Here & There
Copy for Real Estate Guide Column for 11-3-06 (412 words)REAL ESTATE PATTERNSBy Ken DuVall Here & ThereAt the Long Beach California Assn. of Realtors Expo 2 weeks ago 13,000 Realtors were told to expect a modest 2% median existing home price decline to $553,000 from $561,000 this year, along with a 7% decrease in sales throughout 2007 to “only” 447,500 units vs. 481,200 in 2006. “The housing market clearly downshifted in 2006 from the record setting sales and robust price gains on the last few years”, said CAR Pres Vince Malta. “This year’s market was characterized by a gap between buyer and seller expectations. Sellers sensed that the peak was approaching, yet still hoping to get the highest possible price. Buyers’ urgency waned as the number of homes on the market grew. Although the 2007 forecasted sales decline is not expected to be as steep as 2006, the psychology of the market- matching the differing expectations of sellers and buyers- will continue to be a factor as Realtors help consumers navigate a changing market.” Couldn’t have put it better myself. Global craziness department: In Baghdad, death squads are executing hairdressers and women’s clothing store employees for promoting female vanity. Butchers are killed for cutting meat in an offensive way (I’ll guess with you on that one). Topping the list: extremists beheading real estate agents for helping Jews buy property! And you thought that being a Realtor was all fun and games!The good news: National housing inventory levels fell 2.4 percent at the end of September to 3.75 million existing homes available for sale, representing a 7.3 month (6 months is considered “balanced”) supply at the current sales pace. Those numbers are encouraging. While new home sale prices nationally have dropped 9.7%, sales have picked up 5.3%. In the west, new home sales were up a roaring 24%. Guess those builder incentives are working. Nat’l Assn. of Realtors chief economist David Lereah says, “We seem to have passed a cyclical peak in terms of the number of homes on the market with fewer new listings coming online.” That’s true in Chico, even as U.S. economic growth last week slowed to a 1.6% annual rate, a 3-year low. The housing slowdown is clearly having its impact.Lereah continues: “A stable sales pace should draw down the listings to a supply balance that will support price growth within a few months. The worst is behind us. When consumers recognize that home sales are stabilizing, buyers now on the sidelines will get back into the market.” Sounds about right to me. 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.
Taking Stock
Copy for Real Estate Guide Column for 10-27-06 (434 words)REAL ESTATE PATTERNSBy Ken DuVall Taking StockLet’s start out with the incredible. The latest high-end sale: $5.4 BILLION for Stuyvesant Village, the largest apartment complex in NY, 11,000 units on 80 acres built in the 40’s as housing for returning WW II vets. It’s the last “affordable” housing in Manhattan. The tenants bought it to keep it middle-class, and to fight attempts to convert it to rent-stabilized luxury apartments. Hooray for that. Meanwhile, luxury home average prices in San Diego ROSE to $2.4 million this year. Two hundred ten homes worth $1 million or more have sold. No matter the price, well located and accurately priced homes are finding a willing market. Waiting for prices to drop may well be a costly error. You can’t play if you’re not in the game. In Chino (east of L.A.) 34 multi-million dollar homes have been snapped up. In Carlsbad (San Diego area) 7 homes over $1.8 mil have sold in the last 6 months. In nearby Encinitas several $2 mil homes have sold in the last 3 months. There’s never a shortage of big money.As home sales decline, buyers are being attracted by resultant lower prices. The Nat’l Assn. of Realtors says the housing market is showing signs of life and may be leveling out. I wouldn’t be surprised to see another point or two price drop before it’s over. But remember: since 1968, average annual California price appreciation has been 9.1%. Kiplinger again confirms the Fed should launch a gradual easing of rates, to 8%, by mid- 2007.On the negative side: Over 110,000 foreclosures nationwide, up 39%, in September, statewide up 40%, surpassed the total for all of 2005. Hate to say it but I told you so. Note: Buyer demands for cash back at closing are growing. In some cases, properties are appraised at higher values without the lender’s knowledge. That’s fraud, plain and simple. Don’t ever get involved in this kind of scheme. Lenders of late have been LOWERING loan qualifications. Dangerous.Chico update: Last week’s Chico area home list price average was $439,000 for 580 current listings, averaging 91 days on the market to sell. We’ve had 720 sales YTD, equaling 43% of listings, average price $355,000, closing at 98% of list price. Chico’s doing just fine, thank you. California’s median price is $576,360. Only 23% of would-be buyers can afford to buy. As always, Chico is an outstanding bargain. P.S. No matter what some folks are saying, I think the new City Plaza- we all miss those beautiful stately trees- will be great when it’s finally done. For $3.2 mil, it better be! Chess anyone?!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 View from the Top
Copy for Real Estate Guide Column for 10-20-06 (419 words)REAL ESTATE PATTERNSBy Ken DuVall The View from the TopMaybe you didn’t see it but Realogy, parent company of Century 21, Coldwell Banker, ERA Realty, and Sotheby’s, placed a full page ad in USA Today last week, headlined “Opportunity is Knocking at Your Next Front Door!” They had over 100,000 home sales- one every 30 seconds- last month. “Although the media continues to focus on the downside of the changing housing market, there are compelling, reinforcing messages that consumers need to know.” “The unfortunate reality here is that good news seems to get buried, and the negative headlines get all the attention. It is our collective responsibility to disseminate the facts about the market in the face of all the media hype. Unfortunately, bad news sells and that’s what we’re seeing now.”Home prices in Chico and elsewhere are indeed coming back to earth, of their own weight. You can’t mess with Mother Nature! Yet, today’s slowdown comes amid continuing solid consumer/business spending, a recovering stock market, and strong corporate profits, not to mention the lowest Federal budget deficit since 2002. Interestingly, I saw only the balance of trade increase in the headlines. Too bad good news doesn't sell. The key issue is whether the correction is orderly or disorderly. I see orderly. The press is portraying this as a catastrophe. I just don’t think that’s the case. Certainly prices are high and must correct, but that doesn’t equate to a desperate situation. The effect of today’s flattening prices in some markets has been to squeeze out the “irrational exuberance” of 2004-05. “The rapid price adjustment might proceed faster than expected and things could bottom out sooner than you think”, says JP Morgan Chase’s managing director. Alan Greenspan, ex-Fed Chair, said last week, “I suspect we’re coming to the end of this housing downtrend. There is a good chance of coming out of this in good shape. I think the worst may already be over.” Kiplinger’s 10-6-06 issue said, “The steep drop-off in housing should rebound sharply. By 2008 we’ll recover all lost ground.” And finally, quoting the Nat’’l Assn. of Home Builders newsletter of last week, “From now through 2015, housing starts will exceed those of the previous 10-year period. Driven by overall growth, the number of households is forecast to grow by about 1.5 million annually from 2006 to 2015, more than at any time since the early 70’s.”So forget the “Drive-by Media’s” negative vibes. Their job is to sell newspapers, not real estate. Any day above ground is a great day! Enjoy every one.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.
Bottom Line Wrap-Up
Copy for Real Estate Guide Column for 10-13-06 (457 words)REAL ESTATE PATTERNSBy Ken DuVall Bottom Line Wrap-upWe have a cacophony (always wanted to use that word!) of housing market theories lately. It’s like a roller coaster at the top of the ride- then the pause to assure maximum terror on the way down. We’re at that “pause point”. Guessing how far this ride will fall has become a major sport for economists and an army of armchair experts. The reality is that home prices are more stable than the news would have us believe. The following data emanates from my compilation of the analyses of the top economists across America. Barring the unforeseen, this is how I see things at this point in time, based in part on 43 years in the business. I think the “Chicken Little’s” are panicking prematurely.We’re clearly in a correction cycle. Unquestionably, the housing slowdown is becoming more pronounced, but it’s not crashing. The roller coaster always goes back up. Fed Chair Bernanke said last week: “I think there are some strong fundamental underpinnings that should help the housing market over the medium term. These include a good job market, strong income growth, and continued low mortgage rates.”Nationally, homes going into escrow- pending sales- actually rose 4.3% last month, 9.2% in the West, an indication of stability. There is healthy underlying demand from household formation and job creation. There are good buying opportunities now. It’s called getting back to normal. Icarus (Greek mythology) flew too high, his wings melted off, and he crashed back to earth. There’s no free lunch. Sellers’ markets are shifting to buyers’ markets. There’s always pain in that transition. Total home sales may decline 4% in 2007 after a drop of 9% in 2006, the 3rd best year ever. New homes represent only 15% of the market. With the sales pace fluctuating, builders are offering more incentives to ease their unsold backlog. They’re tossing in upgrades, landscaping, club memberships, etc. We’re seeing wise Chico home sellers doing likewise. Give a buyer a reason to buy yours instead of the other guy’s.The median price is either up or down a little over the last year, depending who you listen to. Prices/sales may even decline in 2007. Still-modest loan rates figure to hover around 6% for the next year. Declines in mortgage rates should help put a floor on any decline. Rumor has it the Fed may even reduce their funds rate sometime next year, if inflation stays in check.Housing starts have tumbled but are still expected to remain stable over the long term, with 1.6 million new homes in 2007, up 4%. Construction materials cost will fall. Population growth, fueled by immigration will continue providing steady demand. Everything should work out fine. Again, take the long view, and 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.
