Copy for Real Estate Guide Column for 6-26-09
REAL ESTATE PATTERNS
By Ken DuVall

IT’S SAFE TO GO IN THE WATER AGAIN!

In the Sacramento Delta suburbs east of San Francisco, where prices soared and fell as wildly as anywhere in the country, a housing market rebound is excitedly underway. One new development to add to the mix: move-up buyers have all but disappeared. The distressed sellers have lost their equity to foreclosures and short sales resulting in them having no down payment for a replacement home. They’re renters now. But the bottom feeders are taking their place.

A 1,600 square foot home in Antioch listed for $179,000, after last selling for $425,000 in 2004, drew multiple offers selling for $210,000 cash, as many are these days. It was a "short sale" needing lender approval to sell for less than owed. Same thing is happening in Chico now with 20 or 30 competing offers not uncommon. Buyers wouldn't touch these just 3 months ago.

"Everyone was waiting for the bottom, and they waited too long, because the bottom has come and gone" commented the listing Realtor. Spurred by markdowns up to 80% from market highs, first-time buyers and investors, both American and foreign, have descended en masse in the last 3 months on San Francisco's and Sacramento’s hardest-hit areas as Wall Street and the economic climate improved somewhat.

They're picking clean the Delta region's banked-owned inventory as soon as properties hit the market in unprecedented bidding wars. The panic buying, fueled by buyers' fear they'll miss out on fire-sale prices, are belying the doom-and-gloom reports of recent rising mortgage delinquency rates and foreclosure activity. I see it as one of several signs the U.S. housing-market turnaround has started in some of the nation's hardest-hit markets.

After spending most of the 1990’s in the $250,000 range, the median-priced home that was sold in the San Francisco area, rose to a stunning $850,000 by its May 2007 peak. It since fell to a low of $399,000 in February, a 53% drop in just 21 months, before posting its first monthly gain in March.

The median is expected to continue rising at a healthy clip in months ahead since it's now at the pre-bubble level of 9 years ago. At roughly 22,000 units, Las Vegas- another hard hit area- inventory is not far off its recent record high, yet recent sales showed flourishing demand, the 4th best on record set during the height of the boom. That record is now expected to be broken this summer.

Pending sales of existing U.S. homes also took an upswing in April, rising 6.7% in the biggest monthly gain in over 7 years. Yet in another report that belies the first-quarter delinquency numbers, mortgages defaults fell 3% in April and were down 24% from a record 106,482 in February. This is a critical turnaround for us.

The main stream media only tells us what they want us to hear. I dig deeper. I’m quoting you these out of area stats to illustrate the overall housing market picture. Sales are still going well here in Chico.

Get this: a buyer in Boston’s upscale Back Bay section plunked down $300,000 (the highest on record) for a PARKING PLACE, driving the ask price up from the $250,000. Granted they are scarce, but $300,000? Wow! Supply and demand at work. The seller also has a 2 BR condo in the same building asking $2.5 mil.

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 6-19-09

REAL ESTATE PATTERNS
By Ken DuVall

IT MAY NOT GET ANY WORSE

Ninety percent of the nation’s economists predict the recession will end in the 3rd quarter of this year, although the recovery will be bumpy. Ditto from Fed Chair Ben Bernanke. But he cautioned, “Unless we demonstrate”- even with the $1.8 trillion budget deficit this year- “a strong commitment to fiscal sustainability, we will have neither financial stability nor healthy economic growth.”

Pending U.S. home sales, up for 3 months in a row, rose 6.7 % in April after a 3.2% rise in March, the best in 7 years, signaling a housing market bottoming process is emerging. The California home median price has increased for 2 consecutive months for the first time in 2 years! California’s pending sales too were up 2%. The statewide existing home median price rose from $253,040 in March to $256,700 in April, a 1.4% gain after a 2.2% gain in March.

With sales of existing homes remaining above the 500,000 level for the 8th month in a row, California is being closely watched as a barometer of the overall economy. Sales of existing single family homes increased 49.2% in April compared with the same period a year ago. The state’s median price seems to be at or near the bottom, even as over 50% of the Sac areas comprise short sales. About 25% of all Chico listings in the $200K to $300K are shorts here too. They are being bid up like crazy too as multiple offers come in.

Sales of foreclosures too have sparked bidding wars. But the market for high end properties is at a virtual standstill as it’s difficult to obtain jumbo loans. Unfortunately unemployment will climb this year even as the economy rebounds, meaning still more foreclosures as the jobless cannot make their loan payments. The national median price was dragged down to $170,000 as foreclosures made up 45% of all recent U.S. sales.

Nationally, the number of unsold homes at the end of April rose 9% to 4 million, a 10 month supply- not good. But look for housing to set a faster pace as starts are expected to streak from about 500,000 this year to 825,000 in 2010, but still 45% below the long term trend of 1.5 million annual starts.

With the mounting demise of many retail and office tenants, look for more shrinkage in commercial and retail construction as we go. Vacancies are mounting swiftly. Corporate bankruptcies are on the rise, increasing to 55,000 this year. Times will remain tough well into next year but the frightening collapse of sales and corporate earnings is probably behind us now. I think that we can finally begin to breathe a sigh of relief.

Only for the Ultra Rich & Famous: you can now rent a house for the summer in the way upscale Hamptons on Long Island, NY for a mere $350,000! At the height of the market in 2007, a house that went for $12 million is now going for a piddling $8 mil! Even some of disgraced Ponzi scheme Bernie Madoff (he “made off” with their money- couldn’t resist that!) victims have had to sell their Hampton’s homes.

Commented Steven Gaines, local Hampton’s talk show host, “Those wannabe Hamptonites being flushed out of here is really a good thing. It keeps the elitism going.” Well, you can just kiss my royal class, Steven!!

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.