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.