We're on a Roll

Copy for Real Estate Guide Column for 2-23-07 (463 words)

REAL ESTATE PATTERNS
By Ken DuVall

We’re On a Roll

Can anything trip up the present economic expansion? The prime candidates haven’t succeeded: the Fed’s interest rate hikes last year, the housing slump, energy price run-ups- all much feared events- that we’ve managed with no life threatening consequences. Even as we continue to recover, the housing market did not crash and burn. Now we should look to overall economic strength for what the future holds in store which will hopefully bolster consumer confidence.

The Gross Domestic Product (GDP) forecast is now projected at 3% for 2007, inflation just over 2%, 1.5 million new jobs (many are potential home buyers), and oil averaging around $60 (who really knows?) a barrel. Home sales and price appreciation are not going to hit old records, but we will see demonstrable growth in both compared to the lows we experienced last fall. We are making progress even though the new home construction pace took a big hit last month.

In fact, per Kiplinger, growth may actually get pretty steamy by the 2nd half of the year, as the drag from the slower housing market tails off, and U.S. businesses and consumers ramp up spending, thanks mostly to robust employment, stocks, and other investment gains. For the moment, I don’t see any dark clouds on the horizon.

U.S. homeownership has hovered around 70% for the last 3 years. Nearly 76 million out of 110 million American household’s homes were owner-occupied at the end of 2006. No other country even comes close. Naturally it’s lower, 64%, in the West where our prices are higher, highest in the Midwest at 73%. Among age groups, the 65 and up crowd clocks in at 81%, on down to 43% for those 35 and younger.

On the down side, more people are taking on riskier loans in order to become homeowners. No down payment loans are up, with 40% of first-time buyers opting for them. Not good. As a result, foreclosure rates have risen dramatically. Vacancies now number over 2 million nationwide, huge. Look for the new 50-year loan (to reduce monthly payments) to become popular as both buyers and lenders cope with higher prices.

Looks OK locally. Through last week the Chico MLS shows 97 homes in escrow already this year. That’s good activity for us. There were 461 home listings, a satisfactory level. However, we only have 30 active commercial listings, way low for that category.

Chico’s mirroring a 33% global increase in com’l sales which hit a record $646 billion last year. People are coming to Chico and business buyers accordingly are snapping up properties to accommodate that enlargement while they can still afford the price. Meanwhile, the local growth vs. no growth factions continue to duke it out over values and issues. Unfortunately, delays and lower densities inevitably increase cost.

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.

We're Happening Again!

Copy for Real Estate Guide Column for 2-16-07 (444 words)

REAL ESTATE PATTERNS
By Ken DuVall

We’re Happening Again!

The Pending Home Sales Index (PHSI), which I consider the true indicator of the housing market’s strength, just came out showing that homes going into escrow are indeed higher, affirming that stabilization- love that word- is occurring as I write. Based on contracts signed in December, the index rose 4.9%.

This was the biggest increase since March 2004. Our unsold inventory level peaked last July, at an all-time high. This recent rise in existing home sales is certainly a welcome relief to everyone except maybe the mainstream media! I think we’re finally back on track. The “correction” period appears to be history. Thank you very much.

It looks like buyers are becoming comfortable again, sensing that timing is good and the market has finally bottomed out. The experts now expect sustainable activity levels and modest sales gains throughout 2007- 2008. This year promises to be the 4th best on record. As I’ve maintained all along, the sky did not fall. In the West, the PHSI rose 5.3%. We’re always hot.

The median price for a California home is now $567,690. The highest: Santa Barbara, $1.25 mil. The lowest: the high desert up out of Palm Springs: $324,560. In Chico, it’s $325,000. Think more buyers want cactus and sand, or trees and streams? You tell me. Not everyone likes it, but more people means increased demand, which pushes values.

Talk about some really expensive real estate: How’s about your very own island? One brokerage devotes a web site exclusively to these mini-paradises. But be prepared to part with some big bucks. Vatu Vara in the Fiji’s, the most expensive on Forbes’ list this year, is asking a mere $75 mil! There’s no house- that’s just the island. But, you get Mel Gibson for a neighbor 20 miles east on his Mago Island. You could just sail your yacht right over and say hi!

Private islands offer complete privacy and incredible scenery, and away from the paparazzi the celebs among us hate. Some even have their own airstrip. You just hop in your private jet and swoop right down there. But inhabitable islands rarely hit the market.

Ever since Marlon Brando bought an atoll near Tahiti in 1965 after filming “Mutiny on the Bounty”, prices have hit the stratosphere. His Tetiaroa has a single inhabitant: one of the “Godfather’s” 11 children, son Simon Teihotu. But not for long: a new luxury resort development is underway there. The cheapest island is Coakley Cay in the Bahamas listed for $25 mil. If your pocketbook won’t stretch, you could always just rent one. One private island in the Bahamas, Nygard Cay, goes for a measly $35,000 a day.

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.

Here & There

Copy for Real Estate Guide Column for 2-9-07 (451 words)

REAL ESTATE PATTERNS
By Ken DuVall

Here & There

Despite the media’s doom-and-gloom predictions and recent negative reporting, 2006 ended up the third strongest year on record for existing-home sales. We’re now moving beyond the low of the housing cycle last fall. Buyers are responding to low interest rates- figure 6.6% average in 2007- and competitive pricing by sellers. The tightening inventory will support prices.
This moderate slowing was essential to restore vitality. Affordability is at the core. Sales slowed due to rapid price appreciation fueled by speculators and suddenly homes were no longer a bargain. Many buyers got priced out of the market. An interesting new report shows that 60% of all 2007 transactions will involve immigrants, and minorities- whatever that may mean anymore.

The national median existing-home price for all housing types was $222,000 in December 2006, actually up 1.1% from $219,600 in December 2005. The pieces for gradual recovery are now falling into place. Think in terms of perhaps 1.5% home price appreciation in 2007, with slow, steady gains in both sales and prices through 2008, inflation easing to 2%, wages up 4%, the Fed holding up on interest rate increases, and we’ve got a winning scenario to improve sales and affordability. So be it.

Chico’s sitting pretty compared to London. A 77 SF (yes, that’s seventy seven square feet!) basement is listed as a “studio”, asking $335,000 or $4350 a SF! It features a shower, closet, and sink. For another $59,000, you actually get electricity and heat thrown in! London’s ultra high-end properties, the priciest in the world, average $5900 per SF, vs Chico’s $200-250 per SF average. We put 85 homes in escrow in January. Not too shabby.

While a London mansion at $125 mil still holds the record sales price, the most expensive American home sale goes to a 10,000 SF, 63-acre estate near NY City at $58 mil. A London 103 room “hovel” near Windsor Castle, a spec home, is offered for a paltry $139 mil. Another spec ready next year in Bozeman, Mont. offers a 55,000 SF 10 BR spectacular mansion on 160 acres with its own ski lift to the private Yellowstone Club slopes. Listed at $155 mil. I doubt the buyer will need a loan.

A Saudi prince’s retreat at Aspen, CO is listed at $135 mil. The Donald’s Palm Beach, FL pad is still up for $125 mil. A Tahoe waterfront home is asking $100 mil. There’s now a waiting list for new multi-mil luxury yachts and private jets. Note: Carroll Shelby’s 1966 (0 to 60 mph in 3 seconds!) Ford Cobra just sold for $5.5 mil! Gets 8 mpg. And finally, a 12-person box at last week’s Super Bowl went for $168,000! The world now counts 793 billionaires.

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.