Coldwell Banker Realty Check for November 2011

Fortune Magazine and the Wall Street Journal: Time To Get Back Into Real Estate

Okay, I know many of us have been saying this for some time now, but when the news media starts saying it – well, I guess that makes people stand up and take notice. A number of recent articles in the national press are now saying that it might be the right time for consumers, who have largely been on the sidelines, to jump back into the housing market.

I understand why potential buyers, whether first-timers or move-up buyers, remain cautious given all the economic headwinds and bad news out there. Economic growth has been slow, the jobless rate too high, and don’t even get me started about the politics in Washington, the euro-zone debt problems and the challenges facing Greece.

But I often urge buyers to examine what I like to call your “personal economy.” That is, if you have a steady job, reasonable credit, and enough savings for a solid down payment, you might want to take a deep breath and think about taking the leap into the housing market while prices and interest rates are so low.

Read what two of the nation’s top business publications, Fortune magazine and The Wall Street Journal, are telling their readers:

“Forget stocks. Don’t bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing.”

– “Real estate: It’s time to buy again,” Fortune Magazine article by Shawn Tully.

“Two key measures now suggest it’s an excellent time to buy a house, either to live in for the long-term or for investment income.”

– “It’s Time to Buy that House,” The Wall Street Journal article by Jack Hough.

Tully in the Fortune piece interviewed Mike Castleman, founder and CEO of Metrostudy, who has spent more than 30 years tracking data on the inventory of new homes in the United States. Each quarter, inspectors go through 45,000 subdivisions from California to Maryland. According to Fortune, inspectors examine 5 million lots and record whether they contain a house under construction or completed.

What has Castleman observed? The glut of new homes that the U.S. had a few years ago at the peak of the market has rapidly disappeared. Instead, he told Tully that he has seen a rapidly declining inventory that could force prices higher. In the 41 cities Metrostudy looked at, there are just 78,000 houses vacant and for sale, or under construction – less than a quarter of the 343,000 units at the height of the market in 2006 and less than the total a decade ago.

“The talking heads who are down on real estate will hate to hear this, but America needs to build a lot more houses,” Fortune quoted Castleman as saying. “And in most markets the price of new homes is fixin’ to rise, not fall.”

Metrostudy collects figures on the number of homes that are vacant and for sale in each city, and the number of months it takes to sell all them to determine whether individual markets have a surplus or a shortage of homes. “If we had anything like normal levels of buying, those houses would sell in 2½ months,” Castleman told Fortune. “We’d see an incredible shortage. And that’s where we’re heading.”

Fortune says that consumers may be confused by conflicting news reports on the housing market, and that could be impacting their confidence in buying a home. On one hand, housing affordability has never been better. But on the other hand, they continue to see housing starts falling and home prices still heading down in some markets.

Tully said economists Robert Shiller and Karl Case, authors of the S&P/Case-Shiller Home Price indices, have different views about where we are in the cycle. While Shiller remains pessimistic, Case is more optimistic that things are starting to turn around, telling Fortune that “the lack of new home building is a huge help that a lot of people are ignoring.”

In its analysis of the housing market, Fortune noted that it’s important to look at the economic fundamentals of home ownership to see where the market is headed. As home prices rose sharply over the past decade, Tully said the magazine warned that a bubble was forming due to the level of new construction and the cost of owning a home compared to renting one.

“Eventually reality set in, and prices plummeted,” Tully said. “Our current view focuses on those same fundamentals — only now they’re pointing in the opposite direction,” Fortune noted. “So let’s state it simply and forcibly: Housing is back.”

The Fortune article said what will drive the recovery of the housing market is a sharp drop in new home construction, as noted in the Metrostudy research, as well as a big drop in home prices. Home prices have fallen about 30% nationwide since 2006, Fortune said, and more than 50 percent in hardest hit markets. With unusually high affordability levels, the article noted, Americans will start returning to the market.

While no one can predict with certainty the future of home prices and sales volume, it is safe to say that a turnaround will eventually happen. Timing the market is very difficult because you will never know the absolute bottom until prices have started going back up again. My advice is to look closely at your own “personal economy” and talk with a professional Realtor to see if now might be a good time for you to take advantage of low prices and rates, and join others in taking the plunge into buying a home.

Thanks for Reading,

Kris Vogt, Coldwell Banker

Start building your memories,
as you turn your house into a home. 

As you might guess, this document is a compilation of information from our own efforts as REALTORS, as well as input from other REALTORS in our Coldwell Banker office.  I hope it has been of value to you.  Don’t hesitate to email us with any suggestions that will make this document better for you and your fellow home owners!
Be sure to follow us on Facebook at  www.Facebook.com/ElkGroveRealEstate.  For information about properties available for sale and for more information for buyers and sellers, please visit our website at www.ElkGroveRealEstate.com and don’t hesitate to give us a call or drop us an email with your questions.

Make sure to click the Comment box below and share this article with your friends as well.

October Market Update from Kris Vogt, Coldwell Banker

Hello,  

First let me apologize for being a bit late on our Real Estate Market Update this month. The good news is, I have very good reason to be late. There has been a lot of attention paid to the numbers released in mid-October and rather than just give you an information dump of the stats, I wanted to take the time to analyze the numbers with my team and make sure I gave you the appropriate details and opinion of what we’re seeing.

Most specifically, when the numbers were reported late last month, much of the media chose to take a top down view, focusing on the decline in sales and home prices. But, in most cases, what wasn’t factored into the equation was the over decline in inventory we are seeing market wide.

The fact is, inventory remains a major troubling spot for our market. Market wide, we are down to 4.2 months supply of inventory (that’s a 31% decline in inventory year over year) and yet sales, year over year market wide, saw a 16% increase. So while an initial look at the numbers may cause some concern, as you delve further into them, you really see some very positive trends coming from our market.

Market Commentary:

Again, this month, we saw some relatively big declines in sales month over month. The reasons for this are twofold:

  1. Seasonality–We typically see a rather large decline in home sales between August and September. This year we saw a 6% decline in sales between August and September versus last year’s 4% decline.
  2. Inventory–As I mentioned before, possibly the most important reason for this decline in sales is a decline in good, solid inventory. For the fifth straight month, we have seen a decline in inventory market wide. In fact, since April of this year, we have seen inventory levels drop by 12%. Year over year, the inventory levels have declined 21%.

Where are we seeing the biggest shifts in sales?

Overall, the big shift in sales have just been in the last month. In fact, year over year, across the board, we are seeing increases in sales across all markets with the entry-level market seeing the biggest rise at 23% year over year. The entry-level market seems to be receiving the biggest boost, thanks largely due to investors.

  • Market Wide: 2,535 (Sept. 11) vs. 2,700 (Aug. 11) = 6% decline
  • Market Wide: 2,535 (Sept. 11) vs. 2,186 (Sept. 10) = 16% increase
  • Entry Level*: 1,822 (Sept. 11) vs. 1,915 (Aug. 10) = 5% decline
  • Entry Level: 1,822 (Sept. 11) vs. 1,478 (Sept. 10) = 23% increase
  • Mid Level*: 642 (Sept. 11) vs. 703 (Aug. 11) = 9% decline
  • Mid Level: 642 (Sept. 11) vs.630 (Sept. 10) = 2% increase
  • Upper End*: 100 (Sept. 11) vs. 109 (Aug. 11) = 8% decline
  • Upper End: 100 (Sept. 11) vs. 99 (Sept. 10) = 1% increase

Let’s take a look at inventory numbers:

  • Market Wide: 10,554 (Sept. 11) vs. 11,118 (Aug. 11) = 5% decline
  • Market Wide: 10,554 (Sept. 11) vs. 13,440 (Sept. 10) = 21% decline
  • Entry Level: 6,965 (Sept. 11) vs. 7,481 (Aug. 11) = 11% decline
  • Entry Level: 6,965 (Sept. 11) vs. 8,705 (Sept. 10) = 23% decline
  • Mid Level: 2,743 (Sept. 11) vs. 2,809 (Aug. 11) = 2% decline
  • Mid Level: 2,743 (Sept. 11) vs.3,666 (Sept. 10) = 25% decline
  • Upper End: 922 (Sept. 11) vs. 903 (Aug. 11) = 2% increase
  • Upper End: 922 (Sept. 11) vs. 1,187 (Sept. 10) = 22% decline

Interestingly, inventory levels are the lowest they’ve been in more than two years.

As I visit our offices, one common thread I hear is, “I have so many great, qualified buyers, but it’s really hard finding them a good home.” Essentially what we have is a skewed view at supply and demand because the demand for a specific type of home is out there. It’s just unfortunate because the inventory for that particular type of home is dwindling. While the buyers are there, the good, solid inventory hasn’t been.

One major shift we have seen in the last month is a sudden decline in buyer interest in the luxury end. Whereas in my last two editions of Real Estate Market Update, we were seeing a solid luxury buying trend, suddenly, in September, we saw that interest decline, with sales dropping 8% and inventory levels rising 2% (month over month).

What is this doing to prices?

Buyers are far more active right now and that coupled with tight inventories is helping to firm up pricing while getting serious buyers to be a little more realistic when making offers–especially in the entry-level arena. Properties priced correctly and that show well are getting a tremendous amount of traffic as well as multiple offers.

Additionally, we are finally seeing many banks starting to process short sales in a more streamlined fashion, allowing us quicker short sale approvals.

Here is a look at sold median home prices.

  • Market Wide: $180,000 (Sept. 11) vs. $185,000 (Aug. 11) = 3% decline
  • Market Wide: $180,000 (Sept. 11) vs. $204,000 (Sept. 10) = 12% decline
  • Entry Level: $146,000 (Sept. 11) vs. $150,000 (Aug. 11) = 3% decline
  • Entry Level: $146,000 (Sept. 11) vs. $158,000 (Sept. 10) = 8% decline
  • Mid Level: $312,000 (Sept. 11) vs. $323,000 (Aug. 11) = 3% decline
  • Mid Level: $312,000 (Sept. 11) vs. $315,000 (Sept. 10) = 1% decline
  • Upper End: $615,000 (Sept. 11) vs. $600,000 (Aug. 11) = 3% increase
  • Upper End: $615,000 (Sept. 11) vs. $619,000 (Sept. 10) = 1% decline

The final piece I’d like to point out this month is that of accepted offers, which I think showcases several interesting trends (take particular note of what we have seen year over year both in the entry-level as well as in the upper end):

  • Market Wide: 2,673 (Sept. 11) vs. 2,822 (Aug. 11) = 5% decline
  • Market Wide: 2,673 (Sept. 11) vs. 2,124 (Sept. 10) = 26% increase
  • Entry Level: 1,986 (Sept. 11) vs. 2,068 (Aug. 11) = 4% decline
  • Entry Level: 1,986 (Sept. 11) vs. 1,430 (Sept. 10) = 39% increase
  • Mid Level: 608 (Sept. 11) vs. 685 (Aug. 11) = 11% decline
  • Mid Level: 608 (Sept. 11) vs. 588 (Sept. 10) = 3% increase
  • Upper End: 95 (Sept. 11) vs. 102 (Aug. 11) = 7% decline
  • Upper End: 95 (Sept. 11) vs. 136 (Sept. 10) = 30% decline

My final food for thought this month is that the market is making some interesting headway. While at first glance, it seems the numbers may be disappointing, when you further analyze them, they share a very different story.

We are seeing significant bright spots (and potentially trends) in the entry-level market while the interest in the upper end has had its fair share of challenges over the last several weeks.

We’ll continue to monitor these numbers over the next few weeks and look forward to sharing with you the October numbers in just a few weeks. I say this often times in my office meeting visits, but I think it’s a good way to end this month’s report:

When the market has changed, no one is going to run out in the middle of the street and yell, “The market has changed!” It’s only upon reflection that we can see that a real trend has been established. Until then, we’ll continue to regularly monitor these stats until we begin to see that strong, solid recovery.

That’s it for now. Make it a great month.

Sincerely, Kris

Start building your memories,
as you turn your house into a home. 

As you might guess, this document is a compilation of information from our own efforts as REALTORS, as well as input from other REALTORS in our Coldwell Banker office.  I hope it has been of value to you.  Don’t hesitate to email us with any suggestions that will make this document better for you and your fellow home owners!
Be sure to follow us on Facebook at  www.Facebook.com/ElkGroveRealEstate.  For information about properties available for sale and for more information for buyers and sellers, please visit our website at www.ElkGroveRealEstate.com and don’t hesitate to give us a call or drop us an email with your questions.

Make sure to click the Comment box below and share this article with your friends as well.

Relief For Condo Owners

Over the past several years, I have talked with many condo owners who were being denied the opportunity to rent their condo because their HOA had instituted rules, after they had purchased their condo, prohibiting the owners from renting or leasing their condo.  Maybe they were moving for their job and wanted to rent until they could return to the area.  Some were move-up buyers who wanted to keep the condo for the rental income and become investors. No matter what the reason for their desire to rent or lease their condo, the HOA was prohibiting it in many cases.

I am happy to report, that through the efforts of the California Association of REALTORS, we were successful in the passage of legislation, Senate Bill 150, protecting the owners’ right to rent out their units in these common interest developments.  Starting on January 1, 2012, a condo owner is exempt from any prohibition in the association’s governing documents against renting or leasing their unit unless that prohibition was in effect before the owner acquired title to his or her unit.

So, if you are thinking about buying a condo, make sure that you review the HOA disclosures and look for any prohibition already in place that prohibits renting or leasing.

Additionally, an owner’s right to rent under this law does not terminate for certain transfers of title, including, but not limited to, probate, spousal, parent-to-child, adding a joint tenant, and other transfers exempt from property tax reassessment.

This law does not apply to rental prohibitions in effect before 2012.

Start building your memories,
as you turn your house into a home. 

As you might guess, this document is a compilation of information from our own efforts as REALTORS, as well as input from other REALTORS in our Coldwell Banker office.  I hope it has been of value to you.  Don’t hesitate to email us with any suggestions that will make this document better for you and your fellow home owners!
Be sure to follow us on Facebook at  www.Facebook.com/ElkGroveRealEstate.  For information about properties available for sale and for more information for buyers and sellers, please visit our website at www.ElkGroveRealEstate.com and don’t hesitate to give us a call or drop us an email with your questions.

Make sure to click the Comment box below and share this article with your friends as well.

Tenants Displaying Political Signs

More Legislation Info From The California Association Of Realtors That May Effect You!!!

Tenants Displaying Political Signs:

Effective January 1, 2012, a residential tenant can generally display political signs related to elections, legislative votes, initiatives, and other political matters as specified, but the landlord can make reasonable restrictions as to location, size, and duration of display.

In a single-family dwelling, a tenant’s political signs can be displayed from the yard, window, door, balcony, or outside wall of the leased premises.

In a multifamily dwelling, a tenant’s political signs can be posted in the window or door of the leased premises.  A landlord can restrict the size of a political sign to six square feet.  A landlord can also prohibit a tenant from displaying political signs that violate local, state or federal law, or a lawful provision in an HOA’s governing documents.

A tenant must remove political signs in compliance with time limits set by local ordinance, or absent such time limits, the landlord can reasonably restrict the posting of a sign to 90 days before an election or vote, and its removal within 15 days after the election or vote.

Senate Bill 337.

Start building your memories,
as you turn your house into a home. 

As you might guess, this document is a compilation of information from our own efforts as REALTORS, as well as input from other REALTORS in our Coldwell Banker office.  I hope it has been of value to you.  Don’t hesitate to email us with any suggestions that will make this document better for you and your fellow home owners!
Be sure to follow us on Facebook at  www.Facebook.com/ElkGroveRealEstate.  For information about properties available for sale and for more information for buyers and sellers, please visit our website at www.ElkGroveRealEstate.com and don’t hesitate to give us a call or drop us an email with your questions.

Make sure to click the Comment box below and share this article with your friends as well.

Requests For Property Tax Reductions In Sacramento County

You may have missed this post last month, so I am publishing it again.

Its November now and you should have recently received your property tax bill.  Do you believe that your house has dropped in value and is worth less than what shows on the tax bill?  If so, it is time to request a reduction in your property taxes.  The Sacramento County Tax Assessor accepts  requests until November 30th.

Proposition 8, which passed in 1978, amended Proposition 13 to recognize declines in value for property tax purposes. As a result, the Assessor is required to annually update the assessed value either a property’s Proposition 13 base year value factored for inflation, or its market value as of January 1st, whichever is less.  The Proposition 8 decline in market value assessments are temporary reductions that recognize the fact that the market value has fallen below its current Prop 13 factored value. Here is more info on Prop 8.

After the property value has been decreased and the assessment adjusted by the tax assessor, that property’s value must be reviewed each year as of the January 1st lien date, to determine whether its market value is less than its Prop 13 factored value. Prop 8 values can change from year to year as the market fluctuates. When the market value of the Prop 8 property increases above its Prop 13 factored value, the Assessor will once again update the assessment to the property’s Prop 13 factored value. In no case may a value higher than a property’s Prop 13 factored value be enrolled.

So, what to you need to do?  You need to contact us at www.ElkGroveRealEstate.com and request comps for your home so that you can complete the Assessor’s form. Here is a link to the Sacramento County Assessor’s Office.

Remember these important tips:

1.  You will need comparable sales(comps) from the time period of January 1st to March 31st.

2.  You should start the appeal process (information is on the application) if you have not heard back from the Assessor within a week to 10 days after sending in your application.  Don’t wait until the end of the month to send it in.  Do it now.

The process can be fairly simple and there are companies out there who can do it for you buy why would you want to spend a hundred dollars or so to have someone fill out a simple form for you.  You are trying to save money here.

Just email us at Jack.Edwards@cbnorcal.com with your address and contact info and we’ll pull the comps for you for you to complete the process on your own.

Start building your memories,
as you turn your house into a home. 

As you might guess, this document is a compilation of information from our own efforts as REALTORS, as well as input from other REALTORS in our Coldwell Banker office.  I hope it has been of value to you.  Don’t hesitate to email us with any suggestions that will make this document better for you and your fellow home owners!
Be sure to follow us on Facebook at  www.Facebook.com/ElkGroveRealEstate.  For information about properties available for sale and for more information for buyers and sellers, please visit our website at www.ElkGroveRealEstate.com and don’t hesitate to give us a call or drop us an email with your questions.

Make sure to click the Comment box below and share this article with your friends as well.