Sacramento Real Estate Views

Archive for the 'Real Estate Market Commentary' Category

Listen to your Grandma! News from the trenches..

The Sacramento real estate market over the last few years has left much to be desired but the signs are there that this nightmare is coming to an end…the proverbial “light at the end of the tunnel” is appearing, the angels are singing on high…Oh the Rapture! aahem! Sorry, it’s been a good month for us so far and I’m excited.

With all of the negative media talk, it’s hard to hear through the shrieking to get to what’s going on out there right now.

In the new homes market, builders are generally the last to feel the market pinch and the first to see the signs of recovery. One of the reasons for this is that the larger builders are publicly held companies that have boards of directors and stock holders to answer to. They will do everything they can to get homes sold, meet goals and that means they price their homes right, some offer incentives or give things away to motivate people to buy.

This last weekend, the builder I work for, Pulte Homes, Inc., had a sale. It was a nationwide event where we offered 4 free options, this primarily was directed at homes that are “out front” or yet to be built or six months with no payments, closing costs paid, directed toward inventory or 30 day escrows.

Our national goal for this event was 60 homes sold for our division. We shattered that goal, shattered I tell you!

Of the homes sold that weekend about 45% were sold in the active adult communities of which there are 2 in the division. This is significant. Why, you ask? The active adult buyer is one of the most savvy buyers in the market. Typically they have bought and sold many homes. They have been through many downturns and know what the signs of recovery look like.

While they may have years of equity in their current homes, they are generally on fixed or limited incomes and don’t often like to take risks unless the risk is minimal.

Traffic at our communities is up 39% since the first of the year and cancellation rates are down 8%. More people are looking and less people are canceling. If fewer people are canceling and most who are buying have homes to sell, the resale market must be picking up as well.

Mike Lyon from Lyon Real Estate is quoted as saying recently that the pending sale number doubled from December to January. I spoke to a Coldwell Banker agent today who told me he lost an all cash offer he made for a client on a property recently. Why?

Because there were 8 other offers on the same property. Multiple offers? In this market?

45% of sales in the active adult communities. Are your grandparents trying to teach you something? Something that even the SacBee doesn’t want you to know? I think so.

Ignore the headlines…this is an awesome article by a nationally known money guru…take it to heart. Your Grandparents have!

Tags: New homes in Sacramento, Sacramento homes, Sacramento real estate market

Fencing…a different perspective

I got an email today and while I haven’t heard this a lot lately, I guess it can be taken as a good sign. It read like this:

“Rob, We understand that the housing industry is suppose to continue to fall into next year……. We are holding off to see what the market will bring.”

There is a lot of fence sitting going on out there right now, here’s what I think.

“Last year about this time, just prior to the mortgage crisis, the NAR and others stated that they foresaw that 2007 would be a flattening year with a nice recovery, or soft landing, occurring in 2008. As we saw, that wasn’t exactly how it went!

I guess the short answer is that no one really knows what the market will do. It could get worse or it could begin to flatten or it could get better. Based on history over the last 30 years, this is one of the worst downturns of them all. (If I think about this honestly, I feel very comfortable about the future!)

We are at 2003 level prices currently in the resale market and new home builders, traditional and active adult, are generally in a better position than resale. They are the last to feel it and the first to rebound. This is due to many factors.

The following link will take you to a couple of articles in favor of buying now and I’m sure you don’t need any information resources against buying now.

Will prices descend below 2003 levels? If I could answer that question, I’d be a bazillionaire.

Buying California real estate has always been a good investment if held for the long term. The general rule of thumb is that it doubles in value every 10 years. So I would say that if you’re planning on buying and then selling in the next couple years, then analyzing the market on a micro level is definately the strategy.

However, if that isn’t the plan, I believe its a great time to buy. I don’t personally believe that prices will go that much lower but you never know. I could be wrong. Many were wrong about 2007.

I do know this: 10 years or even 5 years from today, there will be many people who will be kicking themselves for not buying this year. Do you want to be one of those folks?” (I even think in 2 years, there will be A LOT of kicking going on!)

So how’d I do? I’m almost afraid of asking what you’d say…I’ve seen some of the nasty press out there lately. Be gentle…aside from what your reading, there are some bright sides. Things are getting better, it’s a great time to buy.

Why don’t you come down off that fence, aye? I think even Chicken Little just bought a home! (or two!)

Tags: home buying, housing, market commentary, Sacramento New Homes

Are you FED up?

Who the heck can figure out what’s going on with interest rates right now? The FED lowers the prime rate which, in the past, has brought down the cost of borrowing. But not this time. So what’s the problem?

The credit/mortgage crunch that started in 2007, and now with inflationary concerns, is still and will continue to affect the real estate market for some time to come.

While FreddieMac.com is reporting an average interest rate of 5.72% for a conforming 30 year fixed, lending rates are up. Two rate decreases in the last 2.5 weeks, FreddieMac reporting well under 6% yet getting a fixed rate below 6% without paying points is next to impossible. To say this reflects a lack of confidence in the economy is an understatement.

While the FED is considering another rate cut, the concerns over inflation are pushing mortgage rates higher. The bond data is good but inflation is the real concern at the moment. Until the concern over inflation subsides, don’t expect a decrease in mortgage rates.

The rule of thumb? FED rate cuts do not always mean that mortgage rates with follow suit. There are many more economic factors that enter in to the mix that determine what lenders will charge for their money. For more on this, check out this article from MortgageNewsDaily.com. Great place for “truth in lending”.

Tags: interest rates, mortgage rates, the fed

Bubble Bursts In Elk Grove = Unbalanced Media Coverage!

According to a friend of mine in the resale side of the industry, Lyon Real Estate pulled their corporate advertising from the Sacramento Bee a year or so ago. Correspondingly, I noticed at least, there was a decrease in the amount of articles about how bad our real estate market has been. Funny, money talks and (beep!) walks..I guess the sacbee was walking. (do you smell that? smells familiar, but I can’t place it.)

Recently, the SacBee ran an article about the “implosion” in the Elk Grove real estate market and it’s true, Elk Grove has been hard hit this time around. One of this city’s neighbors, Stockton, Ca has also had a rough go of it being named the “Foreclosure Capitol of the Nation”. Man, I’d hate to run for re-election in that town.

As there always is two sides to EVERY story, I thought I’d share a bright spot about the Elk Grove real estate market that you may not know. Although the SacBee also ran an article about the top selling new home communities in the Sacramento Region, it was buried under a pile of….well, you get the picture… and went largely unnoticed.

Glenbrooke, A Del Webb Community: Just under a year ago, Pulte Homes and Del Webb opened Glenbrooke on Bruceville Road between Elk Grove Blvd. & Whitelock Pkwy. The community offers six models ranging in size from the mid 1200′s to the mid 2200′s sq. ft., two and three bedroom single family detached homes. Last year, as reported by the SacBee, Glenbrooke was the #2 sellling community in the ENTIRE Sacramento region. The community features a 9000 sq. ft. community center with a full time Lifestyle Manager whose job it is to ensure that anyone looking for a good time, an awesome social experience with other like minded folks finds just that. Active Adult living, 55+ and better, at it’s finest.

The bright side about our market currently is that it’s a great time to buy; opportunity is everywhere. It’s unfortunate that so many are struggling to hold on but if they do, the market will reward them. It always has. Good times in our market are coming back soon. Hopefully with a bit more sanity than the last time things took off. I don’t know about you but I’d rather not see this type of market for many years to come!

A little balance in the media is needed. Let’s change the mindset and we can collectively change our results.

Tags: Del Webb, elk grove, Glenbrooke, New Homes, sacramento bee

“It’s a great time to buy” According To Someone other than Me!

Negative press about the Sacramento Area real estate market abounds. It can be found anywhere. Most is justified and some is just plain silly.

This article from News Home Magazine points to the fact that now is a great time to buy a home based on the facts that:

1. Interest rates are still at all time lows. While credit may be tighter, it’s cheaper than ever

2. Home prices have dropped dramatically. This is beating a seriously dead horse, in fact, I’m almost sick of talking about. Aren’t you?

Keep in mind the following about the general rule of thumb about California real estate; it doubles in value roughly, every 10 years.

The market we came out of almost 3 years ago had us thinking that we could buy a home and sell it in 2 years and double our money. This is a long term investment and a damn good one. (if you call 10 years “long term”)

Am I sickeningly positive about where we are now? Well maybe but if you ignore the opportunity now, you’ll hate yourself later! ( how cliche is that!)

Enjoy the spin!

Tags: sacramento real estate

At the Bottom? Is Our Market Coming Out of the Trash Can?

I got an email last week that spoke of a couple of indicators that point to our market coming out of the most recent downturn.

How do we know when the market is going to hit bottom? Honestly, that is a tough question that even the most seasoned real estate brokers won’t even attempt to answer…the “uhs” and “wells” flow like water and no one can say for sure where or when the market will touch back down and begin to head up.

There are a few things happening now though that suggest there might be some light at the end of the tunnel:

1. Investors are returning to the marketplace. I speak to Realtors everyday and one of the things I’m hearing is that there are more investors in the market now than there has been since 2000 to 2003. This is an indication that value is returning to our market.

2. We’re seeing more multiple offers. I just closed a deal with a Prudential Realtor from Elk Grove who told me that she just lost a deal to a multiple offer situation. Multiple offers mean that the property was priced correctly and multiple offers drove that price up. Its a win for a seller no matter what market you’re in.

3. New home traffic is way up. This I see up close and personal everyday. Interest rates are low and so are the prices. This combo is an ideal buying environment. The only hang up here is credit. Money isn’t falling from the sky like it used to. For those who are qualified and have a bit of liquidity, gee whiz what a great time to buy.

There are other signs like mortgage applications on the rise, an increase in permits issued, etc. Its still early yet. Rest assured, this is a great time to buy a home or investment property.