Good Signs
Copy for Real Estate Guide Column for 1-26-07 (463 words)REAL ESTATE PATTERNSBy Ken DuVall Good SignsThe Pending Home Sales Index (PHSI) gauges home sales activity for upcoming months based on sales that are in escrow but not yet closed. It’s the indicator I count on because it provides a true feel for what’s actually happening, vs. the “sky is falling” negative media hype we all get so much of. If deals are going into escrow that says it all about the current market no matter what else we hear. That’s the bottom line- sales. No one can accurately predict the future, but conditions are looking positive to me. Never forget: the housing market is cyclical. It's the nature of the beast.The national PHSI stood at 107 last November. A PHSI of 100 or more indicates a high level of sales activity. Because there is a stronger parallel between changes in the index from a year ago and the actual pace of sales closing in coming months, this points to fairly stable home sales for the near future, a sign that declining sales likely bottomed out last September. The PHSI looks at the trailing edge. To look ahead, just look back. In the West the index fell 15.9% from a year ago to 106.6, still a good number. Yes, it’s down from a year ago, but it’s up now. What we’re actually concerned with here is momentum, the physics law stating that which is motion tends to stay in motion, in the same direction, and at the same velocity. For now: so far, so good.Sacramento is reportedly one of the most overbuilt areas in the country, so I was amazed to read a Sac Bee report last week where builders there using “aggressive” (read: major incentives/price cutting) sales tactics drove their 4th quarter sales up 58% over 2005, marking an end to their unsold inventory glut. Builders are starting to feel like they have their legs under them again. A lot of buyers are getting the idea that this is as good as it gets for the moment. Even the L.A. area is up too. Median prices increased 1.6% since last November and 3.3% over December ’05. In L.A. County alone medians were up 6.5% over a year ago. Both new and resale homes sales in the region were also up 10.3% for the same period. Even though some are still nervous, Chico likewise is doing OK.Are open houses a thing of the past? Yes and no. Sellers want to see their Realtor “working”, but since nearly 80% of buyers now find their new home on the internet, many of the reasons we hold open houses are no longer applicable. Some agents have been shying away from them recently, yet it’s still a source of new buyers and another method of exposing the listing. Times change.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 Latest
Copy for Real Estate Guide Column for 1-19-07 (444 words)REAL ESTATE PATTERNSBy Ken DuVall The Latest Barring the unforeseen, and based on the top expert’s predictions, things should turn out all right as we go forward this year. U.S. economic growth will slow to the 2-2.5% range, 3% by year-end, squelching fears of inflation heating up. Inflation should ease to 2.5%. An early slowdown will just be a pause. Interest rates should hold steady well into 2007. Home builders will breathe easier a year from now. The downward corrections in construction and sales will have run their course by then. But don’t look for the boom or speculative buying to resume. Price gains will be modest. Kiplinger believes the worst of the slump is over, but home sales and prices may keep declining until midyear, though at a slower rate.The Hanley Wood Report last week says 2007 will be a countdown to recovery as builders and suppliers look forward to the spring buying season in hopes that consumer demand improves. Nationally at the current sales pace there is a 6.3 month’s supply of new homes on the market. That’s not too bad. But existing homes at 7.3 month’s are up. Chico’s is OK with around 7 month’s supply. The national new home median price actually increased 5.8% over this time last year. Notwithstanding all the wild projections by academics, Wall Street analysts, and others in the media, much of the housing sector is indeed experiencing a soft landing. Despite the doomsayers, household wealth will not evaporate. The economy is not going into recession because of the housing slump. Last week home loan applications rose 16.6%, another positive sign.A new $40 million Nat’l Assn. of REALTORS ad campaign dubbed “Every Market’s Different, Call a REALTOR Today” to learn the opportunities, challenges, and advantages of buying and selling a home today. It started this week and runs through November with 8750 national TV spots and 25,000 radio ads. The ads stress that all real estate markets are LOCAL, urging consumers thinking about buying or selling to contact a REALTOR about conditions in their own community. Home ownership is a safe, secure way to build long-term wealth, a sound investment. But buyers and sellers have different concerns as their local markets change. REALTORS can counsel and guide them. Most media reports about trends in the housing market are on a national level and don’t capture what’s happening in individual communities. As local market conditions evolve, savvy consumers rely on the guidance of real estate practitioners who are immersed in the industry. Buyers need help structuring the best deal. Sellers need help positioning their homes in this competitive marketplace and engaging serious, capable buyers. So when it’s time, call your favorite REALTOR.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.
Searching for Bottom
Copy for Real Estate Guide Column for 1-12-07 (442 words)REAL ESTATE PATTERNSBy Ken DuVall Searching for BottomIf you were buying or selling today, do you feel like you could either pay too much, or sell for too little? Well, you’re not alone. But look at the bottom line, our actual Chico home sales data for 2005 vs. 2006. For torrid 2005, the Chico MLS database shows 1134 homes sold for a volume of $398 mil with a median price of $325,000 and an average 52 days on market. In ’06 we had 1001 closed sales, volume $353 mil, median still the SAME $325,000, with 68 days to sell. That’s an 11.7% drop in sales volume, but the median was unchanged. I don’t know of anyone that lost money in Chico in 2006. The housing market was not a calamity, despite some negative press.Compare Chico’s 470 currently (last week) listed homes, urban area population 103,000, to Lincoln, near Sac, population 39,000, where 14,000 new homes are for sale. Priced near $450K, they’re being discounted $100K to $200K in a bitter price war. Sales have plummeted 55%. Lesson: too much, too fast. The Fed is expected to leave rates where they are well into next year, or even reduce them. Softer markets are not dead markets, as long as rates remain affordable. Even if prices do continue to decline, there is a silver lining: every 1% price drop generates 50,000 new buyers. Price declines draw buyers back into the game. For now, sales take precedence over price.Nationally, the NAR projects existing home sales to rise gradually into late 2007. New home sales turned around, rising 3.4% in November, the third increase in as many months. We’re entering a more sustainable period. Prices will be supported over time as we draw down the unsold inventory, which is happening.Unsold inventory fell in November, the 4th straight monthly decline. In the majority of America, sales INCREASED an average of 20% in the 4th quarter ‘06. The venerable Lehman Brother’s chief economist expects existing home sales, 85% of the market, to increase 4.6% by the 4th quarter of 2007. The California existing home median price also INCREASED 1.4% over a year ago to the current $555,290. The bottom has not fallen out. Remember that real estate isn’t a get rich quick scheme. Time, not timing, is the primary ingredient in the equation.Bear in mind there are always people that HAVE to sell, and people that HAVE to buy. Experts say only about 25% of the country is actually hurting. There are hot spots, and “not” spots. But in Chico, there’s a constant market for appropriately priced homes- because we’re a place where people really want to live. That’s the key. 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.
