 were still enjoying double-digit price INCREASES. So it’s spotty.

When you look at states with high housing costs or those with recent rapid price gains, you’re typically seeing slower home sales now. But in states with moderately priced areas which have experienced healthy job creation are seeing sales gains. Compared to say Santa Barbara, L.A. or S.F., Chico would fall into the latter category. The economic backdrop remains favorable for housing, helping level out sales. Housing affects the economy, and of course, vice versa. Every element counts all the time, a delicate balancing act.

Kiplinger reports there’s no impending recession. Exports and manufacturing are strong. The economy is growing slowly, which for most people is a good thing. The Fed stood pat this month. Interest rates have dropped back nicely of late. The Fed typically waits about 7 months after holding the rate, and then starts CUTTING it. Keep your fingers crossed, because if that happens, 2007 will definitely be a good year for everyone. View the 2006-2007 slowdown as an inevitable mid-cycle correction, paving the way for several more years of economic expansion and a healthy housing market. P.S. If you ever happen to miss this column in the paper, you can see them all on my website anytime.

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 Moment"

Copy for Real Estate Guide Column for 8-18-06 (445 words)

REAL ESTATE PATTERNS
By Ken DuVall

This is “The Moment”!

Attention buyers- this is the opportunity of the decade. The Nat’l Assn. of Realtors forecasts that home sales will hold steady as the housing market continues to stabilize. There will be little change for the rest of the year. All we’ve seen so far is a minor easing in closed sales, while accompanied by an increase in new escrows. The economy has produced 3.8 million new jobs over the last 2 years, meaning many potential home buyers can enter the market in the foreseeable future, especially in relatively moderately priced areas like Chico, where this is already occurring. If you’re a buyer, now is the time to make your move.

New home sales, existing home sales, and housing starts as well, should record “only” the 3rd best year ever. Current conditions are favorable for everyone, a “win-win” situation. The rise in housing supply is the single biggest change in the market over the last year, taking pressure off home prices and significantly widening choices for buyers. Interest rates have backed off a little. At the same time, sellers are realizing excellent returns. In this changing, more competitive environment, both parties need input from their Realtor now more than ever.

Sellers are always looking for new ways to entice buyers. A news release from Florida reports on a “spiritual approach”, calling on “higher powers”, for extra help. It involves burying a St. Joseph- the patron saint of both sellers and buyers- statue in the home’s yard, and a “sale is just around the corner”. It’s said the ritual began centuries ago when a nun prayed to St. Joseph because the convent needed land. This practice is not endorsed by any church, but one Florida seller’s documented statement is: “I’d been waiting to sell my house for 7 months. Within a few days of burying the statue, it sold.” As I always say, timing is everything. Their Realtor says, “People really believe in this, so what harm can it do?” But should you bury the statue in front, in back, near the “for sale” sign, facing the house, or away from it, etc? I’ll guess with you. I report, you decide.

Here’s a property I’d like to be able to own: for a measly $100 mil you can buy the just listed “Tranquility”, a 210-acre enclave on the Nevada side 10 minutes from the casinos, with its own lake, an awesome Tahoe view, a 50,000 SF house, boat house, stable, gym, a 17-car garage, a movie theatre seating 20, and an indoor basketball court. It’s the home of a Tommy Hilfiger (the designer) co-founder. No word on why she’s selling. If I owned it, I’d never sell.

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 "11th Commandment"

Copy for Real Estate Guide Column for 8-11-06 (464 words)

REAL ESTATE PATTERNS
By Ken DuVall

The “11th Commandment”

“Thou Shalt Not Kid Thyself!” The market decline is gaining pace. But it is NOT a crash, simply another segment in the endless cycle. The national backlog of unsold homes is well shy of previous slumps. The Nat’l Assn. of Realtors says, “We have various housing indicators moving in different directions, a market in transition, striving for balance, a process that will take several months. This quieting in the movement of indicators should restore confidence in buyers who’ve been on the sidelines waiting for the right time to get back into the market. Now is the best time we’ve seen since the 90’s for housing choices and flexible terms.” So be it.

Amazingly, the national median new home price is 2.3% higher than a year ago, while the unsold backlog is up to 6.1 month’s supply now vs. 4.3 months a year ago. But analysts are not forecasting a recession. However, many would-be homeowners have been priced out of the market and are renting instead. Affordability has hit a record low. As for California, while sales have plunged 26%, the June median price actually increased 6% to $575,800 from $542,300 last year! Go figure.

The median number of days on the market is now 46 vs. 28 a year ago. The highest median price, $1.88 mil, and the highest median price increase, 45%, goes to Beverly Hills. Southern California home prices are up 7.4%. But many big builders now build homes only after pre-selling them. Everyone’s understandably a little nervous, but in Chico we’re putting deals in escrow every day, staying about even with new listings. We’re holding around 600 currently. We’ll always be fine; we’re too desirable. Take the long view.

Balance is where it’s at. Sellers are a little more reasonable; buyers are venturing back into the market; and the flip artists are history. We all win. Plus, interest rates are actually drifting down on favorable economic news. Last week I told buyers now is their window of opportunity, and the week before what sellers who MUST sell might do. By the way, just because you cut YOUR asking price by 5% does NOT mean that PRICES IN GENERAL are down 5%!

Here’s some more ideas for sellers in today’s market, that WON’T involve lowering the price: credit your buyer with some of their new loan payments; offer an allowance for carpeting, painting, etc.; pay off some of your buyer’s bills so they qualify for their new loan; pay some of their relocation costs; and the old standby: pay loan costs/points to buy down their interest rate so they can get a bigger loan. These items should be a credit to your buyer, in escrow. Sellers still get their price, PLUS gain cost-of-sale tax deductions. As always, play the hand you’re dealt.

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.