Copy for Real Estate Guide Column for 12-4-09

REAL ESTATE PATTERNS
By Ken DuVall

Housing Market to Stabilize in 2010

“Home sales are expected to rise about 15% next year, as buyers continue taking advantage of the home-buyer tax credit and housing prices stabilize,” said Lawrence Yun, the National Association of Realtor’s chief economist predicted at our annual conference in San Diego.

Yun is forecasting 5.69 million existing home sales in 2010, up from an anticipated 5 million this year. About 549,000 new-home sales are projected for next year, up from an estimated 397,000 this year. Sales of existing homes jumped by 10% in October to a seasonally-adjusted annual rate of 6 million units. Sales activity is currently at the highest pace since Feb. 2007. Hoorah!

"The fear factor will no longer be at play in 2010," said Yun. “Many consumers feared that home prices would continue to fall and decided to postpone their purchases. But next year, those who remained on the sidelines will believe prices have hit bottom. And they'll take action- if they have a job”, he said. Unemployment could hover around 10% during 2010, but it "will not deter those with jobs from making home-purchase decisions."

Realtors are celebrating the extended/expanded home buyer tax credit. With it, first-time buyers – 47% of sales in 2009- can still qualify for up to $8,000. Even those who currently own a home now qualify for a credit up to $6,500 for the purchase of a new principal residence. Realtors are optimistic that the "free money" being offered will generate more sales during December and January. To qualify for the credit, buyers need a binding contract in place by April 30, and close escrow by June 30.

The credit stimulus will continue to help draw down inventory and stabilize home prices and encourage a strong and sustainable housing recovery. The nation’s current inventory of existing homes dropped to a 7 month supply, down from an 8 month supply in September. New home sales took a 6% jump last month too.

"By June, the housing market will be back on track... and I believe that will be the situation as the tax credit ends," Yun said. He expects home values to then be showing consistent and sustainable increases.

Barring unforeseen major economic events, Yun projects home prices to rise between 3% and 5% next year, varying between markets. Foreclosures unfortunately will continue to pile up into next year, expected to peak by the 2nd quarter, but there is enough pent up demand to absorb the inventory quickly.

The bad news: 10.7 million households, or 23% of all mortgage holders, have loans that are higher than the value of their home. The good: Prices in the 20 city major metros are up more than 3% from the bottom in May. We have seen broad improvement in home prices for most of the past 6 months.

The 30-year fixed-rate mortgage, hitting an all-time low of 4.78% last week, should average around 5% +/- in the 4th quarter, and may rise only gradually by the end of 2010. Affordability is at an all-time 18-year peak. No ‘carbon credits’ needed!

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 11-20-09

REAL ESTATE PATTERNS
By Ken DuVall

ENORMOUS WAGER ON CITY CENTER

Let’s this week gaze at the gleaming glass towers of City Center, the biggest thing to hit Las Vegas since the slot machine. Part destination resort, part urban enclave, the 67-acre complex, a city within a city, an architectural tour de force, and an $8.5-billion gamble on the economy, consumer confidence, and the appeal of Vegas itself. It’s also the largest privately funded construction project in America.

The bigger issue is will it draw new and returning visitors? Will it “cannibalize” bookings at existing properties and keep room prices at bargain-basement levels? Will the “new normal economy” prompt potential visitors to think more carefully before heading for that quick trip to Vegas?

Set to open next month, City Center is more than just another casino resort. The idea was born in 2004 when executives at MGM Mirage, City Center’s developer, began exploring ways to utilize their 67 acre parcel between its Monte Carlo and Bellagio resorts.

Clearly, that’s a lot to digest in a market that’s been on a year-long crash diet. It also explains why amazing room deals continue: $31 at Excalibur, $49 at Harrah’s and Bally’s, $129 at Vdara when it opens December 1. And with another 5,000 rooms expected to open next year, the stakes couldn’t be higher. Las Vegas room inventory continues to grow. Last year, the city’s hotels added another 7,600 rooms to 140,000.

In the middle of City Center is Aria, the 4,004 room hotel/casino/condos, their flagship property. The 61-story skyscraper rises above a 150,000 SF casino, 215,000 SF pool deck and 1,800-seat theater that will present a new Cirque du Soleil production (we saw it in 2004, the most incredible show of all time) dedicated to the life and music of Elvis Presley.

The result will be truly spectacular, especially when you add in the pocket parks with water features, sky bridges, and electric tram. City Center is unlike anything the Strip has ever seen. The first thing you see is Crystals, the project’s “retail district,” a stunning structure filled with stores offering the world’s most prestigious brands. Around it, 6 glass towers rise into the sky, a collection of hotels and high-rise condominiums designed by world-renowned architects.

International visitation is also increasing, now accounting for about 15% of Vegas’ take. Last week, British Airways started daily, non-stop service from London. XL Airways will start twice-weekly charter service from Paris. Las Vegas boosters remain convinced they can manage through the economic crisis. Witness the recent resurgence of the penny slot, which offers a deceptively low entry cost, yet provides a surprisingly good return to the house.

In the meantime, over on the City Center campus, the construction continues as thousands of construction workers race against next month’s openings. Vdara opens December 1; Crystals, December 3; Mandarin Oriental, December 4, and Aria, December 16. MGM Mirage CEO James Murren believes City Center will be a “must-see destination for a very long time.” It’s an $8.5 billion bet, huge even for Sin City.

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 11-13-09

REAL ESTATE PATTERNS
By Ken DuVall

BIG REBOUND

U.S. existing-home sales bounced back strongly in September with first-time buyers driving much of the activity, marking 7 gains in the past 8 months, and 9.2% higher than the pace in September 2008. Sales activity is at the highest level in over 2 years. It was the highest reading since December 2006 and more than 21% above a year ago. Distressed home sales accounted for 29% of transactions in September, which reduces unsold inventory. Buyers are enjoying affordability conditions the highest in 40 years.

Much of the momentum is from the first-time buyer tax credit, which is also freeing many sellers to buy a replacement home. The tax credit will be extended through April 2010. Not to worry about the Nov 30th cutoff now. Move-up buyers also got included in the new expanded bill. Meanwhile, Treasury and IRS agents have uncovered more tax credit fraud. Some 580 children as young as 4 have received $627,000 in first-time homebuyer credits, plus 187 criminal schemes have been identified with 107,000 investigations of civil violations now underway. A perfect example of how to bite the hand that feeds us.

The U.S. Unsold Housing Inventory Index in September fell 7.5%, representing a 7.8-month supply, down from a 9.3-month supply in August. Unsold inventory totals are 15% below a year ago. The index indicates the number of months to deplete the supply of homes on the market at the current sales pace. The current housing supply is the lowest in 2 1/2 years. If we continue to absorb inventory at this pace, prices will return to normal, with modest appreciation patterns next year. Let’s hear a big amen for that!

Meanwhile back at the ranch, California home sales increased 2.1% in September compared with the same period a year ago, while the median price of an existing home declined only 7.3%. Sales in September 2009 increased 0.6% compared with August. The September 2009 median price rose 1.1% compared with August’s $292,960 median price vs. $319,310 in September 2008. This marks a new milestone in September when several Calif. Assn. of Realtor’s regions reported positive year-to-year increases in the median price, the first since January 2008.

If that wasn’t enough, September also marked the 7th consecutive month of increases in the statewide median price and the first single-digit decline in the year-to-year median price since October 2007, after 22 consecutive months of double-digit decreases. Efforts by the government to stimulate housing and the economy are favorably impacting the market. Sales have exceeded 500,000 homes for 13 consecutive months, and now are 33% higher compared with 2008 sales.

The Unsold Inventory Index for existing California single-family homes in September 2009 was 4.2 months, compared with 6.5 months for the same period a year ago. The number of days to sell was 33.6 days in September 2009, compared with 46.2 days for the same period a year ago. We are witnessing the sharpest turnaround in American home prices in 100 years. Don’t fret about Chico. We’re looking good too.

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.