Archive for 2008

Home Buyers & Purchase Offers

Perhaps the hardest thing for home buyers, whether this is their first home or whether they have bought many others before, is deciding what the home is worth and the price to offer the seller. Buyers are usually caught wondering if they should offer full price, or over asking price, if they should try a lowball offer or actually listen to the advice of their Realtor® and send in a reasonable offer which allows room for negotiation and ensures both parties some wiggle room on the negotiation table. Since this question comes up pretty regularly, let’s discuss the pros and cons of each.

The Full Price Offer

Drumroll, please! Of course, this is one of the offers that is the most liked by the seller, unless it’s over asking, but that comes with its own set of problems we’ll discuss in a minute. A full price offer is usually made by buyers in stable markets for a house they really love. Usually, there are no other offers on the table.

What happens? If everything goes according to plan and the buyers are not overstretched on their budget, the seller accepts and everything moves on slowly but surely. An incredibly boring escrow closes and leaves everyone happy. The sellers walk away getting what they wanted, the buyers wonder if they paid too much, but soon get caught up in decorating and enjoying their new home and forget their buyer’s remorse.

The Over Asking Price Offer

Writing an offer over the seller’s asking price shows nervousness on the buyer’s side. It is usually made in a market where prices are headed up or when the listing is priced extremely low to encourage multiple offers. The sellers in this case are aware that they have the upper hand and can command a good price. In the recent real estate boom in Sacramento, most homes appreciated by the time escrow closed and buyers came out richer just a month after making an offer, so sellers felt the need to earn some of that future appreciation by pricing the home pretty aggressively.

However, there is a problem with such a strategy. When the real estate market is headed up, there are usually few or no comps available for an appraiser to ascertain value. The difference then has to be made up with cash from the buyer or the price has to be readjusted to reflect the value of the home as determined by comparable properties. (By the way, when the market is headed down, there is a whole set of other problems with comps appraisers have to provide. Nervous lenders usually request more than the usual number to ensure some level of stability in house values.)

The Lowball Offer

Lately, these are the most commonly found offers. So you can probably guess that these offers dominate a buyer’s market, when supply is high and demand is low. Prices are usually headed down or seem to be headed down and foreclosures abound.

On the surface, the lowball offer seems like a good idea. Home buyers often make these offers to sellers in the hopes that they are in a win-win situation. They think that either the seller will accept and they will have purchased a house at a rock bottom price or the seller will come back with a price closer to what they have offered.

The reality, however, is quite different. With so many lowball offers floating around (most from unqualified buyers and other frivolous tire-kickers) the sellers lump even the most qualified home buyer into the to-be-ignored file and never get back to them. As a result, there is no negotiating, the sellers feel insulted and what could have been a reasonable purchase dissolves into nothing but a bad taste in the mouths of both parties involved.

The Right Offer

If you ask me, the right offer is always dependant on a variety of factors. Mainly, how much does a homebuyer like the home? Are there other houses like this one available? What do the comps look like in terms of price per square foot? Does the home buyer know his options when it comes to financing the home and does he really understand his mortgage? How many other offers are the sellers considering? What is the strategy behind pricing the home at the listing price? How soon and why are the sellers moving? All these questions would help determine the right offer price.

That being said however, I think serious home buyers in today’s Sacramento real estate market would do well to make every effort to come across to sellers as reasonable and ready and willing to make the home purchase with a little negotiating. I think if they are armed with a letter of preapproval, a decent good faith amount and an offer that is not too wild, chances are sellers will discount the price. Get off on the wrong foot however and none of this happens. Going in with unreasonable demands or a “my-way-or-the-highway” attitude only results in wasted time and effort by the potential home buyer, the buyer’s agent, the seller and the listing agent.

What would I do? I’d be sure to get the right Realtor®, ask the right questions and then make the right offer. I would take the advice of my Realtor®.

East Sacramento Market Update

This is pretty depressing – throughout the recent fall in home prices, Realtors® and some homeowners have taken heart in the East Sacramento market. Unfortunately, East Sacramento (zip codes 95817 and 95819) seems to have faced some bad weather in September along with the rest of Sacramento county.

It’s easy to tell where the storm is coming from: foreclosures. Compared to last year in September when only 2 foreclosures sold, this September 21 closed escrow. This September also tipped the scale toward the foreclosures in that most sold listings (53%) were foreclosures. To offer a contrast with last September, we have only to know that 91.3% of all units sold then were non-distressed sales.

The sold price per square foot dropped 35.9% over last September to $190.40 – average sales price dropped a whopping 48.4% over last September to end at $214,285.

In the more interesting news: the average sold listing was 1125 sq. ft. this September as compared with 1395 sq. ft. last year, suggesting perhaps that people are buying smaller homes – about 300 feet smaller.

Real Estate Market Update: Sacramento Elder Creek & Fruitridge

Sacramento’s Elder Creek and Fruitridge areas include the zip codes 95820 and 95824.  Since last year two things have happened, and one of them implies the other.  First, prices have fallen — a lot.  Secondly, demand has increased — also a lot.  This common "demand curve" pattern is one we see demonstrated over and over again, and September’s numbers for Elder Creek and Fruitridge are as good an example of it as we’ve seen anywhere.

Unit volume has quadrupled in this area from year to year.  Last September, only 25 homes sold in the Elder Creek and Fruitridge area, whereas this year there were 106 sales.  The vast majority (80.2%) of the new sales were foreclosures, 2.8% were short sales, and 17% were non-distressed.

At the same time, sold price per square foot has been cut almost in half.   Last year the average sold price per square foot was $178.31, while this year the average was down to $91.25, a decrease of 48.8%.  Over the same time, the median sale price dropped 52.9%, from $188,000 in September of 2007 to $88,500 in September of 2008.  This year the average home sold for $105,586 in Elder Creek & Fruitridge, down 47.4% from last year’s average of $200,679.

Inventory in Elder Creek Fruitridge is at 7.1 months (based on one year of sales) or 5.1 months (based on the last six months).

The Buyer-Broker Agreement

A few buyers have asked me why certain real estate brokers will not show them property or even put them in their car without first signing a buyer – broker agreement with them. In fact, when I was working at one of the bigger brokerages, I was expressly warned that unless I got a client to sign one of these very serious contracts, I was not to take them inside a home listed for sale at all. “At the very least,” one manager said at a sales meeting, “Get the Agency signed.”

It was easy for us green agents at the time to lap all this up as bringing us one step closer to being great real estate salespeople – soon on our way to making our first $100,000 in commissions (ha!) but now I believe the manager may have had other motives besides giving us confidence in real estate sales. Today, let’s look at what this contract is.

The Buyer Broker Agreement
Actually, the title should probably say the buyer broker agreements. There are three: the exclusive buyer representation agreement, the non-exclusive representation and one that calls itself simply the buyer representation agreement. They all say The essential difference between the three is simply the amount of commitment expected by the broker on the buyer’s part. They vary from the buyer hiring one broker exclusively (named, uncreatively enough, the buyer representation agreement – exclusive) to the broker agreeing to be simply one of the agents the client can hire (the buyer representation agreement – nonexclusive). The third leaves all the above negotiable.

How the Buyer Agreement Benefits You
I know most clients are afraid when it comes to signing anything before the offer is written or they have found the house they want. They fear that they will be tied to one broker or have to pay the Realtor® even if they don’t find their dream home. While this is a legitimate concern and will be discussed in a minute, buyers should remember that most real estate contracts are written to protect the buyer in many cases. The verbiage of the buyer representation agreement binds the broker to look for a house for the client as much as it binds the client to the broker. In other words, the commitment works both ways. If the broker isn’t doing his job, the buyer should be able to fire him.

What you Should Look For if you Sign These
So along those lines, here are a few things you should consider before you sign one of these agreements. (By the way, you should know that I actually had to go looking for these in my forms because I haven’t used one for years, but some real estate agents swear by them and so do some home buyers, so I feel the need to tell you about them.)

1. Is this exclusive? First off, if you trust your Realtor® and believe her to be the only one you will look for homes with, you should get an exclusive agreement. If not, sign a non exclusive contract.

2. The timeline: Check how long the Realtor® is committed to showing you homes and if that matches your timeline for finding a house.

3. Compensation: If you wish to pay your broker out of pocket (may happen if the price of the property is extremely low, as in the case of some mobile homes) the amount will need to be agreed upon and included. If not, most brokers get paid by sharing the commission with the seller’s agent and this line should say “as noted in MLS.” It is important that this line not put a percentage like “3% of sales price” because if the seller has only agreed to 2.5% of the sales price, you as the buyer will be responsible for the difference.

A Powerful Tool
One of the best things about the buyer representation contract is that it gives us as Realtors® permission to go prospecting for the right home for our homebuyers. If you don’t find the home you want, we can then legally advertise the fact that we have a home buyer who wants a certain home. It gives us permission to knock on someone’s door and broadcast a definite need. To me, that is the best use of this agreement and can be a powerful tool for any home buyer. So don’t immediately get on the defensive when a Realtor® offers you this 4 page contract. Read it over and see if you can negotiate it to help & protect your needs as much as you think it protects those of the broker.

Carmichael Real Estate Market Update, September, 2008

With prices falling in Carmichael and throughout the rest of Sacramento County, buyers took advantage of bargains this year and generally purchased more homes this year than last.  In Carmichael, volume was up 26.3% over last year, with 48 homes selling in September versus 38 last September.

The average sold price per square foot in Carmichael fell 21.9% from year to year, from $224.79 in September of 2007 to $175.55 in 2008.  This is about $45.00 per square foot more than the county-wide average.  The average home sold for $304,816 in September, down 19.1% from last September’s average of $377,007.  The median home selling price fell 23.1%, from $357,500 in September of 2007 to $275,000 in September of 2008.

37.5% of the sales in Carmichael in September were non-distressed sales.  Another 47.9% were foreclosures, and 14.6% were short sales.  That 14.6% figure is another good example of how the number of short sales getting approved seems to have increased somewhat lately, perhaps as banks begin to get a feel for just how much money they can lose by going all the way to foreclosure.

Downtown Sacramento Real Estate :: Market Update, September, 2008

Buyers continued to pay a substantial premium for a Downtown Sacramento address in September, with average prices more than double the county-wide average.  Although the average sold price per square foot was down 20.1% from September to September, this year’s value of $277.34 was up slightly from the previous month, when the average sold price per square foot downtown was $259.48.

The average selling price downtown in September was $399,364, down 10.3% from last year’s average of $421,924.  The median selling price in Downtown Sacramento was $375,000, up 1.7% from last year’s median selling price of $368,750.

Even though it comprises the two zip codes of 95814 and 95816, Downtown Sacramento is very small in terms of the number of homes that sell every month, averaging only about 13 homes per month over the last year.  September’s volume was low at only eleven homes, broken down as exactly one foreclosure, one short sale, and nine non-distressed homes.

There are 87 homes in inventory downtown, which works out to be about six months of inventory.  Twelve of these are short sales, but there are no foreclosures currently active.  At 86% of all available homes, non-distressed sales make up the lion’s share of the inventory.

El Dorado County Real Estate Market Update, September, 2008

For the first time in several months, El Dorado County enjoyed a year on year unit volume increase in September.  As I write this in October, taking the best figure for inventory we have, El Dorado County has 10.4 months of unsold inventory, down from the 11.4 months I reported in September.  September’s unit volume was 36.4% higher than last year’s so it does appear that some of the prices in El Dorado County have gotten to the point where buyers are getting more interested.

About three fourths (74.5%) of the homes in inventory are non-distressed sales, with another 15.7% short sales and 9.8% bank owned homes.  Like everywhere else, however, foreclosures are priced lower than other homes, so when you look at sales figures, the number of non-distressed homes drops to 48.4% of all the units sold.  With 161 units selling in September, that means 78 were non-distressed.  Another 19 were short sales (11.8%), while 64 (39.8%) were bank owned foreclosures.

Sold price per square foot fell 21.7% from year to year, from $224.49 in September of 2007 to $175.75 in September of 2008.   The average selling price fell 21.3% during the same period, from $485,485 to $382,319, while the median selling price fell 15.2%, from $424,500 to $360,000.

Sacramento Arden-Arcade Real Estate Market Update, September, 2008

What Metrolist calls Sacramento’s Arden-Arcade area is a fairly heterogeneous mix of neighborhoods, including the areas in the four zip codes 95841, 95821, 95864 and 95825.  Nevertheless we follow tradition by simply calling it Arden-Arcade or Arden-Arcade Creek.

Overall, this area continued to command higher than average prices in September, though like most areas in Sacramento the numbers are down significantly from last year.  The average home sold in Arden-Arcade for $167.78 per square foot, down 26.4% from last year’s average of $228.09 per square foot.  With this year’s crop being significantly smaller than last (1358 square feet versus 1656 square feet), naturally the average sale price fell even more, 39.7%, fro $377,873 in September of 2007 to $227,954 in September of 2008.  The median price fell 44%, from $339,500 to $190,000.

Volume rose from year to year in Arden-Arcade, though not as quickly as in the rest of the county.  Unit volume rose 47.3% from September to September.  There are about 6.5 months of active inventory in Arden-Arcade, 48% of which are non-distressed homes.  The other 52% are either short sale listings or bank foreclosures.

Rosemont Real Estate Market, September 2008

Like Elk Grove, Sacramento’s Rosemont area experienced price drops in September that were somewhat less sharp than the county-wide average, while enjoying a more pronounced increase in volume.  Sixty-eight homes sold in Rosemont in September, one home short of triple the number a year ago, which was twenty-three.  Of these 68 homes, 43 were bank foreclosures (63.2%), 10 were short sales (14.7%), and 15  were non-distressed sales (22.1%).

The average sold price per square foot in September in Rosemont was $134.76, down 24.76% from last year’s average sold price per square foot of $178.94.  The median selling price was $188,350 in Rosemont, down 24.5% from last year’s median 245,000.

The average sale price in Rosemont in September was $188,350, down 23.2% from last year’s average of $255,635.  It’s a sign of how much the market for foreclosures has heated up that (as we recently reported for Elk Grove) the average home sold for more than asking price.  In Rosemont in September, the average buyer paid an average of $1,635 over list for their home, a little more than 8/10 of 1% over list.

Another sign of the high activity in Rosemont is the extremely low inventory — between 3.2 and 4.3 months, depending how you count it.

Elk Grove Real Estate Market :: September, 2008

Fueled overwhelmingly by the sale of properties that are either in foreclosure (or about to be), the real estate market in Elk Grove posted another banner month for unit volume in September.  Indeed, by a statistical coincidence, exactly three times as many homes sold in Elk Grove this year as last year in September, with 91 homes selling in 2007 and 273 in 2008.

Although the increase in volume was more dramatic in Elk Grove than in Sacramento County as a whole, prices in Elk Grove fell somewhat less sharply than they did county-wide, but even with that lost 29.5% of their sold price per square foot value in a single year.  Last September, the average home sold in Elk Grove for $179.62 per square foot, so with an average size of 2,091 square feet, this worked out to an average price of $375,637.  This year, at an average of $126.72 per square foot, the average home of 2,096 square feet sold for $265,701.

Almost three fourths (73.6%) of the homes that sold in Elk Grove in September were already bank owned.  Another 13.6% were short sales.  Non-distressed sales were the smallest category of all, at 12.8% of the total.  if you look at the last six months of sales in Elk Grove, there are 3.9 months of inventory.  Even if you average the last twelve months, you still get a low inventory number for Elk Grove, at 5.1 months.

With the huge demand for distressed homes, it’s not surprising that buyers are competing heavily for the best priced offerings.  In September, with an average list price of $263,564, the average buyer paid $2,137 over list price.  Or put another way, they paid 100.81% of the list price.  Still, that’s not bad from a  buyer’s point of view when you consider the homes their buying are almost $110,000 cheaper than last year!

Folsom Real Estate Market Update, September 2008

As we’ve reported several times, the market for real estate in Folsom is generally stronger than in other areas of Sacramento County.  Of course, in this market, such a judgement is often a relative thing.  Folsom prices are falling, just not as fast.   There are foreclosures in Folsom, just not as many.

Forty-nine homes sold in September in Folsom, up 22.5% from last September’s volume of 40 homes.  51% of these were non-distressed, about 10.2% were short sales, and 38.8% were bank foreclosures.

The average home sold in September for $422,079, down 11.4% from last year’s average of $476,339.  The median price fell 9.2% during this time, from $449,500 in September of 2007 to $408,000 in September of 2008.  The average sold price per square foot in Folsom in September was $190.47, down 12.2% from last September.

Although the increase in unit volume has not been as dramatic in Folsom as it has been in other areas of Sacramento County recently, inventory numbers are still healthy in Folsom, with 4.7 months of inventory overall, and 3.9 months of inventory for non-distressed homes.

Sacramento County Real Estate — Sold Prices and Unit Volume Charts

Sacramento County Real Estate Sold Price Per Square Foot

 

Sacramento County Homes Sold Per Month Through the MLS

Revisions to Community Pages In Progress

I’ve just begun some preliminary work on revising the community section of this web site.  If any section of the site needs it, it’s this one, since it hasn’t been updated since the site was born in 2003.  (In fact, sometime during the fun of the last year or two I took the link to the community section off the home page because it’s looking so long in the tooth).

The update will make the community pages more dynamic and and more complete, integrating elements from this blog on the one hand and our database of active and sold homes on the other.  Once that’s well underway, I’ll probably make some changes to the blog to add links back to the community pages, so when you read a market update you can instantly browse homes, etc.

I estimate it will be about 1-4 weeks before I have something ready to show, but when I do I’ll make an announcement here.

Summary RSS Feed Format

I realize that some of my readers just bookmark this URL or are reading me outside of an RSS Feed Reader, but those of you who aren’t may have noticed that the format of the feed has changed recently. 

I’ve been experimenting with different ways to do this to see if I can see a change in some of the scraper sites.  Yes, I know, I shouldn’t be changing my feed around because of those idiots — I should be fighting more aggressively with attorneys or rocket propelled grenades or the like.

Anyway, if this is inconveniencing any of that miniscule but intrepid brand of tasteful people who subscribe to me, please drop me a note and I’ll see about switching it back.

Sacramento County Real Estate Market Review :: September, 2008

It’s that time again.  The agents and brokers who subscribe to Metrolist have entered  their sales data for the previous month, so we can take that data and mine it to within an inch of its life.

As we often do, let’s start with Sacramento County, which experienced a sharper than usual drop in the sold price per square foot from the month before.  In September, the average sold price per square foot was $130.50, down 7.4% from the August average of $140.87, and 35.2% from a year ago, when the average sold price per square foot was $201.35.  In September, the average home in Sacramento County was 1595 square feet in size, down 6.1% from 1699 on average last year, and sold for $208,212, down 39.2% from last September’s average of 39.2%.  The median sale price in September was $185,800, down 40.6% from last year’s median sale price of $313,000.

With prices down so much, unit volume continues to be high compared to last year.  Indeed, in September we sold 2084 units, up 60 units from August, and more than doubling last year’s pathetic showing of 803 units.  We’ll have some charts appearing soon that show the unit sales and price data back to about 2004.

As usual, the bulk of the demand in September was for distressed properties.  Bank owned foreclosures (also known as "Real Estate Owned" or REOs) accounted for biggest piece of the pie, making up 69.7% of the sales in September.  With banks still slow to approve short sales, however, this category made up the smallest percentage of the sales at 10.5% of the sales in September, even though at present they make up 43.4% of active listings.  Finally, non-distressed sales comprised some 19.9% of the sales in September.

Foreclosures, Short Sales, and Non-Distressed Sales By Area

Here are the numbers for various types of sales for the last 30 days in the greater Sacramento County (including Placer County and El Dorado County). Note that because of the lag in reporting sales, numbers for “Total Units” are typically slightly lower than the real totals.  After more than a year of hearing banks would start moving on short sales, it does look as though we’re seeing a little movement on them now compared to previous months, but the numbers are still pretty low in that category.

Sacramento County

Area Name Zip Code Total Units Foreclosures Short Sales Non-Distressed
Carmichael 95608 44 40.9% 18.2% 40.9%
Citrus Heights 95610 30 60.0% 23.3% 16.7%
Citrus Heights 95621 51 62.7% 19.6% 17.6%
East Sacramento & Vicinity 95819 14 14.3% 7.1% 78.6%
East Sacramento & Vicinity 95817 16 87.5% 6.3% 6.3%
Elk Grove 95624 70 71.4% 15.7% 12.9%
Elk Grove 95758 85 78.8% 9.4% 11.8%
Elk Grove 95757 62 72.6% 16.1% 11.3%
Elverta 95626 9 88.9% 0.0% 11.1%
Fair Oaks 95628 32 59.4% 12.5% 28.1%
Folsom & Vicinity 95630 44 38.6% 9.1% 52.3%
Galt 95632 28 71.4% 14.3% 14.3%
Herald 95638 1 100.0% 0.0% 0.0%
Isleton 95641 1 0.0% 0.0% 100.0%
Mather 95655 9 77.8% 0.0% 22.2%
North Highlands& Vicinity 95660 72 84.7% 6.9% 8.3%
North Sacramento Natomas Del Paso Heights 95833 46 73.9% 8.7% 17.4%
North Sacramento Natomas Del Paso Heights 95838 88 81.8% 10.2% 8.0%
North Sacramento Natomas Del Paso Heights 95835 73 63.0% 13.7% 23.3%
North Sacramento Natomas Del Paso Heights 95834 52 63.5% 13.5% 23.1%
Orangevale 95662 29 55.2% 10.3% 34.5%
Ranch Cordova Gold River 95670 57 59.6% 14.0% 26.3%
Rancho Cordova 95742 29 62.1% 13.8% 24.1%
Rancho Murieta 95683 7 42.9% 0.0% 57.1%
Rio Linda 95673 24 75.0% 4.2% 20.8%
Sacramento Antelope 95843 77 64.9% 19.5% 15.6%
Sacramento Arden Arcade Creek Vicinity 95821 27 66.7% 3.7% 29.6%
Sacramento Arden Arcade Creek Vicinity 95864 19 36.8% 10.5% 52.6%
Sacramento Arden Arcade Creek Vicinity 95841 11 90.9% 0.0% 9.1%
Sacramento Arden Arcade Creek Vicinity 95825 15 46.7% 0.0% 53.3%
Sacramento Arden-Arcade Creek Vicinity 95815 40 85.0% 5.0% 10.0%
Sacramento Downtown Midtown 95816 5 20.0% 20.0% 60.0%
Sacramento Downtown Midtown 95814 4 0.0% 0.0% 100.0%
Sacramento Elder Creek Fruitridge 95820 55 81.8% 5.5% 12.7%
Sacramento Elder Creek Fruitridge 95824 32 84.4% 0.0% 15.6%
Sacramento Florin & Vicinity 95829 40 75.0% 10.0% 15.0%
Sacramento Florin & Vicinity 95828 106 87.7% 8.5% 3.8%
Sacramento Foothill Farms 95842 50 80.0% 6.0% 14.0%
Sacramento Franklin Freeport Vicinity 95823 133 91.0% 3.0% 6.0%
Sacramento Franklin Freeport Vicinity 95832 19 84.2% 15.8% 0.0%
Sacramento Land Park Curtis Park 95818 14 14.3% 0.0% 85.7%
Sacramento Rosemont College Greens Mayhew 95827 26 73.1% 15.4% 11.5%
Sacramento Rosemont College Greens Mayhew 95826 30 56.7% 13.3% 30.0%
Sacramento So Land Park Greenhaven 95831 21 23.8% 4.8% 71.4%
Sacramento South Land Park Greenhaven 95822 62 66.1% 6.5% 27.4%
Walnut Grove 95690 2 0.0% 0.0% 100.0%
Wilton 95693 7 42.9% 14.3% 42.9%

Placer County

Area Name Zip Code Total Units Foreclosures Short Sales Non-Distressed
Alta 95701 3 33.3% 0.0% 66.7%
Auburn 95603 9 22.2% 11.1% 66.7%
Auburn 95602 10 30.0% 0.0% 70.0%
Colfax 95713 3 66.7% 33.3% 0.0%
Foresthill 95631 4 50.0% 0.0% 50.0%
Granite Bay 95746 11 0.0% 27.3% 72.7%
Lincoln 95648 97 44.3% 20.6% 35.1%
Loomis 95650 9 22.2% 0.0% 77.8%
Meadow Vista 95722 2 0.0% 50.0% 50.0%
Newcastle 95658 2 50.0% 0.0% 50.0%
Penryn 95663 1 100.0% 0.0% 0.0%
Rocklin 95765 34 29.4% 5.9% 64.7%
Rocklin 95677 32 43.8% 15.6% 40.6%
Roseville 95678 51 45.1% 27.5% 27.5%
Roseville 95747 80 40.0% 15.0% 45.0%
Roseville 95661 24 33.3% 25.0% 41.7%
Sheridan 95681 2 100.0% 0.0% 0.0%
Weimar 95736 1 0.0% 0.0% 100.0%

El Dorado County

Area Name Zip Code Total Units Foreclosures Short Sales Non-Distressed
Camino 95709 6 100.0% 0.0% 0.0%
Cool 95614 3 0.0% 0.0% 100.0%
El Dorado 95623 3 66.7% 0.0% 33.3%
El Dorado Hills 95762 60 30.0% 16.7% 53.3%
Garden Valley 95633 4 0.0% 0.0% 100.0%
Georgetown 95634 4 0.0% 25.0% 75.0%
Grizzly Flats 95636 3 66.7% 0.0% 33.3%
Lotus 95651 1 100.0% 0.0% 0.0%
Pilot Hill 95664 1 100.0% 0.0% 0.0%
Placerville 95667 22 50.0% 9.1% 40.9%
Pollock Pines 95726 8 25.0% 0.0% 75.0%
Rescue 95672 4 50.0% 50.0% 0.0%
Shingle Springs / Cameron Park 95682 21 52.4% 4.8% 42.9%
Somerset / Fair Play 95684 1 0.0% 100.0% 0.0%
South Lake Tahoe 96150 1 0.0% 100.0% 0.0%
Twin Bridges 95735 6 0.0% 0.0% 100.0%

Weapons of Mass Amortization

The Boy Who Cried Wolf

When I was a child I had a book of Aesop’s fables, a book full of great children’s stories. Each story not only included a moral lesson, it explicitly told you at the end what the moral lesson was.

A lot of our idioms in English come from Aesop’s fables. "Sour grapes" for example.

Another example that’s relevant to our purposes is a story called "The boy who cried wolf." We all know the idiom, and probably most of you had the same book I did, where the shepherd boy cried wolf so often that the villagers no longer believed him, and one day they didn’t come running, and a real wolf came and scattered all the sheep.

If you didn’t have the book, no worries. You have a computer. So here, you can read the story, and learn the explicit moral at the end:

Nobody believes a liar…even when he’s telling the truth.

Fast Forward to The Daily Show

More than two and a half millennia after Aesop wrote his little stories, Jon Stewart aired a segment about how eerily similar the fear-mongering of the Iraq War was to the fear-mongering of the Paulson bailout.

If you’re mad at me for going on and on about the Paulson bailout: I apologize.

But here’s the thing. There weren’t any weapons of mass destruction in Iraq, and nobody believes a liar, even when he’s telling the truth.

The Credit Crisis So Far

I don’t want there to be a credit crisis, because as I said yesterday, it would hurt my business. So if it turns out there is one, I hope you won’t say I encouraged it to happen by saying "Bring it on", because I never said that.

Still, at the risk of seeming to taunt the credit crisis that everyone has been told to be so afraid of, here’s how the credit crisis is playing out as of Thursday. According to Freddie Mac:

McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 6.10 percent with an average 0.6 point for the week ending October 2, 2008, up from last week when it averaged 6.09 percent. Last year at this time, the 30-year FRM averaged 6.37 percent.

The 15-year FRM this week averaged 5.78 percent with an average 0.6 point, up from last week when it averaged 5.77 percent. A year ago at this time, the 15-year FRM averaged 6.03 percent.

So let me see if I understand this correctly: we’re in the middle of the biggest life-threatening credit crunch since the Great Depression, and mortgage interest rates are lower than the (historically somewhat low) rate they were at last year. During the worst finance news week in recent memory, the 30 year fixed loan went up a whopping 1/100th of 1% from the previous week.

No, John, You Don’t Get It — It’s Short Term Loans That Are In Trouble

Yes, it’s quite possible I don’t get it.  I’m not an economist.

But let’s look at some short term rates.

Everyone’s talking about short term loans and the LIBOR. That must be really in the crapper compared to last year, right?

Bloomberg warns: "Libor Soars, Commercial Paper Slumps as Credit Freeze Deepens". Pretty scary. OK, I’ll bite, what are the numbers?

Per Bankrate.com, again as of Thursday:

image

Soaring, is it? Down over a point from last year on the 1 month, 3 month, and 6 month figure is "soaring"? If that’s soaring, I’m an eagle.

But still, we’re told we need to be scared.  If it’s not the Libor, it’s the "Libor-OIS spread" we need to worry about.   Well, maybe we do, but I have a sort of knee jerk reaction whenever someone tells me I need to be scared:  I think they’re trying to manipulate me.  Naomi Klein gets it.

Be Afraid.  Be Very Afraid.  Drop Dead NOW from Fear (After You Sign This Check).

In the thirties, Roosevelt told people a lot worse off than we are now:  The only thing we have to fear is fear itself. 

Today we’re told we need to be petrified. Anderson Cooper has taken to interviewing Suze Orman. We’re told that any minute now we’re going to have a flood of biblical proportions. Meantime it’s not raining, it’s not cloudy, barometric pressure is high, but trust me, they say: we’re going to have a flood of biblical proportions.

Trust me. Iraq has weapons of mass destruction.

Trust me. The check’s in the mail.

Trust me. Of course that dress doesn’t make you look fat.

Trust me. Congress will still respect me in the morning.

Update:

Well, it looks like at least one Congressman gets what Jon Stewart and I have been saying:

Sacramento County September Real Estate Price Changes By Area

Here are the sold prices per square foot for various areas of Sacramento County.  I’ll let you make what you will of this.  Feel free to compare to last month’s numbers and make even more of what you will.  (That way you don’t run out).

At some point I need to add the unit volume numbers in since sometimes we’re really only looking at one or two sales so the number is less significant.  But it gives you an idea.

Meantime, both the winner and the loser in terms of price change is East Sacramento, so like Bill Clinton and the definition of what “is” is, it all depends on what you mean by East Sacramento.  If you mean the area of East Sacramento that includes, among other things, Oak Park (95817), homes lost 62.7% of their value from year to year.  On the other hand, if you mean the area of the East Sacramento that has, among other things, the Fabulous Forties (95819), homes lost only 2.2% of their value from year to year.

Bonus question:  which neighborhood more accurately reflects the socioeconomic bracket toward which the $700 Billion Paulson Bailout is targeted?  Oh, excuse me:  I meant to say the $810 Billion Paulson bailout, now that the Senate has made it “better”.

Come on, class warriors!  You know this one…

Area Name Zip Code Price / Sq Ft
September, 2007		 Price / Sq Ft
September, 2008		 Change
Carmichael 95608 $223.89 $178.28 -20.4%
Citrus Heights 95610 $188.78 $144.77 -23.3%
Citrus Heights 95621 $195.31 $139.37 -28.6%
East Sacramento & Vicinity 95819 $314.33 $307.41 -2.2%
East Sacramento & Vicinity 95817 $239.64 $89.46 -62.7%
Elk Grove 95624 $178.59 $130.45 -27.0%
Elk Grove 95758 $189.62 $128.89 -32.0%
Elk Grove 95757 $166.68 $121.91 -26.9%
Fair Oaks 95628 $218.36 $169.42 -22.4%
Folsom & Vicinity 95630 $217.05 $191.40 -11.8%
Galt 95632 $199.98 $141.90 -29.0%
Mather 95655 $203.89 $109.79 -46.2%
North Highlands& Vicinity 95660 $162.93 $104.11 -36.1%
North Sacramento Natomas Del Paso Heights 95833 $190.09 $116.08 -38.9%
North Sacramento Natomas Del Paso Heights 95838 $154.67 $92.88 -39.9%
North Sacramento Natomas Del Paso Heights 95835 $182.90 $137.00 -25.1%
North Sacramento Natomas Del Paso Heights 95834 $184.62 $126.21 -31.6%
Orangevale 95662 $215.13 $170.79 -20.6%
Ranch Cordova Gold River 95670 $204.75 $145.49 -28.9%
Rancho Cordova 95742 $158.29 $121.01 -23.5%
Rancho Murieta 95683 $263.56 $174.13 -33.9%
Rio Linda 95673 $198.37 $118.21 -40.4%
Sacramento Antelope 95843 $167.88 $129.30 -23.0%
Sacramento Arden Arcade Creek Vicinity 95821 $223.18 $142.41 -36.2%
Sacramento Arden Arcade Creek Vicinity 95864 $288.37 $234.20 -18.8%
Sacramento Arden Arcade Creek Vicinity 95841 $223.18 $99.61 -55.4%
Sacramento Arden Arcade Creek Vicinity 95825 $181.25 $163.04 -10.0%
Sacramento Arden-Arcade Creek Vicinity 95815 $151.54 $84.21 -44.4%
Sacramento Downtown Midtown 95816 $347.17 $297.88 -14.2%
Sacramento Elder Creek Fruitridge 95820 $182.76 $89.64 -51.0%
Sacramento Elder Creek Fruitridge 95824 $174.43 $89.82 -48.5%
Sacramento Florin & Vicinity 95829 $173.28 $146.14 -15.7%
Sacramento Florin & Vicinity 95828 $155.49 $97.13 -37.5%
Sacramento Foothill Farms 95842 $189.31 $118.92 -37.2%
Sacramento Franklin Freeport Vicinity 95823 $156.42 $89.88 -42.5%
Sacramento Franklin Freeport Vicinity 95832 $145.60 $84.75 -41.8%
Sacramento Land Park Curtis Park 95818 $349.89 $284.63 -18.7%
Sacramento Rosemont College Greens Mayhew 95827 $168.09 $125.36 -25.4%
Sacramento Rosemont College Greens Mayhew 95826 $182.94 $142.87 -21.9%
Sacramento So Land Park Greenhaven 95831 $214.63 $173.76 -19.0%
Sacramento South Land Park Greenhaven 95822 $220.38 $129.25 -41.4%
Walnut Grove 95690 $214.33 $246.75 15.1%
Wilton 95693 $367.14 $156.88 -57.3%

The Defeat of the Paulson Bailout And What It Means for Real Estate

Well, here it is October, and we have a few days to wait before the real estate sales statistics for September are robust enough to publish.  So that leaves me with a day or two to reflect on the bailout, and try to flesh out what I think it all means from the perspective of those buying and selling homes.  I’ve made no secret of my opposition to the bailout — indeed, calling it a bailout just now instead of an “economic rescue plan” should have pretty much given my position away. 

You’d think I’d be pretty excited about the bailout’s defeat, though as a Democrat I found it surreal in the extreme that we’d finally get an opposition party to the anti-constitutional mayhem of George W Bush — and that the opposition party would be (largely) his own Republican colleagues.  More encouraging, perhaps, was the analysis done by Nate Silver of FiveThirtyEight.com that shows that the people who killed this thing were — you’re not going to guess this one — the people of the United States, acting through their representatives!

Wow.  Surprise, surprise.

Predictably, Time Magazine spun the events of the last few days not as an unusual triumph of representative government, but as a failure of Congress to lead.

And when they needed it most, our nation’s leaders found they had squandered their ability to exert influence over the people who chose them to lead.

No, we didn’t choose them to lead, you corporate mouthpiece jerk — we chose them to follow!  House of “Representatives” – get it?  Of the people, by the people, FOR the people.  Get it?

But Enough About Politics?  What About the Impact on Real Estate?

To give the people calling the bailout an “economic rescue plan” their due, there really are several issues afoot here, and we can discuss them separately.

  1. Does the economy need rescuing?
  2. Is it the role of government to rescue the economy?
  3. Would the Paulson plan have succeeded in rescuing the economy?

I believe the answer to question one is that the economy in particularly bad shape, so yes, someone with better ideas than me should do some intelligent things to it.  My answer to question two is that the question itself is miserable, being on a par with this one:  Is it the role of a husband to help his wife up after he beats her?  No, no, no!  The role of the husband is not to beat her to begin with, but to do things that will render her prosperous.  Government broke the economy by deregulating it (in concert with other ill considered policies like not fixing our trade deficit and cutting taxes while having a war).  Having broken it, they then proceeded to try to minimize the negative impact on the same rich people they were helping out when they deregulated it.  If Paulson’s bill had repealed one or two acts passed in the late 1990s that rolled back the New Deal protections that would have prevented this fiasco, I would have been for it.  Throwing money at a broken, deregulated economy without fixing it is like helping your wife up just so you can hit her again.  This is the core of my opposition to the Paulson Plan — that it needed to solve the problem in the long term while fixing it in the short term.

As for my answer to question three, my honest answer is “I don’t know”, but with that, I’m in good (or at least:  wealthy) company.  Paulson doesn’t know either.  Neither does anyone else.  I do think it’s result would have been to artificially inflate the price of mortgage backed securities, credit default swaps, and (to a lesser extent, but ultimately) real estate.

So Now What?

Well, if credit completely dries up, it’s an understatement to say that that’s not good for my business.  Nor is it good for anyone buying or selling a home  (unless you mean by anybody the guy with plenty of cash).  Over the last two years, there has been a gradual shift toward programs like FHA, as well as a tightening of lending standards that, in my opinion, has been mostly healthy.  Writing reasonable loans to people who have the means to make the payments should have been what lenders were doing all along.

On the other hand, turning off the spigot entirely would sure be a bad thing for a lot of people.  Personally, as the market has declined, I’ve been less personally frightened by (actual) falling prices than by the (potential) specter of an extremely tight money supply. 

I don’t need to tell you how bad a large scale stoppage of credit would be.  The government’s been scaring you for two weeks with that, and the details are well known.  The government saying this possibility is immanent is not that frightening — because they lie so much I don’t trust them.  What scares me is that guys like Robert Kuttner are saying it, too, and I trust him.

Meantime, I think the effect of a Paulson bailout or one like it would be that it would work or it wouldn’t, but all it would do would be to prevent a worst-case scenario of credit drying up.  Short of preventing the worst results of that, I don’t think it would have had much effect on prices.  The help for those already in foreclosure might have done some good, but preventing the next wave of foreclosures means reforming the system at all levels:  from the mortgage broker, to the banks, to the credit agencies rating the paper, to Wall Street. 

It also means educating consumers.  I’m happy to say I’ve tried to do this all along with my standard buyer speech:   “There are two prices — the one you’re comfortable with and the one the lender will give you.”  (Of course, those of you who hate Realtors® can blame me, too, if you want, for all the good it will do.  Let me know if you can move the DOW by hating me, and I’ll invest and then start hating me, too).

Ultimately, having an economy that relies solely on the real estate market is completely unsustainable.  People need to buy the houses, after all, and they need to have a job to buy one — at least in most years except 2004!

Update:  After writing this I learned that the Senate is voting on an awful version of this bill today, so calling it defeated may be premature.  Having repeatedly waged war on behalf of the top 1% of the wealthy against the American people, it was probably naive to think Congress would let us off this easily.

Sacramento Real Estate Market Update – Natomas Area

I remember back when the market was still booming, in those innocently happy 2004 days when prices were going up and the country was still in love enough with Peter Print-money (aka George Bush) to elect him to a second term.  (Don’t blame me; I voted for Kerry).

Around that time, I remember one agent telling me that Natomas was a booming area where she saw a lot of opportunity.

Remember 2004?  CNN Money ran this article, with this little by-line, which is rather funny in retrospect:

“Don’t look now, but $2 a gallon gas is here.”

Yeah, don’t look now.

Anyway, Natomas Real Estate

Like many of the areas that were so hot in 2004 (Elk Grove comes to mind), a large number of foreclosures has turned 2008 into yet another buyer gold rush for Natomas.  Sales have more than doubled since 2007 in Natomas (which consists of the zip codes 95833,95834,95835,95836, and 95837).  78 units sold in August of 2007, versus 179 in August of 2008, a 129.5% increase. 

The average sale price in August was $252,522, down 30% from last August’s average of $360,698.  Sold price per square foot fell roughly the same amount (29.6%), averaging $133.57 per square foot in August in Natomas.

About a fifth of the homes that sold in Natomas in August were non-distressed sales.  Bank foreclosures accounted for 71.5% of all sales in August in Natomas.

Inventory in Natomas is falling. There are 5.8 months of inventory in Natomas, or 4.4 months if you use the absorption rate of the last six months.

Placerville Real Estate Market Update

Placerville is one of the few incorporated communities in El Dorado County and the county seat, but when we talk about Placerville real estate, we often want to include areas that are outside the city limits as well.  Unit sales were the same as last year in Placerville, with 27 homes selling in August of each month.  However, the supply of homes in the Placerville area is far outstripping the demand, with the result that there are about thirteen to fifteen months of inventory in Placerville at present.

The average home sold in Placerville in August of 2008 for $190.36 per square foot, down 15.2% from last year’s average of $224.41.  The average selling price this year was $364,934, down 28.2% from last year’s average of $508,385.  At $315,000, August’s median selling price this year was down 26.7% from last August’s median of $430,000.

Of the more than three hundred homes in active inventory, only about 25% are short sales and foreclosures, though they made up about 41% of sales in August.

North Sacramento / Del Paso Heights Real Estate Market — A Study in Extremes

North Sacramento and Del Paso Heights (95815,95838) is one of the areas that’s been hardest hit by foreclosures in Sacramento.  Because of the resulting huge price drops, many bargain hunters have been out out for the past several months, pushing the number of homes sold in August to new heights.  No matter what statistic you look at for this area, it’s extreme.

Take the fact that homes have lost almost half their value in a single year.  Last August, the average sold price per square foot was $172.19, and in August of 2008, that number had fallen to $90.80 per square foot, a 47.3% drop.  By coincidence, the average home size both years was the same, so the average selling price also fell 47.3%, from $214,633 in August of 2008 to $113,181 in August of 2008.  Alarmists take note:  the median price in this area fell 54.5% in one year, from $220,000 in August of 2007 to $100,200 in August of 2008.

Of course, such a huge drop is driven by distressed sales — lots of them.  Fully 93.1% of all sales in North Sac / Del Paso Heights in August were bank foreclosures, with another 4.9% being short sales.  If you add those two numbers up, you’ll see that only 2% of all sales that closed in this area were non-distressed sales (even though non-distressed sales account for 16% of all listings).

Although inventory has just recently dipped below the six month mark in North Sacramento / Del Paso Heights, I don’t expect this to remain true for long if banks keep discounting their offerings.  In August, sales volume had more than tripled from the year before, with 102 units selling in August of 2008 versus only 29 in August of 2007.

Orangevale Real Estate Market

The average home sold in Orangevale in August for $296,325, down 20.9% from last year’s average price of $374,508.  Sold price per square foot was down 16.6%, from $214.62 in August of 2007 to $178.93 in August of 2008.  Meantime, the median price fell 25.4% during the same period, from $340,000 in August of 2007 to $235,500 in August of 2008. 

Foreclosures and short sales made up about one third of all sales in August of 2007 in Orangevale.  In 2008, that number had increase to about two thirds.  This August, demand for homes in Orangevale has been strong, with 87% more unit volume than at the same time last year.   Forty-three homes sold in Orangevale in August of 2008 versus twenty-three a year ago.

There are 6.2 months of inventory in Orangevale, about half of which are short sales and foreclosures collectively.

Cameron Park Real Estate Market Update August 2008

Like most areas of El Dorado County, the market recently in Cameron Park is one in which there continues to be a moderate to high amount of inventory and sluggish sales compared to last year. 

Eighteen homes sold in Cameron Park in August, down 14.3% from last August’s figure of twenty-one sales.  Two thirds of these sales were non-distressed.  Sold price per square foot fell 17.1% over the year, form $222.39 in August of 2007 to $184.36 in August of 2008.  The average selling price in August was $358,500, down 16.6% from last year, while the median selling price was $368,000, down 8% from last year’s median of $400,000.

Inventory is fairly high at 8.1 months overall.  The number of non-distressed homes in active inventory (67.8%) aligns fairly well with the number of non-distressed homes that sold in August (66.7%).  22.6% of the active listings in Cameron Park are short sales, and about 9.5% of all sales are foreclosures.

El Dorado Hills Real Estate Market

Unlike many areas of Sacramento County, El Dorado Hills and other areas in El Dorado County have not seen huge increases in volume in recent months.  With prices falling more slowly than in Sacramento County, El Dorado County has lower demand and more inventory.

With 47 homes selling in August of 2008, sales volume was down 9.6% from last year’s volume of 52 homes sold in August of 2007.  The average price per square foot fell 20.6% from August to August, from $235.59 in August of 2007 to $187.15 in August of 2008.  This year’s average El Dorado Hills home sold for $587,854, down 22.4% from last year’s average of $757,285.  The median price dropped 14%, from $610,500 in August of 2007 to $525,000 in August of 2008.

Non-distressed sales in El Dorado Hills make up a more significant proportion of sales than in other areas, making up 59.6% of all sales in August.  Bank foreclosures accounted for 34% of all sales, while short sales accounted for 6.4% of sales.

There are about 9.4 months of inventory in El Dorado Hills.

Real Estate Market Update — Churchill Downs Area

The Churchill Downs area of Sacramento is the area in the zip code 95829.  Though no one calls it either of these names, you could think of it as East Florin Road, or South Rosemont.  Churchill Downs is an area where there are many homes built in the late 1980s and early 1990s.  (The average "year built" in our database is 1989).  Many of these homes show quite nicely, and the large number of foreclosures have brought a typically priced home in Churchill Downs down to the low to mid $200,000s.

The average home sold in Churchill Downs in August for $230,348, down 44.5% from last year’s average price of $230,348.  With this year’s crop being 13.7% smaller than last year’s, however, sold price per square foot fell somewhat less.  This year’s average was $135.31, down 32.4% from last year’s average sold price per square foot of $200.21.  The median sale price fell 34.5% from year to year, from $336,025 in August of 2007 to $220,000 in August of 2008.

With thirty-seven of forty-three sales being "bank repos", foreclosures made up 86% of all sales in August versus "only" 26.9% last August.  Short sales accounted for 4.7% of sales, while non-distressed sales made up 9.3% of sales.

Currently in inventory there are 184 homes in Churchill Downs — about five months of inventory based on the last six months of sales.

How Many Home Loans Could You Make With $700 Billion (My Alternative to Hank Paulson)

How bad does the Treasury Secretary’s plan have to be before Congress approves it?

Well, don’t worry, Chris Dodd’s probably already written something close to what Congress will approve, but if you aren’t depressed enough yet, you may be happy to know that a real estate broker with no direct banking experience was able to come up with a better (albeit still hugely dumb) plan in a few days.

I believe you could put twenty smart guys in a room for a morning and come up with a better plan.  The problem with having Congress do it is that not that they’re not smart, but that they’re owned by the wrong people.

Meantime, here’s my dumb but not as dumb as Paulson’s plan. 

Spoiler alert:  I manage to pay back the American people in eight years while making 13 million low-risk home loans to the American people.

If you enjoy it, please don’t forget to hit the Digg button while you’re there.

Antelope Real Estate Market Update August 2008

A few months ago unit volume was peaking in Antelope, which made for a nice Antelope stampede pun, but this year we can see the curve rounding the top, at least temporarily.

image

63 homes sold in August, up 23.5% from the same time last year.  The average home selling price fell 32.1% over the year, from 312,766 in August of 2007 to $212,214 in August of 2008.  Since this year’s home was also slightly smaller in Antelope, the sold price per square foot fell less sharply, but still lost 26.9%.  Sold price per square foot in August of 2008 was $132.42.

Short sales closed relatively well in Antelope in August, accounting for 23.8% of all sales.  Foreclosures made up 61.9% of all sales, while non-distressed sales accounted for only 14.3% of the total.  Those who’ve been predicting for the last eighteen months that any minute now banks will suddenly smarten up and start approving short sales may want to look to August, 2008 in Antelope to see themselves vindicated.  (Just don’t look at other data points or you may be disappointed!)

Presently there are 4.9 months of inventory in Antelope.

Write or Call Your Representative / Senator to Oppose the Paulson Bailout

I don’t know how much you’re following the news of the bailout of wall street banks who repackaged bad loans, but if you’re not, now is a great time to get involved and please, please call your elected representative and tell everyone you can about this incredible fiasco.

Hank Paulson, Secretary of the Treasury, and George Bush are asking Congress for the authority to spend up to $700 billion at a time (that’s a balance sheet maximum, not a maximum on the total the government can spend).  That’s more than the total cost of the War in Iraq so far.  The Treasury will spend it buying bad loans, and get no equity stake in the firms they’re buying them from — leading some to call it "cash for trash".

Section eight of the proposed legislation gives Paulson an oversight-free blank check as to how to spend that much of your money.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

You can read the full text here.

Although as you might expect, public opposition to the plan is strongest among Democrats, several prominent conservatives have also gone on record as being opposed to the plan.  This legislation is so bad that even CNN gets it.

Please look up and either write to or phone your Senator and House Representative right away.  You can learn more about the proposal by clicking through on the articles current on Digg for Business and Finance.

Congress is in a HUGE RUSH to get this done, so those of us who think it’s expensive, ill conceived and leaves us stuck holding the bill need to MOVE NOW to express our concerns to Congress.

UPDATE:

Here is the latest draft the bill, which I must admit I think is substantially better than Paulson’s original proposal.  I wouldn’t go so far as to say this makes me for the bill, but at least it’s moving in the right direction.

Sacramento County Real Estate Price Changes By Area

I’ve written for some time now that county-wide averages might not adequately or accurately represent real changes in home values.  For example, if counties with the largest drops in prices are also the ones selling the most homes (as I would expect given my role as a data nerd), then I would expect that the overall average county-wide difference in price (i.e., lump all the homes and divide) would be much higher than the averages difference in price for each area (lump homes by area, divide, then average that).

Well, if I haven’t put you to sleep already, you’ll be pleased (or horrified) to learn that the numbers don’t come out all that differently when you work the numbers different ways.  For example, in Sacramento County, our latest county-wide average price drop from August to August was 32.4%, while the area-wide average of the change column, below, works out to be 30.1%.  So yes, the fact that the cheapest homes are selling the most has skewed the numbers slightly — but only slightly. 

And of course, averaging by-area numbers entails a whole new set of problems — like how many areas do you have and how big are they?  For example, in Applegate, in Placer County, one home sold in August of 2007, and another in August of 2008.  If you live in Applegate and you don’t understand statistical significance, you may be very happy to find out that your area home values went up 63.2% in one year! 

Anyway, along the way we created a new query that goes area by area and checks out the price drops.  We’ll probably tweak this going forward to show unit volume, but here are some preliminary results for Sacramento County.

Sacramento County Real Estate Price Real Changes By Area

Area Name Zip Code Price / Sq Ft
August, 2007		 Price / Sq Ft
August, 2008		 Change
Carmichael 95608 $238.53 $176.05 -26.2%
Citrus Heights 95610 $190.39 $152.00 -20.2%
Citrus Heights 95621 $191.32 $141.20 -26.2%
East Sacramento & Vicinity 95819 $340.54 $308.20 -9.5%
East Sacramento & Vicinity 95817 $215.11 $113.09 -47.4%
Elk Grove 95624 $198.27 $128.69 -35.1%
Elk Grove 95758 $197.74 $133.42 -32.5%
Elk Grove 95757 $163.01 $130.52 -19.9%
Elverta 95626 $230.55 $134.52 -41.7%
Fair Oaks 95628 $218.27 $182.37 -16.4%
Folsom & Vicinity 95630 $227.07 $196.91 -13.3%
Galt 95632 $248.01 $132.25 -46.7%
North Highlands& Vicinity 95660 $168.99 $108.01 -36.1%
North Sacramento Natomas Del Paso Heights 95833 $207.66 $126.11 -39.3%
North Sacramento Natomas Del Paso Heights 95838 $174.92 $92.33 -47.2%
North Sacramento Natomas Del Paso Heights 95835 $187.53 $134.79 -28.1%
North Sacramento Natomas Del Paso Heights 95834 $179.39 $122.76 -31.6%
Orangevale 95662 $214.62 $178.93 -16.6%
Ranch Cordova Gold River 95670 $199.76 $142.98 -28.4%
Rancho Cordova 95742 $159.88 $126.58 -20.8%
Rancho Murieta 95683 $225.04 $182.43 -18.9%
Rio Linda 95673 $198.12 $148.83 -24.9%
Sacramento Antelope 95843 $181.10 $131.65 -27.3%
Sacramento Arden Arcade Creek Vicinity 95821 $222.28 $163.22 -26.6%
Sacramento Arden Arcade Creek Vicinity 95864 $292.29 $251.95 -13.8%
Sacramento Arden Arcade Creek Vicinity 95841 $182.14 $135.85 -25.4%
Sacramento Arden Arcade Creek Vicinity 95825 $217.62 $158.04 -27.4%
Sacramento Arden-Arcade Creek Vicinity 95815 $164.02 $85.53 -47.9%
Sacramento Downtown Midtown 95816 $376.61 $261.81 -30.5%
Sacramento Downtown Midtown 95814 $256.95 $251.10 -2.3%
Sacramento Elder Creek Fruitridge 95820 $182.31 $105.92 -41.9%
Sacramento Elder Creek Fruitridge 95824 $176.41 $90.99 -48.4%
Sacramento Florin & Vicinity 95829 $200.21 $135.31 -32.4%
Sacramento Florin & Vicinity 95828 $176.47 $106.17 -39.8%
Sacramento Foothill Farms 95842 $180.55 $110.73 -38.7%
Sacramento Franklin Freeport Vicinity 95823 $162.54 $96.31 -40.7%
Sacramento Franklin Freeport Vicinity 95832 $163.34 $94.97 -41.9%
Sacramento Land Park Curtis Park 95818 $312.15 $308.98 -1.0%
Sacramento Rosemont College Greens Mayhew 95827 $192.31 $134.07 -30.3%
Sacramento Rosemont College Greens Mayhew 95826 $196.92 $140.94 -28.4%
Sacramento So Land Park Greenhaven 95831 $220.18 $186.55 -15.3%
Sacramento South Land Park Greenhaven 95822 $226.45 $120.62 -46.7%
Walnut Grove 95690 $530.98 $181.22 -65.9%
Wilton 95693 $247.71 $184.75 -25.4%