Copy for Real Estate Guide Column for 6-11-10
REAL ESTATE PATTERNS
By Ken DuVall

GOOD NEWS FOR A CHANGE!

The partial housing recovery is real and sustainable despite recent volatility brought on mostly by on-again, off-again tax incentives for home buyers. There are some reasons to believe the recovery will continue. Prices comparably have again become very affordable. Nationally, pending sales were up 6% in April.

It now takes about 18% of the typical household income to meet payments on a single family home, which compares well with the long-term average of 26%. Consumer confidence is improving some. It doesn’t drive all purchases by consumers, but it does play a role in expensive, long-term commitments.

A recent survey by the Univ. of Mich. found that about three quarters of Americans believe that this is “a good time to buy.” The outlook may stay positive. And credit conditions continue their let-up. Many lenders are still waiting for assurances that home prices are stabilizing, but the consensus seems to be moving in that direction. Credit will flow more freely as a result with 30-year fixed rates now below 5%.

Europe’s sovereign debt crisis has a silver lining for U.S. motorists. Gasoline pump prices will fall along with oil prices, just in time for a vacation season that’s likely to see more Americans traveling than a year ago. A gallon of gas will cost $2.50, on average, by July 4th, vs. $2.74 now. The per-barrel price may hit $60 vs. $70+ lately. Strong demand may beef up the price to about $2.60 by Labor Day. So you can drive around looking for a house to buy at a lower gas cost!

The nation's housing inventory is cluttered with foreclosures, short sales, and home builders willing to make a deal. If you're in the market to buy a home today, you're likely weighing the benefits of each type of property available for purchase.

Don't be fooled. Not all bank-owned foreclosures are sold at deep discounts. Not all builders are slashing prices. Short sales can be a crapshoot, with some buyers enduring months of waiting and still not getting the property. Buyers are more educated these days. They have a good sense of what they're looking for.

Foreclosures reclaimed by the bank are many times sold at a discount. However, the size of the discount depends on the market you're in. A recent report found that the typical discount for bank-owned properties, compared with a traditionally sold home, averaged 20% to 30%. According to an online marketplace of foreclosure properties, the average discount on bank-owned properties was 34% in the first quarter on a national basis.

There is more than one reason why the selling price of a foreclosure is lower than a traditional home. The seller is typically a bank, and would like to move the property off the books as quickly as possible. Conversely, a traditional seller is interested in getting a certain price and is willing to stay in the market although listing price decreases are not uncommon in Chico these days.

The median price of an existing, single-family detached home in California during April 2010 was $306,230, a 21% increase from the $253,110 median for April 2009. The April 2010 median price increased 1.5% compared with March’s $301,790 median price. So far, so good, folks.

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.