Archive for May, 2009

Fruitridge Real Estate Market Update: April 2009

Fueled by low prices, the sales in the Elder Creek / Fruitridge area continue to rise. 120 homes sold this month in the area of which 103 were foreclosure sales! The rest were divided equally between short sales and non-distressed sales. Overall unit volume in Fruitridge is still 71.4% higher than it was last year at the same time showing that this area has still to rid itself of a lot of homes before the market will stabilize.

Foreclosure sales have spiked 87.3% year over year; short sales have also registered a huge increase of 700% for the same period, while non-distressed homes have suffered a decline of 36% for the same period.

The average sold price per square foot is currently an unbelievable $67.69 – that’s a drop of 42.1% year over year from a high of $116.91. The average sales price is $76,589 down 37.2% from last April’s $121,988. The median sales price is $65,000 down 39.5% for the same period.

Inventory is at 2.4 months based on the last year of sales and 2.2 months based on the last six months of sales. Foreclosure inventory is at 0.6 months and 0.5 months respectively.

Citrus Heights Real Estate Market Update: April 2009

As we have seen elsewhere, as soon as the foreclosure inventory begins to show signs of bottoming out, so do home sales in many areas. Citrus Heights is no exception to the rule. A total of 87 homes sold in the month of April and overall unit volume suffered 16.3% year over year. Foreclosure sales themselves are down 10% year over year, while short sales have gained 275% for the same period. Non-distressed sales are also down 52.4% for the same period.

Average price per square foot is now $119.86. That’s a 19.4% drop from last April’s high of $148.77. The average sales price in April is $175,550 which is 15.7% lower than a year ago. Median sales price is down 17.5% for the same period. It is currently $170,000 down from $206,000.

Inventory in Citrus Heights is at 3.3 months based on the last 12 months of sales and 3.7 months based on the last 6 months of sales. Foreclosure inventory is at 0.6 months and 0.7 months respectively.

North Highlands Real Estate Market Update: April 2009

Lots of sales and lower (and lower!) prices have fueled the real estate market in North Highlands. 64 homes sold this month in the area as compared with just 49 a year ago – that’s a unit volume increase of 31%. Of the homes sold, 43 were foreclosure sales, 8 were short sales and the rest 13 were non-distressed. So distress sales continue to dominate the real estate sales market, even though the non-distressed sales almost doubled year over year.

Where is the bottom for the prices? No one knows. Currently average sold price per square foot is $79.92, that’s 29% under last April’s $112.88. Average sales price in the area rests at $93,641 down 27.5% from last April’s $129,220. The median sales price is currently $87,925, down 29.7% year over year from a high of $125,000.

Inventory is at 2.1 months. Foreclosure inventory is at 0.3 months, so unless we see more REOs soon, it’s slim pickings for foreclosure sales and homebuyers might be forced to take a look at some of the short sales. Short sale inventory is at 20.8 months.

Land Park Real Estate Market Update: April 2009

The majority of sales in Land Park are still non-distressed sales. Perhaps that’s because there just aren’t that many foreclosures and short sales on the market. While that should spell good news for prices, Land Park continues to remain sluggish.

A total of 13 homes sold in the area in the month of April of which 2 were foreclosures and 11 were non-distressed homes. Overall unit volume is down 13.3% overall year over year. Foreclosure sales remain the same, but non-distressed home sales fell 15.4% for the same period.

Sold price per square foot is currently at $231.12 which is down 16.6% from a year ago. The high last April was $277.22. Average sales price in April is $340,900 down 12% from last April’s $387,633. Median sales price is now $350,000. Homebuyers as a result have afforded on average 5.5% bigger homes year over year.

Inventory is at 4.5 months based on the last 12 months of sales and 4.9 months based on the last six months of sales.

Antelope Real Estate Market Update: April 2009

A total of 60 homes sold this month in the Antelope area and there have been some interesting changes in the real estate landscape. For one thing, the overall unit volume is down 27% year over year. And for another, foreclosure sales are down for what is perhaps the first time in months. Overall foreclosure sales are down 48% year over year.

As for the numbers: 33 foreclosures sold this April along with 15 short sales and 12 non-distressed homes. Currently 4 out of 5 homes are distress sales and while that number might not be too different from last month or even a year ago, the difference is that short sales have doubled year over year!

Price per square foot is currently at $114.21 – that’s down 17.5% year over year from a high of $138.50. The current average sales price is $183,288 down 25% year over year from a high of $243,829. Median sales price is currently $186,989, down 22.3% for the same period.

Inventory is at 3.3 months based on the last 12 months of sales and 3.8 months based on the last six months of sales. Foreclosure inventory is at 0.5 months and 0.6 months respectively.

Home Sellers: Top Five Ways to Sell a Bathroom

(If you’re wondering why you would sell just the bathroom and not the entire home, please refer to the earlier post about “selling” a kitchen.)

Oh good, you’re back. I hope you’re beginning to get the idea that selling a home is more than just selling the real estate that the home seems to be. The reason why homebuyers really pick one home over another can be pretty complex. Just for a small smattering of choices in a home buyer’s mind, let’s name price, floor plan, location, proximity (or distance!) from friends and / or relatives, childhood nostalgia for an area or type of home, size of home, features and amenities, neighbors, and so on. And these are just the ones they admit to. Or even are aware of! There could be hundreds or thousands other reasons that lurk just under the conscious mind of the supposedly always-searching-never-really-finding-just-the-right-dream-home home buyer.

But this post is about bathrooms, isn’t it? So let’s get to the top five ways to entice this elusive home buyer into seeing your bathroom as superior to all others he or she has seen.

1. Sell the Dream

I don’t know if, in the past, bathrooms used to be a room that was mainly considered in a practical manner. Did home buyers ever walk in to one of these and think, Great. It has a shower and a toilet and a mirror. Oh, and a sink to wash my hands and face. Perfect. Done. The point is, no one today thinks of a bathroom as a particularly practical place. Remember the kitchen and the fantasy of the gourmet cook? Well, a similar fantasy pervades the bathroom. But it is one of relaxation. There isn’t a single person who doesn’t want a bathroom to resemble a spa. Okay, well, maybe my husband is one. But as a homebuyer, would he deny me that if I wanted it? Of course not.

The fact that home buyers want a bathroom to be a place of relaxation and comfort might be a new phenomenon but it is one you should not overlook. In fact, knowing this is an inroad into the mind of your home buyer. Do what you have to to make the bathroom as relaxing and peaceful as you can. Accessorize without overdoing it. Use a spa theme. Create the fantasy. Home buyers love it!

2. Banish Clutter & Messes

True story: I once found a blender in a bathtub. Don’t ask me what it was doing there. Suffice it to say it was a spare bathroom and listing pictures were not taken that day. Unless you want to be a source of humor for the home buyers to recall at every housewarming – including their own – don’t use the bathroom for storage. Even if it is an extra bathroom, you don’t want to give the impression of it being derelict. In fact, a bathroom can be worth thousands of dollars! Just ask an appraiser. If you have an extra one of these, consider yourself lucky.

Every bathroom must be clean, however. Any trace of any of the following will make the potential home buyer turn tail and run: mold, used floss, pet hair, human hair, dandruff, old band-aids, used cotton swabs, ear swabs, well, you get the idea. Clean might as well mean disinfected. Just don’t go crazy with the bleach. You want the bathroom to smell clean, but you don’t want to give the homebuyers the impression that they’re in a hospital!

3. High End Fixtures Sell

Part of the reason the little soap and shampoo sachets in upscale hotels are so attractive to bring home are not because you’ve paid a lot of money to stay there. It’s because the impression they give you is one of opulence. And you feel like you’ve brought a little bit of the opulence home by using the shampoo you brought with you while you stayed there and “stole” the little packets. Don’t worry – you’re not a kleptomaniac! You were taken in by the luxury of the place.

Creating luxury in a home for sale is easier in the bathroom than anywhere else. If you do have a sizable budget, that would definitely make it simpler, but again you don’t have to be extravagant. A singular piece like a bowl wash basin or a particularly large beautiful mirror with details carved on it, or even a high end light fixture that draws attention to itself can add to the feeling of opulence. And don’t think of it as unnecessary, either. One Realtor® I knew had a listing with a claw-foot tub and he very nearly sold the house because of that tub! In the advertisement, the lady who asks that architect to “build a house around around this” sets down a faucet, she seems ridiculous, but it might not be too far from the truth. Choose your fixtures wisely. It can be the difference between your home and an REO with the same floor plan.

4. Remove all Signs of You!

This can be a tough one and no one likes to hear it, but it’s so important. Especially in the bathroom. Home buyers usually look at resale homes because they are less expensive and less of a gamble in terms of being in an established neighborhood than new home developments. But they don’t necessarily like the idea that someone else has lived in the home before them. Why are newly remodeled homes so attractive? For the same reason: they ensure that they are not going to find anything that belongs to the previous owners in there.

So when home buyers do come through your home, you might want to find a safe spot outside the bathroom (maybe a storage cabinet somewhere that’s not as likely to get opened) to put your shampoo, makeup and whatever personal effects you like to use in the bathroom. My personal pet peeves include razors and lipstick, but there are a host of others. So hide those! Remove all signs that you are selling a place where you still live and get clean every morning. It’s tough but very important to a selling a home.

5. Make Necessary Repairs First

Nothing will put a potential home buyer off like a leaking faucet or a water stain close to the edge of a bathtub. You can have a spa theme and the bathroom can smell wonderful. You can even have high end appliances, but home buyers have a special vision I like to call “problem oriented” and spot red flags like leaks and water stains before they see the features. So unless you have fixed everything that needs to get repaired, I would advise against putting your home on the market.

Sometimes it’s a very simple fix and sellers might not even think about it, but it’s a good idea to walk through your home and be critical to the limit of it. Remember you won’t be living in it any more, so why not consider it critically? Fix everything that needs to get fixed. If it’s in question, it must be repaired. And bathrooms are where most of the repairs need to take place because water damage can develop into a serious problem very quickly. Don’t scare your home buyers away!

If you have a home improvement budget before you put your home on the market, it’s a good idea to pay the most attention to the bathrooms and the kitchen. Next time, we’ll be discussing the living room and the extra bedroom, so come back!

Home Sellers: Top Five Ways to Sell a Kitchen

(Of course I know you’re not just going to sell the kitchen!)

This is part of a series on “selling” various aspects of a home. We know that in the current real estate market, it is even more important not just to add value to your home as a home seller but also to showcase it. While lowering the price is the single most effective way to get more foot traffic through your home when it is on the market, it is also important to show the home buyer just how much more you are offering than, say, the bank-owned home on your block.

The recent dearth of good inventory of REOs might just be your ticket to a move out of your house! Just recently we are beginning to see a tentative interest in owner-occupied homes again. Ask any Realtor® and you’ll hear that kitchens are the most important part of the sale of a home. They can make buyers fall in love and pick a more expensive but better home over a less expensive but plain one. So how do you shine your kitchen and really “sell” it to the buyer? Read on!

1. Think Gourmet

Even though we know we’re not the best cooks in the world (barring some of us at some parties that we can’t stop talking about!) we like to imagine that we are. If your kitchen inspires the word “gourmet” you’re halfway into your new home. All home buyers like the thought of a well thought out, open kitchen where they can whip up a meal in minutes while entertaining ten of their closest friends. Believe me, it’s a fantasy like a sunken tub. Even though all the kitchen ever sees is a take-out every single night of the week, homebuyers still like to own the gourmet kitchen. And their fantasies! So why not give it to them?

If you have appliances that you can boast about, make it a point to showcase them. If you have under cabinet lighting, leave it on during a showing. Little tweaks in lighting can set just the right mood. You don’t have to go and spend thousands of dollars to create a gourmet kitchen; just setting the right things on the countertops like an espresso maker can give a buyer a nudge in the right direction. Think about setting a mood, creating an ambience of luxury. It will go a long way in the mind of the homebuyer and make them more likely to remember your entire home in that very different light.

2. Spit Shine Everything!

This one is a bit of a pet peeve. Homes must be clean and the cleanest area has to be the kitchen. If you are still living in the home I understand how hard this can be. But it is not impossible. You are brave to have your home on the market at this time so it’s even more important to be brave when it comes to work. Clean the area after cooking or eating. If a kitchen looks dirty, home buyers have a visceral reaction to the listing and decide immediately that they will not buy it. They might not even know it, but when they’re with their agents deciding which home to put an offer on the dirty kitchen goes first. Trust me on this one.

Same goes for smells of food and cooking trapped inside the home. Take it from me: you do not want to cook fish in your home ever when the house is on the market. Ever means ever. Go out for sushi if you have to. But don’t dare cook fish. This is especially true in the winter months when houses remain closed for long amounts of time. Steer clear of the fish, clean the kitchen well and air it out after using it. That’s the safest thing you can do!

3. Say “no” to Clutter

I have never seen sales fall faster flatter on their faces than when there is too much in a home where there should be very little. Confusing? Not really. See, in the same way that you wouldn’t put a huge bed in the middle of a tiny bedroom so that you have to walk sideways or even on the bed to get around in the room; in the same way you can’t have all the appliances you have collected since you were in college on your countertops. The countertops need room. Think of it as breathing room.

I was watching a show on HGTV once where the Realtors® talk about a one appliance rule. They say you have one appliance out when the home is on the market. While that might be a bit extreme, I think it’s a good rule of thumb: when it doubt, leave it out. Don’t clutter your counters. Room is important to home buyers. If they see too much junk they’re not going to think, “Wow – look at all this house can hold.” They’re going to think, “Where does our stuff go now?” We are not all blessed with the creative imagination, especially not when we’re shopping for a home. Join the dots for them. Leave out the clutter.

4. Don’t Forget the Nose

We went over this somewhat in terms cooking fish and other smells that can linger in your home. And while we are on the subject, let me reiterate the importance of getting rid of garbage every single day. Well, let’s make that before anyone comes over as well. So maybe two to three times a day. When we live in our homes, we forget that they have smells. But they do. And you don’t notice until you come in from the outside. The best thing you can do is keep the windows open at all times or use a good exhaust fan.

In our family I’m the one with the nose. And I can smell something from miles away. It doesn’t help that we have a child under one year old as well, so suffice it to say if our home ever goes on the market, it’s going to be quite an ordeal keeping the house from smelling – well, rotten. Remember some people have a better sense of smell than you do, so get one of those plug in scents in the kitchen, air out the home and definitely get rid of the garbage before it starts to smell! You might not smell anything but in this case it’s better to the safe that sorry!

5. Details are Everything

Small touches can make a big difference. Ever hear the term less is more? It’s true, but only partially. Less is more if the less is well chosen and well placed. In the kitchen, this could apply to a fruit basket sitting perfectly on a counter top. (Make sure it’s real fruit, by the way. No one likes the idea of a plastic grape!) Using specific items that are well chosen you can draw the attention of a potential home buyer to specific features of your kitchen.

Here are some simple examples: Have a wine chiller? Why not place a nice bottle of wine out with two glasses close to it? A dining table in a nook can be made into a statement with some bright flowers in the center. Remember the details and you will leave the home buyer longing to be part of the life your home promises them. Never forget you are not just selling a home but also the idea and fantasy of living in that home. And details are your best friends.

It is said that kitchens and bathrooms can sell homes. I think every room is just as important as the other. Come back for more great ideas on decorating and staging your home for sale!

Greenhaven Real Estate Market Update: April 2009

Where is the foreclosure inventory? That’s the question on everyone’s minds and it’s the same in Greenhaven. Of the slim pickings, a mere 19 homes sold in the area fondly called the Pocket area in April. That’s a unit volume drop of 40.6% year over year. 5 of these sales were foreclosure sales, 3 were short sales and 11 were non-distressed homes. This means that now almost 3 out of every 5 homes sold are non-distressed.

Average price per square foot has fallen 15% year over year from a high of $190.86 to currently $162.40. Interestingly enough, homebuyers have also bought themselves homes on average 12% bigger than last year at the same time. Average sales price is currently $326,372 down 4.5% from a year ago when it was $341,703. The median sales price in the area is $310,000 which is 6.6% lower than last April when it was $332,000.

Inventory in Greenhaven is at 5.3 months based on the last year of sales and 6.6 months based on the last six months of sales. Foreclosure inventory is at 1.5 months and 1.6 months respectively.

Fair Oaks Real Estate Market Update: April 2009

Is the mystique of Fair Oaks fading? Sales have been fairly lackluster in April in the area in keeping with last month’s boring performance. A total of 25 homes sold in the area in the April for a unit volume decline of 36% year over year! 12 foreclosures closed escrow along with 3 short sales and 10 non-distressed homes. So 3 out of every 5 homes sold is now a distress sale. We’ll have to see if this moves any closer to a balance.

The sold price per square foot is at $147.15 down 23% from a year ago when the high was $191.46. Interestingly enough the average home sold was also 6% smaller than the average sold the same time last year. The current average sales price is $274,472 which is 28% lower than a year ago. Median price is 37% under what it was a year ago. The median price is $232,000. A year ago it was $369,000. Average sales price a year ago was $379,387.

Inventory in Fair Oaks is at 5.7 months based on the last year of sales and 7.1 months based on the last six months of sales, pointing toward the slowdown in purchases. Foreclosure inventory is at 0.9 months and 1.2 months respectively.

Downtown Sacramento Real Estate Market Update: April 2009

It isn’t foreclosures killing downtown Sacramento’s prices in real estate like elsewhere in Sacramento. There are only 2 active foreclosures in the area and if history is to be relied upon as a guide to the future, as soon as foreclosures come on the market in the area, they are picked up by eager buyers. Still downtown hasn’t quite found its groove.

A total of 10 homes sold in the area this month of which 8 were non-distressed, 1 was a foreclosure and 1 was a short sale. This means unit volume is down year over year by 28.6%.

Prices are down as well. The current sold price per square foot is $272.69 down 26.4% year over year from a high of $370.68. The average sales price has plummeted from $502,214 to $375,609 for the same period. That’s a drop of 25%. The median sales price is at $345,666.50. That is down 12% from a year ago when it was $404,000.

Inventory is at 7.1 months based on the last year of sales and 10.5 months based on the last six months of sales. Short sale inventory is at 18 months and 15 months respectively.

Rosemont Real Estate Market Update: April 2009

49 homes sold in Rosemont this month with distress sales still leading the way. 34 of the homes were foreclosure sales, 2 were short sales and 13 were non-distressed. This means that almost 3 out of 4 homes sold in Rosemont were distress sales. While foreclosures are being picked up by home buyers, short sales have a long way to go. there are currently 109 short sales on the market in the area and the average 7 make for more than a year’s inventory of short sales!

But back to the unit volume – it’s up by 36% year over year. And – interestingly enough – this includes the individual groups of foreclosures (up 42% year over year) short sales (up 100% but that’s 2 short sales as compared with 1 so that isn’t saying anything) AND non-distressed sales (up 18.2% for the same period).

Sold price per square foot has stabilized somewhat at $118.70 – almost the same as last month, but 20.3% lower year over year from a high of $149.01. The average sales price is also 24% lower year over year falling from $215,128 to $163,306. The median sales price is at $161,300 down 23% from $209,900.

Inventory in the Rosemont area is at 2.7 months based on the last year of sales and 3 months based on the last six months of sales. Foreclosure inventory is at 0.4 months no matter how you look at it.

FHA No Flip 90 Day Law

First off, I would like to say the best thing about being part of the Association of Realtors® is the legal hotline. Where else would you have lawyers sitting around the phone waiting to answer your legal questions? For free?

I recently had the opportunity to use the broker’s legal hotline provided by the California Association of Realtors® because we had a question about the 90 day no flip law of the FHA. I think now that most loans are FHA loans I think it’s a law I should mention here and discuss in brief. (Of course, the disclaimer stands: I’m not an attorney and am not providing legal advice.)

If you wish to read the law for yourself, you can click here. Referred to as “24 CFR section 203.37a” or more commonly the “90 day anti-flip law” of the FHA it disallows you from selling the home (or even having it under a sales contract) you have bought with an FHA loan for the first 90 days of ownership. There are various other requirements regarding appraisal and so forth for period after the first 90 days as well.

Now you might say, who’s flipping? But the fact is, many people are, albeit for small profits. From what I hear, the number of bank-owned properties on the market are dwindling and although some Realtors® expect to see more listed later this year, the quality of REOs on the current real estate market leaves quite a bit to be desired. This may have just contributed to the perfect scenario for small profits in the quick-flip area. Rehabilitating REOs and then selling them on the open market might be welcomed by eager home buyers who have trouble finding decent homes that are not REOs (too much competition) or short sales (too unsure.)

Whether the inventory goes up from here with more REOs coming on the market according to predictions or it doesn’t, watch for more of these kind of flip homes as the bank-owned homes start to look less and less attractive because of their condition. As the market starts to recover, we may just see more flips before it stabilizes.

If you’re considering it, just make sure you know the laws around it!

Elk Grove Real Estate Market Update: April 2009

This is the first time in many months we have seen an overall unit volume decrease in Elk Grove’s year over year real estate sales. Whether it means anything yet is unclear, but total inventory sales are down 11.9% year over year. Still Elk Grove managed to post a good number of 244 home sales in the month of April. 148 of these sales were foreclosure sales, 41 were short sales and 55 were non-distressed homes. Distress sales continue to dominate with 77.5% of the total sales pie leaving the rest 22.5% to non-distressed properties.

Foreclosure sales are down however year over year by 23% – something that makes me sit up and take notice. The real estate landscape of Elk Grove is changing again. Short sales gained 58% year over year and non-distressed sales fell 7% for the same period.

Where is the bottom for prices? It’s hard to say. Currently, average price per square foot is at $113.04 down 19.3% year over year from $140.01. Home buyers thus afforded themselves homes bigger on average year over year by 8%. The average sales price is currently at $249,810 down 12.6% year over year from a high of $285,725. Median price is also down 10.8% to $240,000.

Inventory is at 3.3 months based on the last year of sales and 3.6 months based on the last six months of sales. Foreclosure inventory is at 0.6 months and 0.7 months respectively.

Folsom Real Estate Market Update: April 2009

A total of 65 homes sold in Folsom this month with the number of sales pretty evenly divided between distressed and non-distressed sales. This is something we haven’t seen in a while and could just be a harbinger of a more normal (or normalizing) market. 21 of the homes that sold were foreclosure sales (that’s 32.3% of the total sales) 13 were short sales (20% of the total) and 31 were non-distressed homes (47.7% of all sales). Year over year, the change has been significant: foreclosure sales are up 91%, short sales are also up 160% and non-distressed sales are down 47.7%. Overall unit volume is up 10.2% for the same period.

Sold price per square foot is currently at $178.29 – that’s 9.5% lower year over year than $196.92. The average home in Folsom sold this month for $383,580 which is 10% under than last April’s average sale price of $425,622. The median sales price has also toppled 13.6% year over year from a high of $420,000 to rest at $363,000.

Inventory is at 4.7 months based on the last year of sales and 5.6 months based on the last six months of sales, which makes sense since we’re just coming out of winter. Foreclosure inventory is at 1.2 months and 1.3 months respectively.

El Dorado County Real Estate Market Update: April 2009

Nothing much has changed in the real estate landscape of El Dorado county since last month. A total of 128 homes sold in the month of April this year – that’s almost the same number as last April. Of these, 60 were foreclosure sales, 21 were short sales and 47 were non-distressed homes. So, the real estate sales pie in El Dorado county shows 47% of all sales to be foreclosures, 16.4% to be short sales (still a pretty large number if you compare it year over year to 5%) and 37% to be non-distressed homes.

The average sold price per square foot has fallen again from last month’s $161.83. It is currently a$148.57, 25% under last April’s $198.08. This has probably encouraged home buyers to acquire homes on average 5% bigger year over year. With this in mind, remember that the average sales price number is not as accurate when comparing year over year averages as the price per square foot. The average sales price in El Dorado county is currently $337,140, down 21% year over year from a high of $427,540. Median price has also fallen 16% for the same period from $380,000 to currently rest at $320,000.

Inventory is at 9.9 months based on the last year of sales and 11.7 months based on the last six months of sales pointing to the recent sluggishness in the El Dorado county market.

Sacramento County Real Estate Market Update: April 2009

Holy moley! Look at the date! Are we seriously this late in posting market updates? Well, the stars – or the weekends – didn’t quite align right this time, so excuse the delay and let’s get on with the statistics. Good or bad? You decide. I’m just here to report the numbers.

A total of 1885 homes sold this month in Sacramento county, an overall unit volume increase of 16% year over year. That’s pretty consistent with last month’s sales of 1836 total homes. The sales included 1229 foreclosures, 247 short sales and 409 non-distressed sales. So 78.3% of all sales are now distressed properties while the rest 21.7% are non-distressed homes. The highest gains this month year over year were in the short sales department – 140% up year over year. Foreclosure sales are also up, but by a much smaller 19% while non-distressed sales are down 16% for the same period.

Sold price per square foot is currently at $113.26, a drop of 24.3% year over year, but slightly higher than last month’s $112.70. Average sales price seems to follow the same curve – currently at $182,724 – which is 26% under last year’s at the same time, but higher than last month’s $181,625. Maybe the articles circulating in web and print media about Sacramento’s prices bottoming out are right. We’ll have to see. Median sales price is currently at $155,000.

Inventory is at 3.3 months based on the last year of sales and 3.5 months based on the last six months of sales. Foreclosure inventory has shrunk further to 0.6 months.

New Homes vs. REOs

During a recent conversation with one of our top producing agents at Elite Properties, Mike Keleshian, he mentioned something that I thought would be worth mentioning on the blog. He said that new homes are lately very possibly beating bank-owned homes as better bargains for home buyers and they are definitely options a home buyer should keep in mind when shopping in this market.

Really?

When one thinks of great bargains in this current real estate market, we tend to think of mainly bank owned homes. While it is true that prices have fallen overall because of the number of foreclosures in the market brought about by the number of bad loans out there, it is also important to remember that prices have fallen for all the homes.

While banks usually price their inventory at rock bottom prices to get rid of it, other homes in the neighborhood are also affected. Their prices have also fallen. (As you probably already know, prices are based on comparable sales of nearby homes. If all the homes in the area are foreclosures and their prices are depressed, the prices of the subject properties fall as well.) So it’s not just the foreclosures that are underpriced – brand spanking new homes have also lost value and are now cheaper than they used to be.

Can a Realtor® Show me New Homes?

Absolutely. In fact, one of the biggest changes that has occurred because of the real estate slowdown is that new homes are now featured regularly in the Metrolist MLS that all Realtors® in the area use. In the past, Realtors® were not welcome in new home subdivisions – and if you can remember the time – home buyers were picked by lotteries and long waiting lists.

Today, the situation is completely different. Home buyers have huge incentives to buy these new homes, whether it be free upgrades or better financing. Some homebuilders are also throwing in luxury vacations and so forth to entice home buyers. Of course, while you’re not really considering a luxury cruise as soon as you buy a new home it is important to know that the home buyers now hold the cards.

What about the Financing Aspects?

If you’re a first time homebuyer in this market, the world is your oyster! Besides the tax credit to first time home buyers, new home builders are now giving you incentives in terms of financing your home purchase. These incentives include a lower interest rate (i.e. lower than what you could get from the bank or any mortgage broker – they discount a point or so) if you use their preferred lender, various upgrades like granite counter tops, landscaping and / or custom paints and so on. Sometimes, builders will even offer to pay a year or two of your mortgage payment.

To compare this with a bank-owned home is to see the advantages of buying a new home right away. Bank owned homes typically need you to jump through their hoops – get pre-approved with their own lender, shorten your timelines to get a loan and various other financing issues. Why not look at new homes and take advantage of the incentives offered to you?

What are the Other Advantages?

I remember attending an appraisal class once and although the emphasis was on how to use comps for Realtors® the appraiser discussing details said something pretty unequivocally – Never compare a new home to a resale home. Why? Simply because it’s a new home!

But besides the fact that some people prefer homes where no one else has ever lived, the fact remains that a new home is something of a novelty for which people will pay a premium. Just from the practical side of things as well it has suffered less wear and tear and less depreciation than a resale home and usually much less than a home that has been foreclosed on someone for non-payment. (Of course, if there were no finances available for the mortgage payment, we can assume there is deferred maintenance on the home.)

It is up to the individual home buyer to decide whether or not he or she prefers a new home subdivision to a resale home, but it is however a choice that should not be ignored if you’re in the market for a home today. There is a host of choices out there and it’s a good idea to at least check each one out before making a decision!

Congratulations to Purva Brown

I am very pleased to announce that Purva Brown has been promoted to the position of Elite Properties Broker of Record, effective May 4, 2009.  As anyone reading this blog is aware, Purva’s been the true voice of the Sacramento Real Estate Blog, keeping the web site up to date and doing a tremendous job at it.  In her new role as the Broker of Record, Purva will take on a large scope of additional responsibilities, having overall responsibility for all of the company’s real estate activities.  Already in the past few days, Purva has proven herself once again to be a tremendous asset to the company in her new role, tackling her new responsibilities with her usual smooth aplomb and relentless attention to detail.

So anyway, with apologies for not going into her years of real estate experience and the fact that she was born at an early age and so forth, congratulations Purva – it’s a pleasure to have you in your new role.

Home Buyers: Top Five Rules of Trading Up Part 2

Yesterday we went over the most basic of rules for trading up or moving out of a small home into a bigger one. It’s important to plan this move perfectly and sell your old home before you buy a new one just because of the general state of the real estate market as it is today. Today we’ll see the rest of the rules of trading up, equally as important as the others mentioned in part 1 of this post.

3. Consider renting the old home

While this is not the conventional practice and can seem like a pretty odd thing to choose, if you are interested in adding real estate to your investment portfolio, this can be a pretty good idea. Many homeowners achieve this when the home they plan on moving from has a relatively small balance left on the mortgage or is completely paid off. While the idea of refinancing that small balance, borrowing against the home seems counter-intuitive, if you are conservative about it, you can manage to do a pretty good job.

The way it works is this: homeowners will refinance the home they currently live in and take some money out as a down payment on another one. (Like I said, this works best if the previous home has a relatively low balance on it and if they borrow conservatively. You can choose to supplement the borrowed down payment with savings to avoid borrowing too much.) The earlier home then will become a rental that brings in money every month (albeit a small amount) in rent which covers the new mortgage, taxes, insurance and other repairs.

It works because buying a home today can be cheaper than renting. But make sure your math is impeccable when you do this and you are not averse to working weekends – at least every once in a while – on your rental property.

4. Do your Research

If you are considering renting out your old property and moving into a new one, I strongly advise you take some time to research the neighborhood you live in and the one you intend moving into in terms of the following questions: Are there a majority of rentals there or owner-occupied homes? What is the average rent? How much visibility would the rental have? What is the average rental period? Are leases more common or month-to-month tenancies? What is the vacancy factor? And finally, how long does a home stay on the market before it sells. You will want to know this and get a good idea of the rental as well as the sales market in the area in case you decide being a landlord takes up too much of your time or otherwise isn’t worth it.

Another aspect you want to be careful of when you decide to rent out your current home and buy a new one is that you understand and are comfortable with the kind of mortgage you get. This is true also when your current home is taking longer than usual to sell and you have your eye on a new one. If you run into the wrong lender, he or she might try to sell you a loan that might work in the short term, and if you are comfortable with that, you may take it. But be absolutely sure that you understand the consequences of it, so you are not stuck with a mortgage you cannot afford or otherwise ruins you financially.

5. Get pre-qualified

Getting pre-qualified early is always a good idea even if you have just begun considering buying a home. The reason for this is that even if you aren’t going to write an offer the next day, you might want to get an idea of your credit. With the recent changes in credit extensions, reduced credit lines and otherwise rising interest rates and balance transfer fees on credit cards, you want to be absolutely sure your credit score gets you a good home mortgage rate.

Even if you are absolutely sure of your credit, still getting pre-qualified helps because you’ll have an idea of your monthly mortgage payment, your interest rate and also your total fees. This goes back to the previous point of doing your research.

That about sums it up for the top five rules of trading up! Follow these and you should be just fine. There are many homes to look at and remember that it’s a buyer’s market currently. So once you have sold your current home (or otherwise rented it out and are happy with the numbers) more than half the battle is won. Trading up into a bigger home – or your dream home – can be done right in any market if you do your homework. Good luck!

Home Buyers: Top Five Rules of Trading Up Part 1

Yes, the real estate market is great if you’re a home buyer. Interest rates are low, prices are even lower and there is a lot of inventory. There are so many homes to look at you might have a harder time making a decision than if there were fewer. Somewhere here I have written about how studies claim that the more options there are the harder it is for people to choose. But all that aside, as a first-time homebuyer, real estate right now seems like an easy “no brainer” choice.

But what if you’re looking to trade up? What if you are like so many of the rest of us who has homeowners already and just don’t want to pass up on this opportunity to buy a bigger home? Perhaps the last one just doesn’t do it. Maybe your family has grown or the kitchen seems to be getting smaller every year as your social circle increases. What then? Is there still room for those of us?

The good news is yes. But trading up is harder now because if you’re hoping to use the value of your old home to buy a new one you might be surprised to learn that your old home isn’t worth what it used to be. While it is easy to say that you will just make up the difference on the other side of the transaction – which is to say that even if the value of your current home is depressed, so is the value of the new one – this is not always an equal transaction.

Here’s what you need to know to make a smart decision about trading up:

1. Plan before you move

It’s easy to dream about a bigger home. If you are like a lot of people, Open Houses are fun and not just because you get to pry into your neighbor’s home. Okay, just kidding. We know you don’t do that. (Do you?) No, if you’re like most people, window shopping homes can be a lot of fun. You get to see different ideas of how homes are arranged and how people live. You get interior decorating images stuck in your head. You wonder if you can make your home look like a picture in a magazine.

When you are seriously in the midst of home shopping though you have to put that starry-eyed version of a house away and focus on practical matters. This can be a tough transition for a lot of people. Planning involves not just making lists of things you hate about your current home that you want to be different in your new home, it involves marrying that list to reality, budgeting for what is already available and can be bought and also making plans for the future to bring in what cannot be yours immediately. If it doesn’t sound like fun, it’s not. Not really. Unless you love doing this sort of thing. Then, more power to you! Go forth and conquer!

2. Sell before you Buy

I did already mention this a little bit earlier but I think it’s worth devoting an entire section to it. If you live in a home you bought a while ago (and by a while I mean before the recent appreciative period in real estate prices) you might still be able to sell it and make a profit. But don’t base your decision of how much your home is worth on the appraisal you got two years ago. And don’t base it on its refinanced value a year ago either. The only way to know how much your current home is worth is to get an appointment with a local Realtor® and have him show you the recent comps. These might surprise you, but it’s the only way to know if you’re looking at this move realistically.

Once you get an idea of how much your current home is really worth, you can then go back to the drawing board and decide if a trade-up seems like a good idea. You might decide that the numbers don’t add up as well as you thought and the old home doesn’t seem so bad after all and you can wait until this current depressed real estate market recovers to make your move. Or then again you might decide that this move is definitely possible. If your decision is the latter ensure that you sell your current home (not just put it on the market) before you head out looking for another. While it might scare you to be without a home for a month or two while your old home is sold and there isn’t a new one, it is the safest way to trade up. And with so many homes there to look at, finding a new home to fit your life into might not be as hard as you think.

Tomorrow, we’ll get into Part 2 of the Five Rules of Trading Up. Come back! If you are one of the many that are moving into a bigger home, you don’t want to miss this!