Archive for January, 2009

Pollock Pines Real Estate Market Update: December 2008

An unhurried lifestyle and an unhurried real estate market. These seem to be the hallmarks of Pollock Pines, or maybe it was just all the snow around December. Whatever the case, the real estate market up here is lackadaisical at best. A mere 8 homes sold this month: 3 forecloures and 5 non-distressed homes! Yes, this is one of the rare areas where non-distressed homes are preferred by buyers over foreclosure sales as evidenced by the numbers! Unit volume was down however by 33.3% year over year.

Sold price per square foot is unchanged over last month, but we do see a drop of 19.5% when compared with last year at the same time: from $171.97 to $138.50. Average sales price has fallen 21.3% for the same period – where last year it was $305,125 today it is $240,200. (This in however higher than last month’s average sales price of $224,273.) Median sales price has seen a drop of 20% from $292,500 to $232,799. (Again, better than last month’s $210,000.)

Inventory is at 11.8 and 12 months based respectively on the last 12 months and 6 months of sales. Yes, it’s an unhurried marketplace all right.

More (!) Good Ideas in Real Estate

I recently responded to a first time homebuyer question from my personal real estate blog. I mention it here as a way of introduction to this post because it seems to me like, this market, even if it is great in terms of prices for the first time homebuyer is harder than others because there are so many REOs and short sales.

First time homebuyers, already a little green behind the ears in the real estate purchase department now find it harder to buy a home than when it is a “normal” market. They have to contend with not just the stress of buying a home and making a six figure purchase with a loan, but also dealing with banks and more paperwork and not very obvious timelines. Everything seems to get a little more mangled when banks are concerned and the real estate landscape today obviously does not follow the norm. What then can a first time homebuyer do? Are there any good ideas for them?

Know your Friends

When you are a first time home buyer (or a subsequent one, I suppose) it is very important that you find a Realtor® who you can trust. A lot of the times people hire a real estate agent just because they are friends or relatives and then wonder if the professional is working in their best interest or they have a raw deal. Many people feel obligated to help a friend who is a Realtor®, but if they are not convinced of the person’s professionalism, it is best they don’t hire him. This kind of charity only results in strained relations long after the real estate is bought or sold. It’s never worth it.

Once you have picked a Realtor® (to represent you as a buyer’s agent); though, trust her. There is nothing worse than a client who is constantly worried that the professional is not on their side. The only way we get paid is if you buy the house. There is no other way. So there is no reason for us to keep you from the house we want. Knowing this, why do clients sometimes think we are trying to wedge a wall between them and their dream home? I believe it’s a lack of trust, that should have been established in the beginning of the relationship.

Know What’s Required

Many times, with REOs the lender has specific instructions that must be fulfilled by the homebuyer. One of them very likely is that the homebuyer get prequalified with a particular lender. The seller cannot require the home buyer to get a loan from a specific lender, but he can require that all applicants be prequalified with a lender they trust. It is in the interests of the bank to do this so they are assured that – were escrow to open – it would not fall through because the buyer did not qualify.

If such a requirement does exist, the listing agent will usually have the instructions on how to carry it out with the listing itself. Ensure that your Realtor® knows what the instructions are – emailing the offer as opposed to faxing it, getting prequalified and other requirements. Also ask your Realtor® to ensure that the offer has been received and acknowledged verbally by the listing agent. This will ensure that it doesn’t simply fall through the cracks and get ignored or missed.

Make Strong Offers – Don’t Play Around

Many times a home buyer will be very excited about prices dropping and will go out looking for homes because he believes he can afford a home at the price offered. But somewhere around the time an offer has to be made, he will decide it would be a much better deal for him if he offered a much, much lower price and “see what happens.” This approach, while seemingly rational, isn’t the best approach. I consider it getting cold feet, and stress and concern and worry almost always go hand in hand with a contemplated home purchase, but it’s not a good idea to base decisions on them. Decisions like offering prices.

A much better way to decide what to offer, instead of speculation, is to understand your mortgage and see what you can easily afford. Look at your personal budget instead of trying to see what’s the least amount the lender will accept. Calculate the difference between what you’re thinking of offering and what is reasonable and see the monthly difference in dollars and cents as it pertains to your pocket book.

Another good idea is to get your Realtor® to make you a CMA – a comparitive market analysis of similar homes in the area and their sold and asking prices. That way you know how much other homes have sold for and can base your judgment on the selling prices of other homes in the area to know if you (and the bank) are indeed in the right ball park in terms of price.

Stay Committed

With REOs, it is easy to get discouraged. Some of them – especially the ones you are likely to fall in love with right away – go fast. Offers are made above asking price, banks encourage multiple offers, there is competition and you wonder where the buyer’s market went! Not to mention the fact that it seems like timelines make no sense and the banks are entirely unpredictable in the offers they pick to work with. You may look at and make offers on ten homes and not get a single one. Yes, REOs are tough to buy. They are however also good purchases if you do your homework and remain committed to the process.

Home buying is stressful and sometimes downright disheartening. But the fruits of your labor are well worth it! So avoid the mental noise and try to remember why you embarked on this journey in the first place. Stay committed to it and you will do just fine!

El Dorado Hills Real Estate Market Update: December 2008

Real estate in El Dorado Hills doesn’t stay under the half million mark for too long. We saw a little blip there last month, but this time it’s back up. The rest of the numbers are looking pretty good too in spite of the foreclosures and short sales that loom over the horizon threateningly.

Sold price per square foot is actually higher than it was last month by a couple of dollars. It is still a drop of 16.7% year over year: from $211.55 last December to $176.24 this December. The average sales price is down 11% for the same period. The average home which used to be worth $624,749 can now only command a sales price of $554,906. But here we see how quickly prices can change. Last month, the average sales price was $498,025. Something to remember when the market does begin to turn. Median sales price is also up over last month’s $460,000. It is currently $500,000, a drop of 10% year over year from the high of $555,000.

We currently have in El dorado Hills 7.4 months and 6.9 months of inventory based on the last 12 months and 6 months of sales respectively. We do see unit volume slowing however, perhaps in keeping with the increase in prices. Foreclosure sales have fallen 58% year over year. Only 8 foreclosures sold this month, along with 6 short sales and 15 non-distressed homes. Total sales are down 25.6% year over year, but the balance between non-distressed and distress sales remains unharmed.

Arden-Arcade Real Estate Market Update: December 2008

Arden Arcade is still a desirable place to live as evidenced by how many homes here have sold in the month of December alone. Here are some interesting averages based on the last six months of sales: 89 homes sell every month, of which 47 are foreclosure sales, 7 are short sales and 35 are non-distressed. This month then was better than average with 56 foreclosures, 9 short sales and 35 non-distressed properties sold.

Demand continues to be high with 144% more homes sold this December than the last. Even non-distressed sales were 34.6% higher year over year. That is not something commonly seen elsewhere in Sacramento county. Foreclosure sales and short sales were 300% higher and 800% higher year over year respectively.

The average sold price per square foot is 21.3% lower than it was last year at this time. Arden-Arcade has seen it drop from $212.02 to $166.83. The average sales price is also 27% lower for the same period – from $337,025 to $246,989. The median sales price has seen a 30% drop from a high of $269,000 to $187,500.

Inventory is at 4.9 months based on the last year of sales and 4.3 months based on the last six months of sales. Keep an eye on the 117 short sales that drag the inventory numbers higher. They constitute 22.3 and 16.7 months of inventory respectively!

Natomas Real Estate Market Update: December 2008

While last year at this time foreclosures were just about beginning to catch up with non-distressed sales in Natomas and home sellers were beginning to panic just a little bit, we were just seeing the tip of the iceberg. Today, 85% of all sales are distress sales and a mere 15% are non-distressed and those home sellers must definitely feel the pinch. Consider this: 118 foreclosures sold in the area of Natomas this month. Couple that with 15 short sales and the 24 non distressed sales are clearly in the minority.

Meanwhile, unit volume continues to be high. 55.4% more homes sold in Natomas this December than they did last December. Meanwhile, non-distressed home sales have suffered a decline of 56.4% year over year.

And the prices have continued to fall, as will always be the case when there are so many foreclosures the market has to absorb. Sold price per square foot has suffered a decline of 30% year over year. Natomas has gone from $172.04 to $120.09. Average sales price has fallen 33% from $318,053 to $213,786. Median sales price has declined 24% from $283,250 to $214,900 for the same period.

Inventory is at 4.4 months based on the last year of sales and 3.9 months based on the last six months. Foreclosure inventory is at 1.6 months.

Fruitridge Real Estate Market Update: December 2008

…and they keep coming! Sales volume in Fruitridge continues to remain high with low prices and a supposedly high demand. Unit volume is up 208% year over year in the 95820 and 95824 areas. 101 foreclosures sold this month – an increase of 304% over last December and 8 short sales also closed. That is a change of 700% positively. So the majority of sales now are distress sales by far. 91% in fact of all sales are distress sales. No wonder then that non distressed sales have fallen. We see a 15% decline in these sales year over year.

The prices are beginning to look pretty good for the first time homebuyers. We see a decline of 47% year over year in the sold price per square foot data. Where last year at this time, we were at $141.59, this year we see an average price per square foot at $75.59. The average sales price is also down 47% year over year from its high of $164,123 to $86,294.

Median sales price in Fruitridge is down a whopping 56% from $159,900 to $70,500.

Inventory is at 4.4 months based on the last year of sales and 3.0 months based on the last six months of sales. Foreclosure inventory is at 2 months, but there are still 150 short sales the market needs to absorb before we see any improvement.

More Good Ideas in Real Estate

The last time, I focused on some general ideas in real estate that I find to be important for home owners to know about to appreciate their home ownership goals fully. Today, I want to focus more on the residential investment side of things in all things real estate. There are many good ideas in this area as well and many of them end up making the investors some money! Again, please let me remind you that none of this is legal, tax or investment advice.

Real Estate Good Idea #1: Investment Real Estate

Yes, why not? Investment real estate in itself is one of the best ideas in real estate. Think about it: you buy a home, you get tenants to live in the home, they pay you rent, which in turn you pay the mortgage and other expenses with. You’re responsible for repairs, property taxes and insurance and eventually you hold the house until it appreciates or until you want to hand it over to your heirs. Not a bad idea overall.

Landlording is a serious business because you’re responsible for the condition of the home your tenants live in, but with a little care in screening tenants and taking care of the house, it can be hugely profitable, especially if you buy the property at the right time when home prices are low. That way, you can even manage to get enough of a rent payment to cover the mortgage and other expenses, something that is pretty tough to do in a state like California, where historically home prices are higher than rents.

Real Estate Good Idea #2: Cashflow

Most investors will tell you that is the only way to invest. If the rental home doesn’t bring you any money month after month that goes straight to your pocket (or bank account) after paying all expenses like the mortgage, the property tax, the home insurance, the utilities (city and county) and repairs, it’s not worth it. Buying a rental that you pay into month after month is called feeding the alligator (or crocodile, I can’t remember which!) because eventually they say it will eat you!

While this is a good idea and a pretty good gauge (not to mention an interesting picture!) I don’t know how realistic this might be in a place like California. There are states where cashflow is better from what I hear, but traditionally, appreciation is the reason investors buy homes in California. However, it is still a good measure of a rental home to ensure that you are not paying too much out of pocket to hold on to the property. The idea is to have most expenses taken care of with the rent payment so that you’re not eaten by the alligator. Or crocodile.

Real Estate Good Idea #3: Appreciation

This is a reiteration of the earlier point, but I had to mention it separately to draw attention to it. If I had a dollar for each time someone has walked into an Open House and said, We used to live in this neighborhood. If only we had kept our home as a rental. The prices right now are just crazy! We could have got so much more for it! Coulda, woulda, shoulda. Well, the real estate investors turn this around. They hold on to a home for as long as they can and then sell high.

If you buy low, hold the home as a rental, have the tenants pay the mortgage (even if you pay some smaller costs associated with the property like utilities) and then sell high, preferably after the mortgage is paid off, you reap some of the benefits of appreciating property values and in some instances these can be substantial.

Real Estate Good Idea #4: Depreciation

While you are looking forward to the investment property appreciating, you can also look forward to the property depreciating! Depreciation is a tax advantage landlords have. According to the IRS, different kinds of property held for investment purposes depreciates over a certain amount of years until it it worth nothing and so “depreciation” is a deduction you can claim on your income tax return for investment property that is owned by you. This also can be a substantial advantage financially and sometimes the only reason certain investors choose to buy real estate.

Real Estate Good Idea #5: 1031 Exchange

The problem, of course, arises when you have made a huge profit in real estate. Now the IRS wants you to pay taxes on it! It’s called capital gains. What can you do? For one, you could just pay the taxes and keep the rest of the money liquid for when you want it. Or you can do a 1031 exchange. 1031 – or Section 1031 – is simply the tax code which refers to this kind of an investment property exchange. Basically, a 1031 exchange involves selling your investment propert and buying a “like-kind” property of equal or higher value. If you do that, you can defer taxes on any profit you may have made.

There are many companies, usually sisters of title companies, that specialize in 1031 exchanges which you should contact before you sell or buy if you wish to do a 1031. There are very specific rules you must follow regarding dates and real estate values for a successful 1031 exchange. However, it is a great tool and many real estate investors use it to their advantage.

Here are then the basic good ideas about investing in real estate. As I write these, a few more come to mind and, no doubt, I will have another post soon about some more good ideas in real estate! Until then, feel free to let us know your own.

Good Ideas in Real Estate

Tired of reading all the bad news in real estate? Well, you’ve come to right place. I’m currently working on compiling a list of good ideas in real estate. Now you might ask, what exactly do you mean by good ideas in real estate? Basically, it’s a list that I intend adding to which comprises of great things people have thought of that adds value to our homes or our rentals. It can be construction-related, such as solar panels on the roof, for instance or a way not to get knocked off your feet, such as an impoun account. With all the bad news out there currently, we thought some happy music might break the monotony. Enjoy! (But let me remind with my legal disclaimer here that none of this constitutes legal or advice.)

Real Estate Good Idea #1: Bi-Monthly Payments

This was a concept promoted most vehemently in the recent years by David Bach in The Automatic Millionaire. Basically, it involves making bi-weekly payments to the mortgage company of half the mortgage payment. So if your mortgage amount is $1000, a bi-weekly payment would be a payment every two weeks of $500 each. A lot of the times this kind of payment helps with cashflow since many people today get paid bi-weekly and also takes years off your mortgage.

This is how it works: a monthly payment makes 24 mortgage payments in a calendar year. However, there are 52 weeks in a complete year. So with bi-weekly payments, instead of the usual 24 payments, you make 26 payments – that’s an extra mortgage payment that goes directly toward the principal, not the interest. Thus, on average you can cut off seven years from your 30 year mortgage. Some mortgage companies charge a hefty fee to be enrolled in this program however which can be easily sidestepped with some planning and an extra mortgage payment a year. Same difference!

Real Estate Good Idea #2: An Impound Account

This is also referred to as “an escrow” many times, but I like to call it an impound account so we don’t confuse it with a home purchase escrow that takes place at a title company. Basically, an impound account – as I’m sure all homeowners know – is set up by and at the mortgage company where money toward your property taxes and home insurance is saved.

A little more is paid by you every month with your mortgage and is reserved in safe-keeping by the mortgage company. This helps you not have a heart attack when those fated bills arrive because the reserves pay for them. Not everyone needs an impound account, however, most people feel comfortable paying a little more each month with their mortgage because they would rather not have to remember to set money aside themselves each month to cover the tax bill.

Real Estate Good Idea #3: Making 15 Year Payments on a 30 Year Mortgage

This is an idea I recently came across here. Many people like the idea of a 15 year fixed mortgage instead of a 30 year. While getting a 15 year fixed mortgage does provide for lower interest rates, lesser interest overall in the mortgage terms and just the psychological relief of debt for just 15 years to many people, it can cause cash flow problems due to its inflexibility.

Kevin of the No Debt Plan suggests you keep your 30 year fixed, calculate the difference and make your 15 year payments. The extra will go to the principle and instead of 30 years, your mortgage will be paid off in 19 years. Not a bad plan if you want a shorter mortgage without refinancing and the flexibility during some months when money is tight. This idea does not appeal to everyone however because there is still a significant difference in how much interest you will pay over those four years, even while making extra payments.

Real Estate Good Idea #4: Home Mortgage Interest Deduction

Usually, making those mortgage payments every month, month after month isn’t fun, unless you’re one of those people that enjoys watching the principal when you do so and watching the number go down (slowly, very slowly). But tax time is a good time to be glad for making those mortgage payments because the interest you pay on your home is tax deductible. The home interest by itself is usually enough to warrant itemizing deductions for a lot of homeowners because it exceeds the standard deduction afforded to them.

Around tax time, you will receive a form 1098 from your mortgage company that tells you the total interest you have paid through the year. It usually is a good idea to double-check the number, especially if you make your mortgage payments earlier. For example, if you’ve made your January payment early, ie. in December, it’s a good idea to see if they added that in. If not, you might want to mention that to your tax accountant.

Real Estate Good Idea #5: Refinancing your Mortgage

This one can seem a bit controversial now that so many people have received bad mortgages but refinancing, if done right, can save you thousands in interest payments. Just be sure you understand the kind of mortgage you get. Many people will say you should refinance if you can save a percentage or half percentage point on your interest. The best way to tell is to use this calculator and look at your family budget. Remember that if you choose not to pull cash out of your home, most refinances are cheaper in terms of interest and fees. Bankrate also gives you an idea of the national average for 30 year and 15 year fixed, but it’s a good idea to talk with a mortgage professional and see what your real interest rate is to get a more accurate picture of how much you would be saving.

Well, that’s it for today’s installment of good ideas in real estate. Next week, I’m going to be focusing on good ideas for investment real estate. If you can think of a few or want me to focus on a specific area in real estate for ideas, feel free to contact us and let me know.

Antelope Real Estate Market Update: December 2008

From what I’m gathering writing these real estate market updates is that things don’t change drastically between the months of November and December and that is certainly true of Antelope as well. We might just be able to draw from that famous metaphor John coined about an Antelope stampede because this certainly seems to be it. Inventory numbers have fallen further this month. Last month I reported 3.9 months and 3.4 months (based on the last 12 months and 6 months respectively) and this month inventory has shrunk further to 3.3 months and 3 months. Even the short sale inventory is markedly lower than last month.

The reason of course is that we have seen a huge increase in real estate sales: foreclosure sales up by 93% year over year, short sales up by 71.4% year over year and total sales up by 58% year over year. The only number suffering a decline is the non-distressed sales volume (down by 13%) and yes, prices.

Average sold price per square foot has fallen 17.6% from $149.39 to $123.10 this December. Average sales price has fallen 22% from $275,720 to $215,952 year over year. Median sales price has also fallen 21% for the same period: from $265,000 to $209,900. Low prices are definitely driving sales in Antelope. It will be interesting to watch what happens when this fast-drying inventory runs out!

Orangevale Real Estate Market Update: December 2008

The real estate landscape in Orangevale is mostly unchanged since last month. 16 foreclosures, 2 short sales and 4 non-distressed homes have sold in this little community close to Fair Oaks, which makes 82% of all sales now distress sales. Foreclosure sales have picked up the most, not surprisingly since last year – they are up by 78%. Conversely, non-distressed sales are down by 43%. Unit volume is up by an almost negligible 22%.

Average sold price per square foot is down again – it is currently $145.72. That’s a drop of $21.8% over last December’s high of $186.46. Average sales price is also down for the same period. Currently at $225,418, it siginifies a drop of 20.3% over last December’s high of $282,940. Median price has also fallen 22% – from $263,202 to $205,000 for the same period.

Inventory is at 5.4 months based on the last year of sales and 5 months based on the last six months of sales.

Greenhaven Real Estate Market Update: December 2008

The Pocket Area (zip code 95831) in Sacramento, also called Greenhaven is managing to hold its own against the tide of foreclosures. We have yet to see how this will carry out into 2009, but it seemed like almost all of 2008, it has managed to keep its head above the water. December was less than great for the area, but unlike other parts of Sacramento county, Greenhaven still showed an increase in its non-distressed sales year over year, albeit by a small number – 17%. Foreclosure sales showed a 100% increase year over year and 1 short sale also sold in the month of December. Unit volume is still up 40% year over year. So a mixture of good and bad news.

The bad news, of course, is on the price front. Sold price per square foot has fallen 11.6% year over year from $192.44 last December to $170.20 this year. The average sale price as dropped $388,800 to $306,362 for the same period – a drop of 21.2%. However, sold price per square foot is a more accurante measure considering the average home sold was also 11% smaller than last year. Median sale price is 19% lower year over year. It fell from $370,000 to rest at $300,000.

Inventory is at 3.6 months based on the last 12 months of sales and 3.8 months based on the last 6 months of sales.

Downtown Sacramento Real Estate Market Update: December 2008

Sales and prices in Downtown Sacramento have been less than prolific this month. Really, it seems that real estate in downtown Sacramento is a study in balance this December anyway. Sales are poised quite neatly between short sales, foreclosure sales and non-distressed sales, each taking a third of the sales pie. That’s a total of 12 houses sold in December, 4 of each. Short sales showed the greatest gain, since last year there were no short sales sold in this area. Non-distressed sales have dropped by 50%. Overall, there is no change in unit volume year over year.

Sold price per square foot however is 27% lower than it was last year at the same time: average price per square foot has dropped from $319.05 to $233.62 year over year. Average sales price has dropped 31% from $385,992 to $267,283 for the same period. Median price is now at $255,000. That is also a drop of 30% from last year’s high of $365,000.

We are beginning to see a drop in foreclosure and short sale inventory, which could be a good thing for sellers in downtown Sacramento. Foreclosure inventory is currently at 1 month and short sales are at 6.8 months. The rest is all non-distressed property. So might see prices go up unless more short sales and foreclosures are added. Overall inventory is at 4.9 months – based on the last year of sales – and 5.2 months based on the last 6 months.

Problems with Impound Accounts

Hapy Friday! Today, I would like to go over some of the problems clients have faced in the past regarding their impound accounts. No one likes receiving their property tax and home insurance bills and being shocked by them, then angry that there is no money anywhere to pay the two. This is easily avoided, of course, by having your mortgage company take a little bit every month with your mortgage payment and then pay those two charges when you are billed for them.

On the face of it, it’s a perfect plan. Mortgage companies are required to give you the option of having an impound or not, and frankly, some of them feel more comfortable if they do. That way, they know they have a reserve and that you are not going to default on either your property taxes or home insurance, both of which the lender sees as a problem that directly affects them. However, impound accounts are far from perfect. It is necessary to be vigilant if you are a first time homebuyer and of course even if you are not.

Ensure the Bills are Paid

Many times, information just doesn’t get processed right. The insurance company sends you the bill, even though you have informed them that you have an impound account. Or vice versa. Either way, it is still your responsibility to follow up with both companies (insurance and mortgage) and make sure that the billing and payment gets handled properly. Even if the mortgage company says that the payment has been paid, call the insurance company and confirm. I once had an incident happen (to me, nonetheless!) where the mortgage company had sent the payment but the account number was incorrect. Meanwhile, the home insurance company was billing me. Well, many faxes and phone calls later, it was set right.

This is important enough that you take time off from work. That was driven home to me when the forest fires got close enough that I called insurance and made sure it was still valid. Never again will I rely on someone else to do a job I’m responsible for!

The Impound Might Send You a Check…

…but do not spend it! Cash it and keep it in reserve. A few months later, they’ll say that your account is short and you have to cover the difference. There is a reason this occurs: sometimes the property taxes paid by the person to who owned the home before you are much, much lower than you owe. That’s because property taxes get reassessed during a transfer of ownership. This can take a while. Meanwhile, during the mortgage company’s impound account audit, they look at the amount of property taxes on record (low) and how much they have held for your payments (high). That number will soon be revised, but for now, they are not allowed to hold more than a certain amount and so are required to send the money back. Even if your mortgage broker had the number right. So, don’t spend the money! Cash the check and save it. You’ll be glad you did.

However, it is Nice When Things Go Well!

Sometimes, however you do end up paying a lot more unfront when you buy the home, thanks to reserve requirements which some lenders insist on. This is a good thing. Remember the new property tax assessment I just spoke about? That creates a supplemental tax bill. The supplemental tax bill is the difference between what the previous owner paid and what you are to pay for the time in the tax year you moved into the home. That’s when you’re glad the lender had the reserve requirements.

You can call the mortgage company and see if they have more money in the impound account than you will need in the year. They can do the calculations for you. Taxes are usually roughly 1.125% of the transfer price. Add insurance and most mortgage brokers will use the 1.25% formula to calculate your mortgage payment. If the amount in the impound is indeed more than will be required for the year, you can go ahead and fax them the supplemental tax bill(s) as well and have them paid. That’s when you’re really happy with the lender for requiring reserves!

I guess all this means that you have to be vigilant. I know many home buyers like to have an impound account because they’re not good at setting money aside every month to cover expenses like home insurance and property taxes, but if anything goes awry, most companies (and definitely the county your taxes go to) will hold you accountable. Even if it’s a genuine error on the part of the mortgage company. So keep a tab on it and the impound account can be quite a boon!

Land Park Real Estate Market Update: December 2008

There is much to cheer about in Sacramento’s Land Park. While in most other areas of Sacramento county, foreclosure sales are definitely in the driver’s seat, hurtling prices into a downward spiral, here in Land Park, real estate prices, while a little soft are holding their own. Non-distressed sales still make up 80% of all sales in the market, while foreclosure sales and short sales each take 10% of the sales pie. Here’s another surprise: not only are non-distressed sales the majority of all sales, they have also enjoyed a year over year increase by about 78%! Add to that a couple of foreclosure sales and short sales and you have a year over year increase in sales by 100%!

Last month I reported an increase in sold price per square foot. This month, I’m happy to report the same good news. Sold price per square foot is now at $271.77, higher than last month’s $269.44, which was higher than October’s $250.87! However, year over year, that is still a decline of $13.4%. Last year, the sold price per square foot was at $313.75.

Average sales price in Land Park has fallen 15% year over year – from a high of $461,150 to $391,750 today. Median sales price has also suffered a decline of 18.6% from $451,250 to 367,500 for the same period.

Inventory is lower again this month. Currently it is at 3.1 months (based on the last year of sales) and 3.4 months (based on the last 6 months of sales.)

Rosemont Real Estate Market Update: December 2008

As in other parts of Sacramento county, inventory in Rosemont seems to be drying up. We’ll have to wait and see if another wave of foreclosures upsets this lowering of inventory or if we can finally heave a sign of relief. Inventory is lower than it was last month, especially for foreclosures. Take a look: we are currently at 3.2 months of inventory if you base it on the average for the last year of sales and 2.6 months if you base it on the last six months of sales. Compare that with last month’s numbers of 4 months and 3.1 months respectively. Foreclosure sales only have inventory of approximately one month!

This is surprising considering total unit volume sales are up a mere 50% year over year. As has been the case for a while now, distress sales make up the major chunk of all homes sold. 62.5% of all sales are now foreclosures, while 10.4% are short sales. Short sales have enjoyed a 400% increase year over year. While the process is slow and drawn out, there seems to be some hope for short sales now. Only 27% homes sold are non-distressed. In spite of suffering a decline of 13.3% in sales year over year, non-distressed sales have almost doubled since last month.

Price data is also slightly better than last month as well, but a far cry from last year. The average price per square foot in Rosemont has fallen 25% year over year, from $173.10 to $130.13, slightly better than last month’s $128.16. Average sales price has fallen 27.4% year over year, from $258,045 to $187,331, again better than $177,780 which was November’s average sales price but nothing to write home about.

Median price is at $190,000, higher than November’s $170,000.

Fair Oaks Real Estate Market Update: December 2008

Fair Oaks real estate continues to see a high demand. Unit volume sales are up 95% year over year and, surprisingly enough, even non-distressed sales are up. 39 residential units sold in December 2008 over just 20 last December. 16 foreclosures also sold, a marked 300% increase over last December’s 4 and 4 short sales also sold, again a 300% increase over last December’s 1. 19 non-distressed homes have also sold, an increase (!) of 26.7% over last December’s 15.

Distressed and non-distressed homes are now equally divided in sales with each taking half of the sales pie, something not commonly seen in many areas of Sacramento where foreclosure sales make up the majority of all home sales.

The price data is of course nothing for homeowners to cheer about, but maybe we can find heart in the fact that homes are selling. Sold price per square foot is now at $160.72 – a 20% decline over last December’s $201.62. The average sales price has fallen 25% year over year from its high of $408,598 to today’s $306,158. Median sales price has fallen 16% from $359,950 to $301,000 for the same period. Interestingly, the average home sold is 6% smaller than last year.

Inventory is lower than last month. Currently, Fair Oaks has 4.9 months of inventory (based on the last year of sales) and 4.2 months of inventory (based on the last 6 months of sales.)

Home Sellers: How Not to Ruin a Home Sale Part 2

In the first part of this series, I wrote about how bad smells in a listing can ruin a good home sale, even if the house is priced right and shows well in general. I actually intended for this post to be just one post, but the topic of bad smells is such a pet peeve with me, that it seemed never to end. I can’t tell you how many homes I have stepped into with clients and the first thing they say when they enter the home is something like, “They have cats!” or “Smokers!” or “What’s that smell?” I can pretty much lock up and leave right then, because I can tell the outcome is not going to be good – and it never is. Anyway, on to the other things that ruin home sales.

It’s Not Just What They See…

Many home sellers live by the adage, “Out of sight is out of mind.” In my experience, that is not true when it comes to potential home buyers. If you are one of those people that just stuffs the junk into a junk drawer and then every drawer becomes a junk drawer, it would be a good idea to do a major spring cleaning before putting your home on the market. Just because you’ve stuffed your… er… “entertainment reading” into a drawer in the furthest laundry cabinet doesn’t mean no one will notice. They will.

Just assume that all closets will be opened. All dishwashers will be opened. All refrigerators, ovens, hallway closet doors will be opened. Believe me. I’ve walked with home buyers when they are in your houses. And they do check how much room is in these. And when they do see something you’ve stashed away, it’s not just your home that’s being judged, it’s you. And then, by extension, how well you may or may not have taken care of your house. So don’t give then any fodder. Get rid of it, or move it to a public storage facility. Ask yourself what you would keep in plain view and if it’s not going to be in plain view, it shouldn’t be there at all.

Soft Music is a Good Idea, Especially if…

Remember there used to be a time when real estate agents would actually bake cookies at Open Houses to make the home smell good? That’s because research shows that people are actually nicer to one another when the smell of baked cookies is in the air. Try to remember back to malls and how they smell just before the holidays? Heck, think of how malls smell every day of the year! Even if you can’t recreate the smell of freshly baked cookies (I mean, really, is it mandatory to get fat eating cookies when your home is on the market?!?) there are other things soothing to the senses you can create just as easily, perhaps more so. Like music.

Play soft, classical or semi-classical music in the background when home buyers are expected. Keep the light dim. Set a mood. The mood should be one of relaxation, calm and comfort. That is what home buyers want – not just a house, but somewhere they can call home. Some place that is quiet and comforting.

Another reason to play soft music in the home is to drown out other distractions that might occur unexpectedly at the time they are viewing the house. Like brakes squealing outside. Or the occasional passing car with loud blaring music (if you can call it music!). Restful sounds within the home can keep home buyers centered in the space and help them focus on the positive aspects of the house without distracting them. It’s almost as if the house becomes a world in itself and invites them in – exactly what most people want from their own home!

Clean Surfaces

This could be a female pet peeve. And if it is, you should pay even more attention to it since most home buying decisions are made by the women in the family. Call it sexist if you want, but most husbands will agree with me. The surfaces must be clean. Bread crumbs on kitchen counters, random pieces of string (or worse, hair!) on the carpet, these are strict no-nos. Not because they are necessarily disgusting (okay, the hair is!) but because they ruin the appearance of clean, untouched-yet-touchable surfaces.

The same rule goes for pet hair on the couches. Even if you’re going to take the couch with you, it makes the home buyer wonder what else in the home has been ruined by dogs. Trust me on this one – surfaces are important. Many home buyers are kinesthetic, which means they depend more on touch than any other sense. Don’t turn them away with dirty countertops. Make sure to clean the home and then clean it again to ensure it feels clean.

There. I think we’ve covered almost all the senses that really matter. Fortunately, you have only four to worry about. Taste is not one that home buyers depend on. So you get a free pass there! Happy home selling!

Home Sellers: How Not to Ruin a Home Sale Part 1

Okay, the potential home buyers have been walking through the home. Your Realtor® has warned you about the price and you’ve decided there is too much competition out there to push your luck. After all, just the other day, another foreclosed property has popped up for sale in your neighborhood. You wait much longer and the your concern is that your home is going to lose value as well. So you price the home under what you think it’s worth. Everything’s ready. And here come some potential home buyers. Do you drive them away by what you do?

Ooh, that Smell! Can’t you Smell that Smell?

After living in a home for a long time, some homeowners don’t even notice the smells in the home. But that doesn’t mean the home buyer doesn’t. When a person enters an unfamiliar setting, I believe that their senses are heightened and they are usually hyper-aware of things like smells. This is even more true if the home has been closed up for a while. Whether you are aware of it or not, remember that all houses have smells. The idea is to make yours have a better smell that invites people in, rather than makes them run for the car holding their noses.

Culprit #1: That lovely Persian cat
Yes, we all love our pets, but if at all possible, move the cat out of the home when you put the house on the market. If that seems too drastic, at least change the litter box daily and try to stash it away from public view. Get a room freshener in the area the litter box sits, so that its smells are quashed. There’s nothing worse than the smell of cat urine to home buyers and don’t think they won’t notice! More likely that they won’t notice anything but the cat’s… er… doings. And the brand new cabinets, the granite counters, the fresh paint – none of that will matter.

Culprit #2: The Dog!
And before anyone names me a cat-hater, (I own 2 cats and a dog, by the way) let me also say that man’s best friend can be a problem too. If your dog is used to laying on the couch and the bed, please be sure to vaccuum every single day your home is on the market. I know it seems unfair, but there are a lot of people out there who don’t like animals in their home and they will be bothered by the smell. Sure, he rescued your child from a traffic accident last year, he also still needs a bath before people arrive. Better yet, take the dog for a walk when home buyers arrive to look at the house. That way, he won’t distract them by jumping up and down or barking either.

Culprit #3: Dirty Dishes
There will be days (weekends, mostly) in my home when dishes pile up in the kitchen sink. Really, the dishwasher is just a few inches away from the sink, but sometimes it seems like miles. But my home is not on the market. And you can be assured those are cleaned up and put away before guests arrive. So dirty dishes in the sink are a strong no-no. Apart from the fact that they are visually unappealing, they also smell if left too long. Get rid of them. Wash dishes as soon as you finish eating if you’re selling your home. Yes, even if it is just one. Don’t pile them up and wait for a full load. And don’t think hiding them unwashed in the dishwasher is a good idea, either. Homebuyers do open appliances to see if the insides, believe me!

Culprit #4: the Garbage
Okay, this one should be obvious, but perhaps not. Get the garbage out of the home every single day, sometimes twice a day, especially if you like seafood or chicken. Or if you have a baby, like I do, who wears diapers. There’s nothing worse than a potential home buyer wanting to hunt down the source of a bad smell. And yes, on the surface of it, it might not seem like a big deal. It’s only garbage – of course you’re not going to leave it behind when you move for them to take care of, but we’re talking of first impressions and in my experience, home buyers know in the first five to ten seconds if they like the house or not. Those five seconds are hard to get back once they’ve been ruined with smells.

Other Random Culprits
Yes, there are more. Many more. Cigarette smells, unclean bathrooms, mold under the sink, random unknown blobs of dirt on the floor, old beer containers, unidentified spots on the carpet, fertilizer in the house plants, dirty shoes, old laundry, smelly socks, stinky undershirts, food in the sink, rotting flowers in a vase, the list goes on.

Yes, we’re a dirty species. But when our homes are on the market, we must give every pretense of smelling good. Remember you’re selling the home devoid if your selves and that’s how it must appear to every potential home buyer, or you’ve just ruined a home sale!

El Dorado County Real Estate Market Update: December 2008

El Dorado county saw its first year over year drop in unit volume sales in months. 99 homes sold in December of 2008, 10.8% lower than the 111 which sold in December 2007. 42 foreclosures sold (up year over year by 16%) 18 short sales sold (up 125%) and 39 non-distressed homes also sold (down 41.8%). Distress sales now make up the major chunk of home sales – 60% of all sales.

Sold price per square foot is down once again. It is currently at $167.17, down 17.9% over last year’s high of $203.63. That is also lower than last month’s aerage price per square foot number of $171.42. The average sales price is also down 21% year over year; it has fallen from $466,714 to rest at $368,912, also slightly lower than $373,892 in November 2008. Median sales price is down 18.5% from $417,000 to $340,000, lower also than last month’s $350,000.

Inventory is at 9.8 months (based on the last year of sales) and 9.3 months (based on the last six months of sales). El Dorado county might see some pain yet if the short sale inventory doesn’t get sold quickly. There are 250 short sales currently on the market and while that number is only slightly larger than the 193 active foreclosures, the difference in inventory is striking. Foreclosures only make up 3.7 months of inventory. Short sales? 17 long months!

Folsom Real Estate Market Update: December 2008

There might be good news on the horizon for Folsom dwellers, but it’s still too early to call. The numbers though seem to suggest a healthy market for home buyers. With the current real estate climate coupled with proximity to the rest of Sacramento county taking a toll on prices on homes in Folsom, buyers have enjoyed some bargains here. However, that could change very quickly – and Folsom is one of the areas where we will see it first.

Unit volume is down 9.1% year over year in Folsom. And we continue to see a nice balance between foreclosure sales and non-distressed sales. 20 foreclosures and 23 non-distressed homes sold in Folsom in December. The rest (7) were short sales. Non-distressed sales are down 46.5% however over last year, while distress sales have gained momentum. Foreclosures were up 122% and short sales up 133% year over year.

Sold price per square foot – the most reliable indicator of home prices – has fallen yet again from $212.19 to $182.68 currently. It is 13.9% under last December. The average sales price has also tumbled 12.9% over last year, from its high of $449,488 in December 2007 to $391,428 last month. That is however higher than November’s average sale price of $386,010. Median sale price year over year has also fallen from $380,000 to $361,450. That is a drop of 4.9%.

Inventory is at 4.5 months.

Elk Grove Real Estate Market Update: December 2008

If you’re looking for big and bigger homes, Elk Grove is definitely one place to find them. With the average home above 2000 square feet, home buyers seem to be flocking to this city to find the best deals. And deals they are finding – with foreclosures and short sales selling at such a rapid pace, the average homes sold in Elk Grove are getting bigger – about 8% bigger to be exact.

The statement about foreclosures and short sales selling fast is no hyperbole either: 190 foreclosures and 37 short sales sold in the month of December in Elk Grove. That’s more than 6 REOs and more than 1 short sale a day! That led to a 150% increase in foreclosure sales year over year, a 270% increase in closed short sales year over year and a 41.5% decrease in non-distressed sales! Only 12% of all sales were non-distressed properties, with the majority (73.6%) being foreclosures. Unit volume remained higher than last year at 85.6%. A total of 258 homes sold in Elk Grove in the month of December 2008.

The average price per square foot has fallen to $120.11 – that’s a drop of 25% over last year’s $160.23. The average home in Elk Grove now sells for 19% under what it sold for last December: average sale price has tumbled from $323,140 to $260,538. The median sale price has also fallen 22.3% – from a high of $310,000 last December to $241,000 in December 2008.

Inventory is lower than last month. It is currently at 3.8 months (based on the last year of sales) and 3.3 months (based on the last six months of sales).

Sacramento County Real Estate Market Update: December 2008

If you’re waiting for a happy new year in real estate, this might not be it. Well, then again, it might. But the numbers in Sacramento county are less than prolific. Usually, nothing changes much in December anyway as home owners and home buyers are smack dab in the middle of the holiday season. Their days are better spent visiting than home shopping. Nevertheless, here are the numbers.

Unit volume is up again over November and over last year by a whopping 105.6%. A total of 1914 homes sold in December over just 931 last December. Of these, 72.4% (1385) were foreclosure properties and 10.4% (200) were short sales. Compare that with just 329 non-distressed properties selling in Sacramento county and you will see why prices have fallen yet again. Non-distressed sales now make up 17.2% of the total sales, down 27% from last December. Not co-incidentally, foreclosure sales are up 217% and closed short sales are up 354%!

Sold price per square foot last month was at $122.69. This month, it is down slightly over last month at $120.64 – that is however a drop of 31.6% year over year. The average sales price is also down 36.3% for the same period. It is currently $192,773. Last month, the average home sold for $196,839. Median price also tells the same sad story: 38.3% drop over last year. We are currently at $170,000 down from last month’s $175,000 and December 2007′s $275,500.

The only silver lining here is that inventory has shrunk a little. Sacramento county is currently at 4.2 months of inventory based on the last year of sales and 3.6 months based on the last 6 months of sales. Foreclosure inventory is at 1.9 and 1.6 months respectively.

Home Buyers: Three Ways to Pick the Right Neighborhood

I must be focusing on the home sellers quite a bit lately… and honestly, there aren’t a lot of them out there. Most homes on the market – the ones that catch a first time home buyer’s eye anyway – are bank-owned. (By the way, some of them are such a steal lately. I was in Roseville yesterday showing homes and came across some fantastic finds for under $200,000.)

Anyway, for the purpose of this post, I’m going to focus on how you as a home buyer (first time or not) can pick the right neighborhood and be happy with your purchase. The fact that home prices have fallen so much makes it hard to choose the area you really want to live in. Couple that with the fact that REOs have generally deferred maintenance and unkempt front lawns and picking the right home seems like quite a gamble. But not if you follow these simple tips:

Friends and Family

Sure, you might not be the person to want your mother-in-law over at your home for dinner every night, but having family and friends in the same area might be a good idea. For one, chances are you have already been to their homes a few times, so you know the neighborhood. And instead of checking the newspaper for crime statistics and other details your relatives probably have first-hand knowledge of most of what you care about.

A built-in social life means a lot to many people as well. You might think you don’t care about that now, but sometimes having the yellow book or google as your only friend when you want to head out to just pick up something from the nearest store or find that perfect burrito place in town is not such a great idea.

Distance from Work / Commute Time

Some home buyers like to focus on the time it would take them to get to work. I remember my daughter’s pediatrician saying that he was all but two minutes away from his place of work and he loved it. He almost fainted when I told him I lived in Pollock Pines. Well, to each his own. I like to clear my head before I head home, unlike some others that would rather just get home and then relax.

Whichever camp you belong to, make sure that your home choice matches it. A good way to do this is to drive around during your lunch hour. If you prefer to live close to work, get a drive-by look at the homes listed in the area. You can also just search the area on our MLS search right here, but driving around gives you a visual of the homes, so you are better prepared to judge them. If you are one who likes a commute, time yours and then drive around on the weekends. Don’t judge your commute by the weekend drive time though. Pollock Pines for example is just 45 minutes from Sacramento on the weekends, but during week days it can take almost an hours and a half!

Do your research. Get a look at homes, compare prices and styles. Take your time getting to know the area. Some places are notoriously only business areas. Be sure you can live there or far enough away that you can separate home from work and relax when you’re home. Well, I suppose I should qualify that with an “if that’s important to you.”

Other Ways to Pick

The best things – my husband and I have decided – about moving to Pollock Pines are the neighbors. I have never met nicer people anywhere. Because it is a smaller town than Sacramento, the sense of community is greater but it isn’t so small that everyone knows your name and where you are and what you’re doing. If neighbors are important to you, some footwork might be necessary. It isn’t so odd to knock on a few doors and ask what the area is like. People are quite friendly when you ask about anything that is important to them. And if they aren’t nice, well, move on. Why would you want to live next to a grouch?

Google can be your best friend when looking for a certain interest and then buying a home close to it. For example, if you have a dog and want a dog park close, just search for “dog park” and the place you’re looking at. Same for horses. Or maybe you want to live close to a vineyard or a small home brew club. Google can give you all the answers and then you can do your research from there.

Hopefully, I’ve helped point you in the right direction. It’s usually a good idea to take some time to figure out what is important to you before making the leap to buy a home. Then you come from a place of motivation and reason to buy. Just because home prices have fallen drastically in a certain area doesn’t make it the ideal place. Take some time to do your research and once you know the right place, feel free to pounce on the right home!

Three Big Remodeling Errors Home Sellers Make

Picture this: You have to sell your home. Perhaps your company asks you to move to another city. Quickly. The real estate market is a buyer’s market, but you hope to recoup the costs in the place you relocate to. But you still want to make a good sale. Thankfully, you have been judicious in the purchase and the sale will not be short. You have some cash on hand to spruce up the place you currently live in before you put it on the open market. What do you do? Hopefully, you don’t make these three biggest errors when remodeling for a sale!

Painting Everything White

This seems to be a favorite mistake because it appeals to everyone’s sense of cleanliness. If it’s white, you can spot a speck of dust, we think. And so, if it’s white, it must be clean. While that seems like a good idea, usually painting the entire place white has just the opposite effect. For one thing, it looks like an attempt at sanitation. Like a hospital. People don’t like living in a hospital – it appears cold and unappealing to comfort and warmth – two things home buyers will pay a premium for. Why cold? Because it dulls all the little details. It hides the crown molding and it covers up the window design. It makes all the features of the home disappear! Why would you want to do that?

The only time whitewashing a house is a good idea is when the house is a short-term rental and one that is painted every 3 months or so. The landlord has chosen the cheapest paint available and one that requires the least amount of work and attention to detail. You want to create the opposite effect. So pick your paint with care and pay attention to detail. Use paint to accentuate the trim, the molding and the wainscoating. These are features. Don’t hide them!

Making Changes Based on Personal Preferences

I don’t know why it is that moving (or potential moving) brings out the finish-it-all-now monster out in all of us. Suddenly, we feel the desire to set everything right, become more organized, clean up our act, so to speak. This nesting instinct is a good thing – especially once we get to the new home – or we wouldn’t unpack and would live in boxes all our lives! But in the home that is going on the market, the nesting instinct is completely misplaced. While finishing projects is necessary, getting them to fit your personal preferences is not! Sometimes, it’s hard to draw the line, but you must!

Most home owners have projects. They have ideas of how the home should look and what it should feel like. Unfortunately, only a few homeowners ever get their home to look like that picture in their mind. And it’s a worthy endeavor, just not one to engage in while the home is on the market. Sometimes, this involves abandoning projects and finishing them in a way different than one imagined, getting the home to appeal to a taste that is different from your own. But remember, you will not be living in the home any more! Save your efforts for the new place and save yourself some money, too.

Getting the Latest and Greatest

Many home sellers think that the more they remodel, the more money they will make in the sale of a home. That is simply not true. According to most research, kitchens, bathrooms and siding gets the most return on investment. So watch for what remodeling efforts you want to put into the home before you list it. All of them are not created equal. Just because granite countertops are fashionable does not mean they immediately increase the value of the home – just look at the all the REOs on the market today. Believe me, a lot of them have granite counter tops.

A better idea is to look at how much you’re willing to spend and then take a good look at your home. If you can afford an interior designer, get one. The most important thing for a home to sell is not that it has the coolest, newest brand-name appliances or fixtures. It’s conformity. You want to stay within the style of your home and the houses around it. It’s called the principle of comformity. This is not to say that you cannot upgrade a 1940s kitchen. By all means, go ahead and do it. Home buyers love upgraded kitchens but be sure you retain a sense of the original style of the home. Then, when the home is on the market you could also play up the charm by staging it.

While I’m not absolutely sure these are the three biggest errors home sellers make, I’m pretty sure they rank pretty high on the list. So try and avoid these and hopefully you will hold on to enough of your money to be able to get the next home just as you like it!