Copy for Real Estate Guide Column for 7-31-09

REAL ESTATE PATTERNS
By Ken DuVall

LOW DOWN ON THE HIGH END

In affluent Bronxville, N.Y., 15 miles north of NYC in Westchester County where residents of million-dollar homes have an easy half-hour commute into Manhattan, selling a house has become a whole lot harder. Larry Brocchini put his four-bedroom Colonial on the market in late May, with a price tag of $969,000. He and his wife have hosted open houses and showed the home about 10 times, but no offers yet. Reason? Potential buyers looking to escape traffic and crowded schools in Manhattan are having trouble selling their own apartments and co-ops there.

In the Big Apple, the median sales price for an apartment priced in the top 10% of the market fell as much as 26% in the second quarter and the number of sales plunged 50% from last year. "People are just being a little more deliberative than they have been in the past," said Brocchini, a 44-year-old attorney. In the Chico area, we have some 37 homes listed from $750K to $2.8 mil. High-priced homes everywhere are languishing.

Nationally, at the current sales pace, there's about a 40-month supply of homes on the market for $750,000 and up. That's more than double the stock in mid-2007, before the credit crunch. By contrast, there is now less than a 10-month supply for all homes. The high end is currently the worst performing sector of the residential market, but we’re beginning to see some relief.

The recession and collateral damage in the stock markets have knocked many luxury buyers out of the game. Falling home prices coupled with unsympathetic new appraisal rules have scuttled many deals. And, lenders have jacked up interest rates and down payment levels for high-priced mortgages. Yet we do see some credit markets softening along with increased demand.

Since the credit crunch began in 2007, Fannie Mae and Freddie Mac are virtually the only new loan buyers left, but they cannot purchase mortgages above $729,500. That means any lender who makes a mortgage above that amount- a jumbo loan- will have to keep the loan on its books, which depletes the funds they can lend, and, causes your interest rate to increase.

On the flip side, there's some really unbelievable buys out there. Not all once wealthy people are still wealthy so some have to sell their homes- if they can- just to stay afloat. At the same time, banks are requiring hefty down payments even if the borrower has a golden credit history. Qualified buyers can score heavily in this environment.

To make up for falling values in Florida, Erik Lebsack is throwing in his $80,000 2007 Mercedes Benz. The home, appraised at $1.1 million in 2006, has been listed for $780,000 since December. "If people don't think they’re stealing the house, they feel like they're getting ripped off" Lebsack said. Welcome to the club, Erik.

The really good news of the week: U.S. home sales were up 11% in June, the highest amount in 9 years. Prices climbed almost 1% as well. Realtors all over are reporting their clients believe the worst is behind us. Public confidence is returning, a very good sign. Goldman Sachs analysts said Monday, “It’s becoming clear that prices may be close to bottoming.” Hallelujah!

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 and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

Copy for Real Estate Guide Column for 7-24-09

REAL ESTATE PATTERNS
By Ken DuVall

LOOKING BETTER

Pending home sales nationally rose in May for the fourth straight month, spurred by low prices and a first-time homebuyers tax credit, fresh evidence that the housing sector may be recovering. While the increase was small, it followed a 7.1% jump in April. The increase in April and the fact that May sustained this rise indicates that existing home sales are poised to rise in the coming months. From my lips to God’s ears!

New home construction expanded for the second straight month in June after hitting a record low in April, the highest level of starts since last November. The pending home sales index is now 6.7% higher than in 2008. The last time it increased for 4 straight months was in October 2004. Sounds good to me.

Completed home sales rose 2.4% from April to May, the third month-to-month increase this year. Building permits, a leading indicator of housing construction, rose 8.7%. Starts rose 3.6% in June. This is the highest level of permits since December. Better than a poke in the eye!

A Harris Poll found Realtors among the Top 12 Most Trusted Professionals in America. This was several notches below nurses, doctors and pharmacists, but comfortably above attorneys, stockbrokers and sales professionals in a number of other industries. In fact, while sales professionals as a whole rated somewhere midway on the “most trusted” scale, Realtors consistently garnered the top rating among the entire sales group. I’ll take it!

The California Assn. of Realtors is now offering a free supplemental insurance product for First Time Home Buyers who lose their jobs due to layoffs. Qualified buyers may be eligible to receive $1,500 per month, for up to six months, to help make their mortgage payments. Nice.

Falling prices, low rates are prodding California homebuyers. Favorable home prices, record-low interest rates, and the belief that rates will rise in the near future were the primary motivators leading home buyers to purchase. Sixty-eight percent of buyers said price decreases motivated them to buy while 39% reported low interest rates enabled them move to a better location. California’s median home price, up 7% in June, now $267,570, which 69% of first time buyers can now afford. That’s a good sign.

Housing affordability has improved dramatically in response to the decline in home prices along with historically low mortgage rates, creating a tremendous opportunity for home buyers in California. Home sales in California rebounded in late 2008 and early 2009, reflecting the combination of favorable prices, low mortgage rates, and home buyer tax credits, fueled primarily by sales of distressed properties that accounted for more than half of the state’s transactions.

Forty-nine percent of all buyers purchased a home through a traditional market sale, while 38% purchased a bank-owned property. Reflecting the difficulty in closing short sales--properties selling for less than the loan amount--only 13% of buyers purchased a short sale property. They should be called “long” sales!

There are now 19 million empty homes in this country. Low or inappropriate appraiser valuations are now rearing their ugly head, affected by distressed sale prices. Lenders are spooked. New loans are hard to come by. The foreclosure beast has a long tail.

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 and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

Copy for Real Estate Guide Column for 7-10-09

REAL ESTATE PATTERNS
By Ken DuVall

I’LL TAKE CHICO EVERY TIME!

We aren’t doing all that badly in Beautiful Downtown Chico. These are the Year-to-Year comparison stats for the periods of 1-1-08 to 6-30-08 vs. the 1-1-09 to 6-30-09 numbers. These data cover the Chico area MLS sales and listings for single family detached homes and condos.

Last year in the first half we had 407 sales for a sales volume of $133,771,540 with an average price of $328,667. This year to date we’ve had 372 sales for a volume of $106,379,676 with an average price of $285,967. Currently there’s 146 more pending in escrow as I write. This equates to a sales volume decrease of 20% and a 13% decrease in price. Not life threatening. My best guess: we’ll hit a true housing market bottom sometime around year end.

With distressed- foreclosures and short sales, accounting for about 25% of all volume- and the lowered prices needed to sell during the owner’s lifetime (!), Chico has not really fared too badly compared to the rest of the country. Of course, sales and prices have taken hits nearly everywhere over the last year. By the way, there are 372 metro areas in all, not just the 20 cities used by the rather insufficient Case-Schiller index.

On the listing side, year to date in 2008 we had 799 home and condo listings with the resulting sales after an average 77 days on market. This year to date there have been 663 listings with the resulting sales after 85 days on market. Compared to several other major metros, Chico is truly amazing. Why? Because Chico is a place where people really want to live- and people create values. That makes all the difference. Or would you rather live in L.A.?! You tell me!

Sad sign of the times: Angry, defaulting homeowners are lashing out. Windows and drywall are broken. The doors are off their hinges. Built-in fixtures and cabinets have been ripped out. What can be sold is. All that -- and much more -- describes many homes in foreclosure-wracked markets around the country. The destruction has been committed by former homeowners as a sort of toxic “parting gift” for the bank that foreclosed on them. Some bitter former owners can’t resist wreaking a little havoc before they are evicted from what had been their home.

I’m not preaching here but since the property technically belongs to the bank, those acts constitute vandalism and theft. It's clearly wrong to destroy private property, even if it was yours once upon a time and is now slipping through your fingers. In many ways, these are sad and desperate times. But as Abe Lincoln said: "Most folks are about as happy as they make up their minds to be." Lemme hear a big Amen to that! We shall endure.

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.