Our Elk Grove site has a new Real Estate Market Update for September, along with a new graph showing average sale prices throughout the year.

Enjoy!

Granite Bay real estate market is doing extremely well compared to other greater Sacramento markets in every respect except for appreciation. The average home sold in August through the MLS listed at $938,515 and sold for 98% of list price, for an average sale price of $919,552. The median selling price was $828,000. Granite Bay homes sold for only a modest 4.2% more in August of this year than last year, but when adjusted for the smaller average square footage this year, the appreciation from August to August was 8.0% — fairly tame indeed by recent standards, but perhaps to be expected in the area’s most expensive market.

In other respects, Granite Bay’s market seems quite healthy, and defies our expectations based on other area markets. For one thing, homes were selling slightly faster this year than last, at 41 days as opposed to 44 days. Moreover, this August more units were sold rather than last: 51 units as against last year’s 45. And with 2.8 months worth of inventory built up, Granite Bay’s inventory numbers are the lowest for any area we’ve examined.

Turning now to the real estate market in the greater Placerville area for August of 2005, this August 30 units sold compared to last year’s 29. The sale price was $434,910, up 28.4% from last year. The median sale price in Placerville this year $397,450. Adjusted for this year’s larger model size, however, the rate of increase becomes 19.8% — still very respectable indeed!

On average, seller’s sold their homes for 97.6% of the list price — the average list price was $455,513. This “swing”, or discount, of 2.4% is one of the larger values in the local area, but with only 30 units sold, sample size could easily be playing a role here. Placerville homes spent an average of 42 days on the market this year, up slightly from last year’s average of forty days.

As in many local markets, Placerville is experiencing a pretty high inventory “backlog” of homes presently. There are 4.8 months worth of homes in inventory as of 9/25/05.

August, 2005 El Dorado Hills home sales were somewhat unusual compared to other local markets. For one thing, those homes that did sell sold more quickly this year, spending 36 days on the market on average as compared to last year’s average of 41 days.

Secondly, the average square footage for sold homes was lower this year than last, which is unique in all the markets we’ve been studying. In all other cases we’ve examined, this year’s sold homes were bigger.

In August, the average home sold for $684,108, or 98.8% of the average listed price of $692,283. The sale price this August is 7.8% higher than last August’s $634,330, but adjusted for the lower square footage, sale prices increased 12.8% from the average a year ago.

There are approximately four and one half months worth of residential inventory in El Dorado Hills at present (September 25th, 205). This isn’t the highest we’ve seen, but it’s still high. The reason for this buildup is not hard to find. First of all, the average unsold house is almost 14% larger than the average sold house, and larger homes typically take somewhat longer to sell. Even more importantly, the many homes that are lingering on the market do so for the same reason all homes linger on the market — they’re priced too high. Comparing the average list price-per-square-foot (256.21) of homes that sold with the average list price per square foot of homes on the market ($293.64), we note that the difference is that homes on the market are listed 15% higher than homes that sold. Remember, we’re not even talking about sale price here — just comparing the list price to list price in both cases.

Cameron Park’s real estate market was strong in August, but is threatened by increasing inventory. Some thirty-two residential units sold in August of 2005, down from last year’s number of 49. Average days on market remained steady however at 37 days for both periods. The average Cameron Park home sold for $496,100 in August 2005, or 99.2% of the average list price of $499,983. The median selling price in August was $495,000, so we’re poised to break the half million mark in September.

Appreciation from last year was quite strong even when compared to the greater Sacramento market as a whole. The average Cameron Park home sale price of $496,100 for August of 2005 marks a 24.9% increase over the $397,067 selling prices for
same month last year. Adjusted for the larger square footage, Cameron Park homes still sold for 20.4% more than they did last year.

September’s Picture is Less Rosey
Though Cameron Park’s appreciation and days on market statistics are strong, inventory built up considerably throughout the summer, and by now can be considered somewhat “bloated”. Based on the number of homes sold through the MLS
in August, and the number of homes active today (September 23, 2005), there are slightly more than five months worth of homes in inventory. (In other words, even if we listed nothing new, it would take five months to sell the homes we
have). In general, the average home on the market today in Cameron Park is almost 300 square feet bigger and lists for almost $100,000 more than the homes sold in August.

Get all the facts on YOUR home with a complete CMA
Average numbers are good starting point, but if you’re getting ready to sell, correctly pricing your exact property against recent comparables is vital to a successful sale. Fill out our CMA form or call us toll free at (877) 735-5657 and we will be happy to prepare a complete Comparative Market Analysis for you with no obligation.

Residential real estate in Citrus Heights fared well in August, with 137 residential units sold. As in most areas — with the exception of Elk Grove — unit volume was down somewhat from last year’s numbers. In August, 2004, 179 residential units were sold.

The average sale price for a home in Citrus Height was $350,544, or 99.6% of the $351,851 average list price. The median sale price was $349,950.

This year’s average sale price of $350,544 is a 20.9% increase over the same time last year. As we’ve been finding in other areas, however, this year’s “average” home was larger in square footage. Because of this, some of the 20.9% increase is an artifact of the larger home size. The average price per square foot increased only 14.9% from last August to August of 2005.

The time it took to sell a home increased by 50% during this time, from 16 days last year to 24 days this year. As we’ve seen elsewhere, there is a certain “glut” of inventory in Citrus Heights, though less so than in other areas. Citrus Heights has almost exactly three months of inventory, as opposed to other local markets, where the numbers range as high as four months.

This real estate market update for Citrus Heights is based on both 95621 and 95610 for all residential units for the period August 1st through August 31, 2005.

Judging from the August MLS numbers, Folsom’s real estate is putting in a very strong showing this year. August residential home sales in Folsom comprised 104 units, down from last year’s 137. However, homes are still selling in a relatively short time. The average home sold in August in Folsom spent 24 days on the market, up only slightly from August 2004′s average of 21 days. The average sale price in August was $581,979, based on an average list price of $587,580, making the sale price to list price ratio 99.0%. The median home sale price was $549,900.

Most impressively, homes sold in Folsom in August showed a 27.3% increase from the $457,296 sale price of last year. However, when adjusted for the larger square footage of the homes offered this year, the increase is in reality a more modest — though still impressive — 116.3%. Last year the median sale price figure was at $429,500.

As of September 19th, we had 3 1/3 months of homes in inventory, which seems somewhat high given our other strong numbers. This probably reflects some seasonal slowing as well as the fact that in a strong market, many sellers will push prices well beyond anything the comparables will sustain. It’s for this reason that even in the strongest markets, only 75% of homes listed in the MLS actually sell during the listing period.

Earlier I posted a response to an article in the Sacramento Bee which discussed some frightening market statistics. I’ve dug into what I believe are the sources of some of those statistics, and so I think I can offer some more perspective on the wide boom-and-bust debate.

It appears that some of the market statistics that were quoted in the Bee have been widely quoted on the net, and seem to have their source in a company called PMI Mortgage Insurance. The name is also what they sell, since PMI stands for “Private Mortgage Insurance.” Typically lenders require PMI to be paid whenever the loan-to-value ratio exceeds 80%. (The thinking is that if you have 20% or more of your own money at risk, you’ll be less likely to default — and lenders don’t like defaults).

Needless to say, a company insuring a lender against default is going to be concerned if prices go south, especially if many of the loans their insuring are taken out by over-leveraged investors who were putting up with negative cash flow and banking on appreciation. Non-owner occupied, high loan-to-value ratio — that’s practically a formula for risk as far as lenders are concerned. So PMI (the company) does an analysis of the housing market in order to understand the risk involved.

Well, so far, so good. Trying to figure out the odds is what you’d expect an insurance company to do. So PMI figured out, based on their statistical model, what the Sacramento Bee pointed out: that of all the places studied, Sacramento ranked number twelve from the top of the most likely places for a price decrease over the next two years. So a lot of you may have read that and thought, “Gee, I better not buy a house in the Sacramento area.”

And in some cases, you’re right — you’d better not. In other cases, I say “hogwash”.

Before we get into which case is which, here’s the good news. Even though it’s twelfth from the top, the likelihood that Sacramento’s prices will decline over the next two years is only 41.9%. Or to put it another way, there’s a better than even — 58.1% — chance that prices will stay the same or continue to increase over that time — again according to PMI.

Now, I would argue that whether or not you should or shouldn’t care about price depreciation boils down to a series of simple questions. First of all, are you buying the house to live in or as an investment? If it’s to live in, and if you can buy it with an amortizing loan, and you’re comfortable with the payment and the terms of your loan after you’ve talked it over with a lender and Realtor® — then what the heck are you waiting for? Buy! Waiting for prices to go down is not a good idea, because the best way for that to happen is for interest to go up. Lock in a fixed rate loan, pay with low interest, then if prices go down just hold until they go up again before you sell. On the other hand, if you’re not comfortable with the payment, don’t buy.

If you’re an investor, you have to ask yourself a different set of questions. Most importantly, if you have enough of a down payment to achieve positive cash flow, or if you’re confident you can “fix and flip”, then go for it! If, on the other hand, you have 5 or 10% to put down or need to leverage your own home to invest, but you don’t want to “miss out” on all the great deals your friends are telling you about, I recommend surfing away from this web site now. (You might want to go play Freecell or something.) If you’re not fixing and flipping, an off-the-top-of-my-head estimate for how much money you should have in cash before considering a real estate investment in the Sacramento area is about $60,000. Anything less than that, and you’ll be that overleveraged investor banking on appreciation that PMI is so worried about.

We’ve compared the August real estate market statistics for the South Land Park / Greenhaven area in Sacramento (95831) for single family homes. Based on 32 homes sold this year and 38 sold last year, South Land Park owners are still seeing property appreciation, but the rate of growth has slowed somewhat from the heyday of 2002-2004. For example, in 2004 the average single family home sold for $448,406 and was 2,053 square feet. This year’s average was $510,202, an increase of 13.8%. However, when adjusted for the smaller size of the average sold home in the area this year (1997 square feet), the increase actually works out to be a more “respectable” 18.1%.

It’s a sign not only of the strong national market but our strong local market that we’re somewhat disappointed to see price appreciation at less than 20% in a given neighborhood.

In terms of days on market, this year’s average of 29 days compares favorably to last year’s (30 days). We’ll see if these numbers can be maintained as we move into Fall — currently we have almost three months (2.94 months) worth of inventory to sell in South Land Park.