Copy for Real Estate Guide Column for 8-28-09

REAL ESTATE PATTERNS
By Ken DuVall

END OF THE TUNNEL

The deterioration in national housing values is finally showing signs of slowing. Home sales soared 7.2% in July as first-time buyers rushed to take advantage of the tax credit. It was the 4th straight monthly increase and the strongest month since August 2007. It was also the largest one- month gain in 10 years. Median home values shows that the year-over-year depreciation reversed itself during the 2nd quarter of 2009.

To be taken with a grain of salt, Fed Chair Bernanke said the U.S. economy is "leveling out" and that "the prospects for a return to growth in the near term appear good", an upbeat assessment of the nation's economy in light of rebounding equity prices and recent positive economic data. So the decline is finally reversing itself as we knew it ultimately must.

There are even some areas in the country where home prices have increased over the past 12 months. We may not be out of the woods yet, but we appear to be on the mend. Gag: Q: How far can a bear run into the woods? A: Half way. Then he’s running out!

After being blamed for inflating home values during the housing boom, the appraisal business is again coming under fire. If the appraisal is too high, buyers may overpay and lenders may over-lend. If they are too low, it’s hard to get a righteous loan amount. Some say the pendulum has now swung too far toward caution. The lowball foreclosure sales comps appraisers must use are not helping either. Appraisers and lenders have become nervous and cautious.

On the dark side, retail store vacancies won’t top out until at least mid-2010 per Kiplinger. About 150,000 stores across the U.S. will shutter their doors this year. Even strip malls are feeling the pain. Usually anchored with grocery and drugstores, strip malls typically weather economic downturns well. Not so this time. Overall vacancies are already at 10%. Just look around Chico.

On the bright side, American homeowners are much more realistic about their own homes’ values than they were a year ago and about the future values of their homes. Fully 81% of homeowners believe their own homes’ values will not decline in the next 6 months- the highest positive percentage since 2008. Remember: It’s your attitude, not your aptitude, that determines your altitude!

I just talked with a broker in Pismo Beach. They’re doing a land office business with 15 to 20 offers on EVERY new listing that comes online. I said, “Wait a minute. Are you in Pismo Beach or Chico?!” They just can’t keep up with it. He says he only gets maybe 10% of his offers accepted being beat out by competing bids.

Meanwhile in Chico, an older home in the Avenues just listed pulled more than 12 offers. Another one off E. 9th St. got 32 offers! Don’t tell me this isn’t a great time to buy. The vast majority of Chico listings are now bargain priced.

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 8-21-09

REAL ESTATE PATTERNS
By Ken DuVall

NO QUICK RECOVERY IN SIGHT

You know I always try to find the bright side but I have to keep my reporting fair. So on balance, here’s a compilation of economic analyses from Wells Fargo, Moody’s, and RealtyTrac as reported last week, even though they don’t paint a very pretty picture. Millions of people have lost their homes or their jobs, or both. Meanwhile, millions of workers lucky enough to still have a job saw their savings plans decimated last year.

While the present housing market remains an excellent time to buy or sell, recent signs of a rebound mask larger problems. You’ve got to know where you’re at in the game. Nationally, prices may have an additional 5% to 8% drop before bottoming out at around 40% below the 2006 peak. It’ll be many years until prices fully recover to their pre-peak levels. Most of the price decline is behind us, but we’re likely to have a prolonged recovery.

Chico has already absorbed the bulk of that drop. Our inventory is low at only 281 homes with an average 131 days on the market to sell. Plus, sales prices are coming closer to list prices of late, and, we’re seeing homes sold-before-tour again, along with fewer foreclosures and short sales, all encouraging signs. Multiple offers are happening again.

But rising joblessness is only going to make matters worse, spurring more foreclosures and at the same time shrinking the pool of would-be buyers. Plus, we’re also seeing some sellers holding back until prices rise again, which they inevitably will, of course. Even renters are having it tough, some with poor credit and others asking for rent concessions.

By the end of next year, a record 1 in 6 mortgages will be in foreclosure, 3.2 million by year-end 2009, on top of an equal number in 2010, triple the typical annual rate. Perspective: in all of 2005, there were only half a million foreclosures. What’s more, about 30% of all borrowers- a record 15 million- remain upside down, owing more than their homes are worth. We’re not going to be back to typical times until the Fat Lady sings, period.

Still, the end IS in sight. As I pointed out last week, both sales and starts have clearly turned the corner. Builder confidence is up. By 2011, sales of new and existing homes will hit 6 million again, which is within the “normal” range. By 2012, new home starts will have climbed back to the 1.2 million a year level. Bottom line: we’ll be fine over the long run. We just went too far too fast. There’s no free lunch- ever- under any circumstances. This Law is immutable. Many pay for the transgressions of the few.

The reason Chico has no major problems now is because we didn’t go crazy as many other areas did. We’re doing just fine. We don’t do foolish in Chico. Prices and volume are close to normal. That’s why we live here. It’s normally normal- and amen to that!

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 8-14-09

REAL ESTATE PATTERNS
By Ken DuVall

ASK AND YE SHALL RECEIVE!

Pending U.S. home sales rose in June for the 5th straight month, another encouraging sign of life in our embattled housing market. For June, the pending home sales index rose 3.6%. The last time there were 5 consecutive monthly gains was back in July 2003. The results were far “better than analysts expected”, which seems to be the new mass media mantra! Nevertheless, amen.

The jump in pending home sales coincides with other positive trends in the residential market. That market is healing and the patient is getting healthier at an accelerating pace according to most industry analysts.

For the first time in 5 years, home resales have risen for 3 months in a row, increasing almost 4% in June. Low prices, attractive mortgage rates, and the first-time homebuyers’ $8,000 tax credit (which is now expected to be extended) have kick-started sales.

Essentially, housing’s is so affordable now, coupled with the tax credit, have become bigger factors in influencing sales. Experts expect existing home sales to gradually rise over the balance of the year, with conditions varying around the country. But I anticipate an unpaved road along the way.

Losses shrank from the year-ago period, as builders across the country took smaller charges against the falling values of its land and unsold homes. More encouraging news: new-home orders picked up during the first half of the year. It appears home sales are on a sounder footing and inventory is gradually being absorbed.

The REALTORS Confidence Index measures the strength of the current housing market and future expectations. Using data from the survey of a panel of REALTORS, we respond to questions regarding current and expected demand, price of homes, and other economic conditions. Our answers are then used to create the index. The current month’s report uses responses of 2993 REALTORS from all over America. For the most part, we feel the indicators are encouraging.

It has been the worst housing recession anyone but us really old folks can remember. From the frenzied boom peak in 2005 to 2006 to the trough earlier this year, home resales fell 38% and new home sales tumbled 76% as construction skidded 79%. And for the first time in 40 years, home prices posted consecutive annual declines. A staggering $4 trillion in home equity was wiped out, and millions of Americans lost their homes through foreclosure.

Now take a deep breath. The worst- barring some extreme global event- for the moment is apparently over. By every measure, except for ongoing foreclosures and job losses, the housing market appears to have stabilized and in many areas is on the comeback trail. Nationwide, home resales in June are up 9% from January, and new home sales have climbed 17% in the same period. Construction has risen nearly 20% since the first of the year.

What more could we ask for at this point in time, without seeming like the “Fisherman’s Wife”?

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.