Copy for Real Estate Guide Column for 7-27-07

REAL ESTATE PATTERNS
By Ken DuVall

The Great American Migration

Americans are abandoning traditional growth centers, placing us in the greatest population redistribution since the Oklahoma dust bowl exodus of the 30’s. What’s behind this mass movement? Experts say the implications of affordability and metropolitan growth management play a large role in the evolving housing market. Loans, now with higher credit ratings and down payments being required due to the subprime loan mess, also affect the market. Even the experts don’t yet know how deeply this seemingly “free lunch” program has hurt us all, but there’s plenty of fall out already.

University scholars say this population shift is “more significant than the migrations of the 50’s and 70’s, an undeniable, radical trend. If jobs and strong local economies were the sole motivators, L.A. wouldn’t be hemorrhaging population faster than Detroit, and Chicago wouldn’t be losing people more quickly than Philadelphia. Could it be as simple as housing affordability? Many top economists’ are coming around to this view. Things have clearly gotten out of the ‘normal’ range.”

Other housing cost escalation factors include regulatory and environmental restrictions, along with artificially controlled land supplies. Cities with the most exclusionary growth standards are the most expensive. University studies show that if you create prohibitive local regulations and zone for low density to prevent urban sprawl, the growth will spread outward as buyers head away from cities looking for more affordable housing. We’re still fleeing to the suburbs, wherever that may turn out to be. Families need a roof over their heads. It’s called finding the line of least resistance, just like cattle do going along the trail.

On top of our already approved some 2500-home Meriam Park subdivision, another 679 new Chico homes finally got the green light last week, after 10 years of haggling with the Powers That Be. Think what those homes would have been priced at 10 years ago. Even so, with still more hurdles, it won’t be online until next year. Another 50-home development just came on last week in the low to mid $200’s range. Question: With sales and prices down, existing home inventory up, building starts down, and nervous buyers milling around out there, why are these developers so stupid as to be planning all these new homes?

Answer: That line from the Robert Redford movie “Field of Dreams”: “Build it and they will come.” Well, welcome to Chico, America! We’re still the Chosen Place for many as it’s turning out. And just west of Roseville a 14,132 home subdivision last week got approval after being in the works for 13 years. The good news: Chico homes are still relatively affordable (some would not unreasonably argue that) and deals are going into escrow every day. Interest rates dropped big time last week. Let’s count our blessings.

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.

Copy for Real Estate Guide Column for 7-20-07

REAL ESTATE PATTERNS
By Ken DuVall

Know Where You’re at in the Game

The latest NAT’L ASSN. OF REALTORS economic forecast shows new home prices recovering next year as housing inventory falls from current levels. With profit margins under pressure, homebuilders will cut back on production. As construction is reduced into 2008 the national new home median price is projected to rise 2.2% next year after a 2.6% drop this year. We must strive for balance.

Buyers still have the advantage with a broad selection of homes for now but prices will go up. The forecast says existing homes sales will begin picking up later this year with price increases of 1.8% in 2008 after a 1.4% drop in 2007. The 30-year fixed rate loan should hover around 6.5% through next year.

First time buyers might do well to consider trying for what used to be called “G.I.” financing like the government gave the returning troops during WW II. The G.I. now stands for “Generous In-laws” who provide a little down payment assistance to their youngsters. On the flip side, homes over $1 mil in L.A., San Jose, S.F., NYC, Seattle, Denver, Phoenix, and Miami are all booming due to the stock market surge and the influx of wealthy foreign investors.

In the same vein, you can buy a PARKING SPACE in NYC for a mere $225,000, about $1500 per SF! People that don’t even own cars are buying them to rent out to people that do and can’t find a place to park it. Boy, how things change. Seven California cities are among the Top 25 with the nation’s fastest growth rate: Lancaster, Bakersfield, Visalia, Irvine, Fontana, Elk Grove, and Palmdale. The #1 spot goes to Las Vegas, NV. But don’t take your eyes off Butte County, just projected to double in size over the next 4 decades.

It’s far from over but the recent pace of home foreclosures actually fell 7% in June after jumping 19% in May but are still huge compared to last June. Four California cities dominate the Top Ten metros’ foreclosure rate: Stockton, Merced, Modesto, and Riverside-San Bernardino posted over 5 times the national rate. Too many people with too little equity living on the financial edge.

Meanwhile, back at the ranch, our “adjustment period” isn’t over, but it’s also not devastating as many in the media would have us believe. Last week there were 589 active home listings in the Chico MLS at a median price of $359,000. Year to date, 569 home have sold with another 129 pending. Coincidentally that’s exactly the same number of sales we had last year at this time. Take it from me; we’re on track to have a good year in Chico real estate, slower, but nonetheless good. You just gotta know where you’re at in the game.

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.

Copy for Real Estate Guide Column for 7-13-07

REAL ESTATE PATTERNS
By Ken DuVall

Much News

A brand new Harvard University Housing report states they aren’t sure how long the current slump/correction will take to run its course, but when market balance is restored, the outlook appears bright and upbeat. Once the current storm blows over, ongoing demand for homes promises to lift home values to new highs. Harvard states immigrants have become increasingly vital to the housing market, representing 14% of recent home buyers and accounting for over one third of net household growth in the last decade.

Kiplinger Letter says no matter what Congress does to curtail future immigration, those already here will buy many thousands of homes over the next 10 years. By spring 2008, Kiplinger says sharp drops in both home building and sales will bottom out and hold steady.

Follow the smart money: a Coldwell Banker survey among millionaires owning $1 to $2 million homes reports they are so confident prices will increase they are planning to buy another home, 10% more than last year. Must be tough among the Rich & Famous. A Forbes Magazine article about high-end goodies included a video center loudspeaker system: Weight: 12 TONS. Cost: $1 MIL! Better get one for the bedroom too!

As foreclosures continue, lender owned home auctions are hot. In Sac last week 1200 people turned out and bought all 107 homes on the block at the rate of one a minute. Successful bidders pay a 5% commission to the auction house. There’s another auction this week with 242 more Nor Cal homes up. That tells me there are a lot of investors out there waiting to swoop.

How things change: Russia’s housing market is booming. They can’t build homes fast enough. Starts are up 67% over last year. A 2 BR 1 BA 900 SF house there goes for $336,000, most sold before construction. Moscow now ranks as the city with the highest cost of living on the globe. And China is experiencing severe inflation problems. Maybe their minimum wage of 28 cents an hour will go up now.

Chico stuff: Chico’s urban area population has over doubled to some 103,000 since 1990 with an average 3-4000 additions every year. Home prices have appreciated almost 100% in the last 5 years. We’re up nearly 1% in the 1st quarter of ’07 per the Fed rankings. The State median home price is up 4.8% year-over-year through May, and 541% since 1980.

Despite main stream media’s relentless negative position, the facts remain irrefutable: Prices go up, down, or sideways based upon the only valid market factors there are: supply and demand, and evolving business cycles. In real estate, when people move away, values there go down. Where people move to, values go up. Period.

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.