Sacramento Real Estate Blog

OK, help me out. When gas prices go up, that’s bad. When the price of healthcare goes up, that’s bad. When the price of groceries goes up, that’s bad. Yet when the prices of homes go down, that’s bad?

Well, it is if you’re using the equity in your house to pay for your groceries, your healthcare, and your gasoline, I suppose.

But if you’re looking to get out from under your landlord, that’s good! (Unless the prediction about rising interest turns out to be true. So far I’ve been wrong about that issue myself, and expected it to rise more and sooner than it has).

Here’s some more crystal ball stuff.

We lumped three zip codes together when dealing with Florin, now we’ll tackle the no less than five zip codes that the MLS considers “North Sacramento / Florin / Del Paso Heights”: 95833, 95834, 95835, 95836, and 95838.

The average home in Natomas sold for $292,763 in November, down 16.5% from the $350,415 average of November of 2006. The median price fell 16.2% from year to year, from $340,000 last November to $285,000 this November. Sold price per square foot fell 22.3%, from $215.11 last November on average to $167.20 this November.

Currently there are 13.5 months of inventory in Natomas. Of this, 27.1% are bank owned foreclosures, and 35.1% are short sales. Of the 92 units that sold in November, 33 were bank foreclosures (35.9%).

On January 1st, be sure to look out for our new set of questions and answers for Sacramento buyers. This is a feature in which I will be answering questions that might come up in your mind when you think about buying your first home and will deal with all aspects of the home buying process - from looking for a house to closing escrow and getting keys.

We might even release an e-book later with these questions and answers. So check back often… and learn!

The Franklin / Freeport area in South Sacramento is the area that’s been hardest hit by foreclosures in Sacramento County.  As you’d expect, in connection with the high number of foreclosures there have been especially deep price decline, high inventory, and large numbers of listings expiring unsold.

Only about five homes sell per month in Franklin / Freeport.  Therefore, in order to have enough numbers to discuss this area somewhat intelligently, we’ll look at the first eleven months of 2007 compared to the same period for 2006, rather than looking at a single month.

From 2006 to 2007, homes in the Franklin Boulevard area lost about a quarter of their value.  The average price fell 27.2%, from $335,800 in 2006 to $244,628 in 2007.  At the same time, sold price per square foot fell by 24.8%, averaging $220.92 in 2006 and falling to $166.19 in 2007.  The median selling price was $314,000 in 2006, and has now fallen 20.4% to $250,000.

In 2006, only 1.1% of sales in this area were bank owned foreclosures, versus 58.5% in 2007.  There are more than two years (28.3 months) of unsold inventory to get through in Franklin / Freeport, of which 41.7% are foreclosures, and 30.2% are short sales.  Some time in early 2008, we expect to see combined inventory for short sales and foreclosures top 75% of active inventory.

The Sacramento MLS, Metrolist, lists the name of the 95831 zip code as “Sacramento South Land Park Greenhaven”, but one look at the map, and Sacramento area residents will immediately recognize that bulge of land around that they call “the Pocket Area”.

The numbers for November show a neighborhood that’s doing relatively well for Sacramento County, with homes retaining more of their value than other areas, and much better figures for inventory and unit volume as well.

Sold price per square foot declined only 6.1% from November to November.  Last November the average Pocket Area home sold for $398,204, while this year the average home sold for $390,719, a 1.9%.  The median selling price in Sacramento’s Pocket Area in November was $365,090, down 6.9% from last year’s median price of $392,000.

The foreclosure rate in the Pocket is 13% of active inventory, while short sales account for 8.7% of active inventory — a combined rate of 21.7% is much lower than Sacramento’s overall average, which recently topped 50%.

Other numbers also show the Pocket Area’s relative strength compared to other Sacramento neighborhoods.  Inventory is only at 5.67 months, putting the Pocket Area (technically at any rate) in the “sellers’ market” category.  Unit volume dropped only 4.2% from November to November, so the Pocket was relatively immune from the November slowdown that plagued the rest of the area.  Days on market and the expired to sold ratio are both down slightly from last year — lower numbers are “better” for sellers in each case.

Congratulations to Brandon and Jessica on buying their first home together!

This couple just got a fantastic price on a home in the Foothill Farms area of 95841 with zero down. In fact, when the final net sheet was in, their total out of pocket expenses were a little more than $250. That includes closing costs, appraisal and all other fees. The seller paid everything! The home was an REO which had been priced extremely well and I’m sure the new homeowners will reap the rewards of this excellent decision just five years from today.

I believe the smartest thing these savvy home buyers did was to get a market analysis on the areas they were interested in and then pick one that has shown the best appreciation historically. Also, with Jessica’s detail oriented mind, we were able to coordinate with the title company, lender and everyone else involved perfectly, making this one of the smoothest transactions I have ever done.

If it wasn’t for the lender (with the lending rules changing everyday) this transaction would have been seamless. But all’s well that ends well!

Congratulations Joe and Rudy.  Buried hatchets are always good, especially if one can somehow work some Jackie Chan into the thread.

Folsom’s real estate market is relatively strong compared to other areas in Sacramento, but is still undergoing some price decline along with high inventory. Bucking the usual trend, November was a good month in Folsom in terms of unit sales. Sixty-four units sold in November, 16.4% more than last year’s 55 units.

The average home sold in Folsom this November for $474,148, down 8.6% from last November’s average of $518,627. Sold price per square foot fell 9.9%, from $239.00 last November to $215.33 this November. Meanwhile the median sale price fell from $482,500 last November to $436,500 this November.

Compared to Sacramento County as a whole, Folsom has a relatively low number of short sales and foreclosures in inventory, with the two categories accounting for just over one fifth of active inventory (20.4%). The expired to sold ratio and the average days on market both fell from November to November.

I thought I’d be contrarian today, just because. Hope Christmas was good for everyone and if you’re considering buying a home, read this article and projection for 2008 and see why this is the best time in years to do so.

While you’re reading that, it might also be a good idea to head over to Yahoo Finance and read this one which suggests that you skip the 20% down payment, which has become so common today as advice to everyone.

I’ve always said you should read all sources and then make up your mind.

So much of the heat (and not light) that’s shed on real estate market writing contains the implicit assumption that falling prices are bad.

Are falling prices bad? Well, they are if you have no choice but to sell now, and you owe more than you own.

Falling prices are also bad if you’re buying and your position is such that you’ll have to sell while prices are still falling.

For everyone else, falling prices are much less of a catastrophe than melting ice caps, because we’re likely to see the situation turn around in a relatively short term.

Falling prices are actually good if you want an investment 1) that you can afford and 2) that provides positive cash flow.

For the longest time, I didn’t see too many properties that penciled out positive in Sacramento County. Today I stubbed my toe on a condo that seemed offhand to pencil out so well that I threw some conservative numbers such as a 25% vacancy rate at it, and I still ended up $5 per month in the black.

There’s probably an improvement of $100 per month that one could make in the vacancy rate, and you can take out the $85 per month in management fees if you want to rent it out yourself. The other thing that’s conservative about this analysis is that this is based on the list price of the home. On the flip side one should inquire about utilities and factor in an estimate for maintenance.

Granted, five bucks is not a lot of money. But lots of folks who bought when it was “a good time” because prices were going up were happy enough to be upside down by hundreds of dollars. (Like the seller of this condo — which is now bank owned? Could be!)

How’s Florin doing?  Well, the alternate title for this post should give it away:

“Florin Maul”.

If real estate is local, and there are local winners (Land Park, East Sac), of course there have to be local losers as well.  Enter Florin, the area encompassing the zip codes 95828, 95829, and 95830.  Florin is roughly bounded by Sunrise Boulevard on the east, and by Kiefer Blvd, Jackson Highway, and Elder Creek Boulevard on the north, by Stockton Blvd in the west and Calvine Boulevard in the South.

From November to November, the median selling price of a Florin home fell 21.5%, from $325,000 to $255,000.  Last November the average selling price was $361,962 — this average fell 25.4% to $269,932.  Insult to injury, this year’s home was larger — so the average price per square foot fell 29.1% from year to year in Florin.

A year ago, bank foreclosures made up 1.6% of sales, though there were any number of short sales in inventory.  This November, bank foreclosures accounted for 61.3% of all homes sold, and together, foreclosures and short sales make up 62.7% of the 18.6 months inventory. 

Rounding out a perfect storm of numerical bad news, unit volume is down 50.8% from year to year, and as of this November the expired to sold ratio is 212.9%

In movies, 2007 was the year of the threequel.  Sensibly enough, Beyonce Knowles was the year’s most desirable woman (I’ve been saying that since 2006, at least).  Al Gore won the Nobel Peace Prize, while the arctic ice cap melted at an alarming rate.

In Sacramento real estate, I’ll remember 2007 as the year when those of us who entered the business early in the decade learned the mechanics of selling short sales and foreclosures. 2007 was the year of the foreclosure in Sacramento County. 

This chart shows the number of foreclosures sold month by month through November of 2007 in blue.  The short sales are shown in pink.

Short Sale “Time Lag”?

About a month ago, a reader responded to my post about the dismally low closing rate for short sales by remarking that my analysis failed to account for the fact that short sales take longer than foreclosures to sell.

The chart above does not show short sales lagging behind foreclosures by the 1-3 months it takes to sell them.  It shows a steady increase in the number of REOs sold.  REOs broke the 10% barrier in April, and short sales have yet to rise above 6%.  The longest short sale I’ve done took four months — sometimes we can close them in 30-60 days.  If short sales were lagging four months behind, not just failing to close, there should be at least 18% of them closing every month by now.

Another problem with this argument is this.  Yes, short sales take longer, but the short sale step also happens before the bank owns the property.  So these sales take longer, but they also start earlier, so the longer sale should be a wash, and clearly the numbers above show that it isn’t.

Elverta is a small community of older homes on acreage (many suitable for horses) as well as some infill development, located north of Rio Linda and west of Antelope (see map).  Because not many homes change hands every month in Elverta (about three per month over the last year), we’ll look at a year’s worth of real estate data, comparing December-November 2006-2007 with the same period for 2005-2006.

The change in value from year to year in Elverta was substantial, so it’s fair to say that Elverta was one of the areas that was hit hard by the downturn in the market.  Last year the average sale price was $399,872, while this year the price was $339,769, a 15.9% drop.  At the same time, this year’s home was slightly larger, on average, so that the sold price per square foot fell 20% from year to year, from $286.42 to $219.49.  The median price last year was $315,000, versus $286,000 this year, a 9.2% drop.

The most dramatic feature of the Elverta market is the change from year to year in the number of units sold, from 69 per year to 32, a 53.6% drop.  Elverta has 18.4 months of inventory to get through, some 51% of which is either a short sale or bank owned foreclosure.

Winter is not the time when most people get charged up about wanting to remodel. But in my family the day after Christmas is traditionally the time we use to plan and begin a new project. Ideally, you wouldn’t want to build a new roof then, but inside projects like replacing the wall heater, or painting seems just right. For one, it chases the winter doldrums, for another it helps brighten the room (if you choose the right colors) and your outlook.

So this winter we’re planning on transforming the fixer-upper part of our house in Pollock Pines. We bought it cheap because the top half was beautifully remodeled and the ground floor was not. It has wood paneling and is very depressing. Now that we have an extra set of hands with family, it should be pretty fun. I will post pics as soon as I get them!

And in case you have wood paneling on your walls and you want to update it, have you thought about just painting it? Read about it here.

Fair Oaks buyers this November bought a much larger home than the average buyer last year.  Last year the average home size was 1816 square feet versus this year’s 2158 square feet, an 18.8% increase.  So it makes sense that both the average price and median price went up from year to year.  In November 2006 the average sale price of a home in Fair Oaks was $418,015, a year later it has increased 9.5%, for a November average of $457,650.  The median selling price increased 13.2% during the same time, from $372,500 to $421,750.

Adjusted for square footage, however, the average home in Fair Oaks lost 7.9% of its value from year to year.  Last year’s sold price per square foot was $230.18, versus $212.07 this year.

Overall, Fair Oaks is doing better than the Sacramento County averages.  Inventory is low by county-wide standards at 6.71 months.  County-wide, the combined short sale and foreclosure inventory account for more than 50% of inventory, but in Fair Oaks, that number is 23.5% at present.

After writing yesterday’s article about East Sacramento’s real estate market, I started to wonder if maybe part of the reason was that all along it had not seen the wild over-valuation that some other areas had experienced during the boom years of 2003-2005.  With this in mind, I decided to take a look at the Land Park area (i.e., the area known in MLS as “Land Park / Curtis Park”, zip code 95818).

The reason is that I remembered thinking in 2004 or so that prices were way out of line in Land Park.  One home in particular stands out in my mind from that time as a real piece of junk, yet it listed for something well over a half million dollars.

Well, in looking at Land Park’s numbers, it quickly became clear that Land Park was behaving a lot like East Sacramento.  The answer to East Sac’s success, therefore, was probably not so much that it was never over-valued as that it simply retained its peak value better, like Land Park.

Like East Sac, this November’s crop of Land Park homes was significantly (12.5%) smaller than last year.  Thus, though the average sale price dropped, sold price per square foot rose from year to year.  This November, the average home sold for $495,795, down 8.4% from last year’s average of $541,321.  Reflecting the average size of this year’s home, the median fell even further, 18.8%, from $520,000 last November to $422,000 this November, an 18.8% drop.  Yet over this time, sold price per square foot rose 4.7%, from $318.61 to $333.64.

Like East Sacramento, this year the expired to sold ratio is down from last year’s numbers.  Last year the ratio was 54.2%, while this year the number is only 22.7%.  Another sign of the sellers market in Land Park is the inventory, which is only 3.88 months.

So, if you’re looking for a Sacramento home that’s close to downtown and increases in value when the market appreciates, and holds its value when the market is down, it’s hard to beat 95818 and 95819.

I always enjoy writing about East Sacramento, because the numbers there are so strong month after month (see for example my earlier East Sacramento market updates).  A true maverick, it’s as though East Sacramento never got the memo about the market being bad, and decided to continue to enjoy a sellers’ market amid the most ursine predictions of doom and gloom.

To be sure, East Sacramento posted a slow November compared to last year.  Unit volume fell 27.3%, from 22 units last year to 16 units this year.  During the same period, however, sold price per square foot rose by 6.5%, from $320.32 last year to $341.15 this year.  In November, the average home sold for $463,625, down .9% from last year’s average of $467,984, while dropping 7% in size from last year.  At $415,000, the median selling price was down 5.5% from last year’s median price in East Sac of $439,000.

Along with increasing price per square foot, East Sacramento continues to enjoy other seller’s market numbers, such as low inventory.  With an average of 22 homes selling each month and 68 units available, inventory in East Sac works out to 3.14 months, well below the traditional six-month line of demarcation between a buyers’ market and a sellers’ market.  The expired to sold ratio, already low last November at 36.4%, fell to a meager 12.5% this November.

The only sprinkle of rain I’ve found on this otherwise sunny parade of good news is that short sales are up to 10.3% of active inventory.  However at a combined total of 13.2% for short sales and REOs, the number of distressed sales in East Sac still pales in comparison to the numbers for Sacramento County as a whole (over 50%).

According to Wikipedia, the second best web site on the Internet next to this one, the fellow who called economics “The Dismal Science” was Thomas Carlyle, and he coined that phrase in response to the theories of Robert Malthus.  That’s the same Robert Malthus whose work on the limits of the food supply compared to the increase in population growth was one of the pillar’s of Darwin’s theory of Natural Selection.

See what you can learn on a real estate web site?

I don’t know about economics being intrinsically dismal, but I do suspect that dismal news helps us to sustain a dismal market, just as good news helps us to sustain a strong market.  People tend to operate off of their own perceptions, rather than reality.

Example:  on December 15, 2005, Freddie Mac reported that for that week the average mortgage rate for a 30 year fixed loan was 6.30% at .5 point.  That month the average home sold in Sacramento County for $246.19 per square foot.  Under those conditions, 1,480 buyers purchased a home in Sacramento County.

Now it’s almost the same time of year in 2007.  According to the latest Freddie Mac survey, interest is at 6.11% at .5 point.  The average price per square foot is $184.05.  Yet based on current projections, it’s looking like less than 600 homes will sell this December.  Maybe it’ll get up to 700 or so, but to give you an idea, as of now it’s December 14th and 276 units have closed in Sacramento County.

“So we keep waiting
(waiting)
Waiting on the world to change
We keep on waiting
(waiting)
Waiting on the world to change”

– John Mayer

The Joke About the Airplane

A four engine jet loses an engine.  The pilot comes over the loudspeaker and says “Attention ladies and gentlemen, please don’t be alarmed, but we’ve shut down one of our engines as a precaution.  Our flight will be delayed 20 minutes.”

Later a second engine goes out, and a third, and each time the pilot announces a longer delay.

Alarmed, one passenger wonders out loud what will happen if the last engine fails?

“In that case”, says the stewardess, “we’ll be up here all day.”

What Does the Joke About the Airplane Have to Do With It?

$246.19 per square foot:  1,480 buyers buy homes

$184.05 per square foot:  less than 700 buyers buy homes

Oh my gosh, what will happen if we get down to $10.00 per square foot?

When that happens, no one will buy anything.

Real estate agents are one of the few groups of people who have our photos on our business cards.  The origins of this bizarre practice are shrouded in mystery, but I have a theory (a charitable one) that at some point we started doing it because we’re going into peoples’ homes all the time, so it helped to  identify who we were. 

Some less charitable interpretations are:

1. So we won’t forget what we look like (or)
2. In case there’s no still pool of water to gaze longingly into (or)
3. So clients can tell which of the five agents they drove around with we are.

How Many #1 Agents Do You Know

Richard Robbins, a real estate trainer, has a joke he tells at seminars about how there are an awful lot of “Number One Agents” out there. 

That’s because the other thing about Realtors® besides the fact that we want people to have a handy photo of us on our business card is that we want everyone to know what superstar producers we are.  Yet the requirements for being a top achiever in terms of performance aren’t always that strict, and the averages are downright dismal.

To give Sacramento County their due, the Masters Club requirements are still pretty reasonable. At four million dollars in closed transactions, a Master’s Club member needs to generate about $100,000 in gross commission volume or thereabouts.  Actually the rule is eight closed ends and $4,000,000 or 30 closed ends.

On the low end of the expectation scale, the El Dorado County Board of Realtors® recently changed the criterion for their Top Achievers award to $1.5 million in closed sales.  Working strictly in El Dorado County, where the average home sold this year for $516,076, in order to be an El Dorado County Top Achiever, you needed to sell three houses in 2007.  At an eighty percent split, an El Dorado County Top Achiever could make about $33,000.

OK, so if you’re top achievers sold three houses (or more) in El Dorado County, how well did your average agent do?   Well, not everyone works in the County where their board membership is, but for the sake of simplifying the numbers, we’re going to treat El Dorado County as a little island.  Estimating a bit to fill in the end of the year numbers and working from an approximate count of the number of Realtors® belonging to the El Dorado County Board as of November, we get 1,733 homes sold in El Dorado County, by 1,043 agents.  So, we get a total sales volume of $859,149, and an approximate total yearly commission volume of $23,626.  Assuming an average split of 80%, the average agent made $18,901 per year before taxes.  (We’re excluding land and residential income properties in our analysis, but it gives a general idea).

Let’s try running the same numbers for Sacramento County.  Of course there we have a lot more homes selling (estimated volume this year of 10,843), but they sell for less, and we also have a lot more Realtors® (approximately 7,068) competing for them.  When we work it out, the average ends up being $583,698 in sales volume per year for each Sacramento County agent.  Using the same 2.75% average as above, that means the average Sacramento County Realtor® generated a total of about $16,052 in commission volume, for an after-split (gross to agent) income of something like $12,841.  To put that in perspective, working forty hours per week for fifty-two weeks at California’s minimum wage of $8.00 per hour, you’d make $16,640, and you wouldn’t have to pay self-employment tax.

Now you know the origin of the expression “real estate broker“.

This is a not so focused real estate article.  I’ll let you in on a secret:  we’ll be lucky if it comes into focus at all by the end.

Of course, the flip side of a total lack of structure is a great deal of freedom.  I could, as it were, romp through this article willy nilly, and you could marvel that I don’t fly sheer through one of its flimsy walls.

I just didn’t have the heart for a market update today, to be honest.  Prices are down.  Volume is down.

On the other hand, at Elite Properties, it’s December and we should have a couple of escrows closing within the next week or so, so I consider us ahead of the pack. 

We’re not super high maintenance, just good solid agents who get things done.  We don’t have a lot of big hair.

Our articles usually are a lot more focused than this, however.

It’s not like there aren’t some things that have been on my mind lately, that I was half-heartedly planning to focus on.  If my focusing muse hadn’t flown off somewhere to lie on a couch sipping lattes, I might have tackled:

• What do real estate production boasts really tell you?
• Low ball offers and the women who love them.
• Breaking the ActiveRain habit without expensive gum or “the patch”.
• What’s up with financing, anyway?
• How perception drives real estate.
• The new mortgage blog.  [There’s a new mortgage blog?]

In fact, come to think of it, this would make a really nifty little writing agenda for the next week or so. 

It’s hardly as ambitious as Purva’s 312 real estate questions.  I really should ask her to send me that list.  312?  That’s a book length set of questions, all right.

Are we there yet?

When I first started selling real estate, I heard the phrase often enough: “Whether the market moves up, down, or sideways, it’s almost always interesting.”

True.

It’s also almost always changing. And the winds of change are here again. A few articles this morning caught my eye and I’m bringing them in here along with the experience of what’s going on around me that I see.

For sure, I’m seeing more clients interested in buying now that the market for the most part has bottomed out. Even if we haven’t quite hit the vrey bottom yet, buying a home is more affordable than it has been in a long time and so the fence-sitters have jumped in.

Today is the Fed Fund’s meeting and most economists expect a rate cut. Although the Fed rate cut doesn’t directly affect mortgage rates, it does have an indirect effect downward.

The National Association of Realtors revised their forecast upward. Okay, it was very slight, but it is at 5.7 million, higher than the 5.69 million homes they predicted last month.

Obviously, the jury is out on the final verdict. But it’s not that hard to see the changes.

Wow, look at that, it’s December already.  No wonder the sun isn’t out.

With the end of the year upon is, it’s time for holiday parties and closing out the accounting season, and Elite Properties is no exception.   At the end of the week we’re getting together for our Christmas Party dinner at the home of the agent who’s arguably our company’s best cook, Vicki Agregado-Babcock. 

Since it’s also time for closing out the accounting season, today I learned that our company’s best cook is also the company’s top producing agent for the year, so congratulations to Vicki for being ahead of the curve! 

I was somewhat chagrined to learn that I came in only in second place for total sales volume.  But I don’t mind too much because as the broker I can make up whatever awards I want, so I think there’s a good chance I’m a shoe-in for broker of the year.

If all else fails, I’m also the tallest.

See, kids, listen to your mom.  Eating your vegetables really works.

…for your home, that is. Consider these three fantastic finds for your bathroom:

A freehander shower: Especially if you’re one of those tall people that have the shower hit you in the face everytime or you’re so short, you can’t reach the shower head to adjust it. Makes the bathroom look very high-end as well and might make a good resale price for your house!

Ambient Rain: For those days when you really just want to shower in the rain, but it’s, say, 110 degrees outside.

A bronze sink: In bowl form or built in. Gives the bathroom a very special look. But be sure to decorate around these items and remove the clutter.

Everyone knows bathrooms sell homes. Consider these finds investments into the future value of your house!

First-time buyers have traditionally bought with zero down, or the help of a gift from a relative for a down payment. However, this traditional method of buying a home might be in trouble. According to my mortgage sources, at least two mortgage insurance companies will limit mortgage insurance to 95% loan to value by the middle of January in California. Chances are the others will follow.

This means that mortgages might have to be reduced to 95% of the value of the home. Therefore, no 100% financing.

First-time buyers, if you have a house in mind, now is still a good time to get in before the loan available to you is gone. Escrows are typically thirty days, so there might still be time to get in before this rule changes, as so many others have in lending lately.

Beyond the middle of January, be prepared to have at least 5% down to buy a home. Gifts from relatives however can count toward that 5%.

The average condo in Sacramento County sold for $248,895 in November, a .2% increase (huh?  See the statistical notes below) from last November’s average of $248,451.  The median price, however, fell 9.5%, from $245,830 last November to $222,500 this November.  The average sold price per square foot fell 8.3% during this time, from $209.84 last November to $192.35 this November.

Some 22.8% of the condos that sold in November were bank foreclosures, much lower than the overall sold foreclosure numbers of 39.9% for Sacramento County.  Similarly, just over 41% of active inventory is either a short sale or foreclosure, significantly less than the approximately 50% number we reported earlier for the Sacramento County residential inventory as a whole.

Possible Problems with the Sample Size

One of the problems you have to be aware of when dealing with statistical data is sample size.  In general, the bigger your sample, the better you can make sense of numbers like averages, median, etc.  Thus, when you talk about the average life span of an American, you want as big a sample as you can find.  If you Google “Sample size and confidence” you’ll start to get a feel for the problem.

However, in dealing with monthly real estate data, the sample size is often smaller than we’d like, but in order to say anything meaningful, we have to deal with what data we have.

The Rosemont area of Sacramento has many relatively affordable homes in established neighborhoods, convenient to both Folsom and Rancho Cordova on the east and to downtown Sacramento on the west.  In November, 21 homes sold in both Rosemont zip codes, 95826 and 95827.  The average sale price was $241,400, down 21.4% from last year’s average price of $307,095.  The average sold price per square foot was $176.98, down 19.3% from last November’s average of $219.20.  The median sale price of $244,000 was down 23.1% from last year’s median of $317,500.

The 9.45 months of inventory in Rosemont has a fairly high percentage of Foreclosures (20.8%) and REOs (26.4%) — though slightly less than the average for Sacramento County.  Of the homes that sold in November, 42.9% were bank owned foreclosures, versus only 2.3% last November.

The real estate market in Elk Grove in November shows an area that’s harder hit than most by foreclosures, with deep price cuts over the last year as a result.  In November, the average home sold in Elk Grove for $346,011, down 17% from last year’s average of $417,001.  Similarly, the median price was down 17.9%, from $395,000 to $324,200.

This November, however, the average home sold in Elk Grove was also 6.5% larger than last November’s average.  As a result, the sold price per square foot ratio dropped a full 20.9% from year to year — one of the more dramatic one year price drops we’ve written about.

Currently, there are some 11.2 months of inventory in Elk Grove.  56.2% of those are “distressed sales” of one type or another, either short sales or foreclosures.  Last November, only 2% of the sales in Elk Grove were bank foreclosures — this November, that number has risen to 50%.

Homes that do sell in Elk Grove, however, show that even though there are bargains to be had, homes still sell fairly close to their list price when all is said and done.  The $346,011 average selling price in Elk Grove is 96.6% of the average list price.

Hello, my name is Inigo Montoya.  You killed my father.  Prepare to die.

This is a tale about blaming the real estate market for whatever else is wrong.

This is also a tale about a bit of ugly sheudenfreude on my part.  The other day I was reading Sacramento News and Review, and there was an article in there about the Sacramento Bee’s stock prices.  While the average Sacramento County home owner’s investment lost 20-30% of its value over the last two years (1st chart, below), the average investor in McClatchy Stock (Sac Bee’s parent company), saw the value of their investment fall 75% (second chart, below).

Normally I’d feel bad for the folks over at the Bee — or at least, I might feel neutral.  But I have to admit, coming on the heels of these folks babbling every other day about the “housing crisis” and “mortgage meltdown” for the last two years, I didn’t feel a heck of a lot of sympathy.   If a guy who invests a dollar ends up with 75 cents, and that is a “meltdown”, what word might be appropriate for a guy who invests a dollar and ends up with a quarter?  Catastrophe?  Unmitigated disaster?  How about THE END OF LIFE AS WE KNOW IT!

But wait — The Sacramento Bee has identified the culprit here.  You see, the mortgage meltdown and the END OF LIFE AS WE KNOW IT at McClatchy aren’t unrelated — it’s the housing market’s fault that the Sacramento Bee’s stock is in the toilet!

Explaining the downturn in July, the Sacramento Bee’s Dale Kasler wrote:

“The downturn mainly reflected a significant drop in ad sales, especially at McClatchy’s California and Florida papers. Nearly three-quarters of the drop in ad revenue came from those two states, which are suffering from real estate woes. Real estate advertising was down 32 percent in California and Florida, causing a spillover effect that depressed other ad categories.”

Wow, really?  That’s quite a meltdown indeed, if now we’re causing a “spillover effect” that’s depressing other ad categories.  How does that work, exactly?  I suppose the sales manager at Folsom Lake Ford said to himself, “Well, hmm, the houses aren’t selling that well any more — no point in advertising the new Explorers this week.  Let’s pull the ad.”

Spillover effect.  OK I’ll bite, let’s discuss spillover, shall we?  With houses harder to sell, not easier, you might expect that instead of spending less on real estate advertising, we might end up spending more.  Then again, maybe your former advertisers didn’t like the fact that your constant use of terms like “Meltdown” and “Crisis” is scaring the buyers off day in and day out, while prices are better than they’ve been from a buyer’s point of view in two years and interest is still quite low.

“My name is Inigo Montoya, Sacramento Bee Staff Writer.  My yellow journalism killed my stock prices.  Prepare to watch me blame the housing market — again!”

By the way, if there are any Sac Bee readers out there who are still wondering, JFK was not killed by Adjustable Rate Mortgages resetting.

The numbers are in for November.  As we get into what’s usually a slow time of year, unit volume is continuing to rise slowly from September and October, with 809 units selling as against October’s 803 and September’s rather bleak 709 units.  Buyers are beginning to take advantage of the bargains offered by short sales and REOs (bank foreclosures) in inventory, which collectively account for just over 50% of active listings (REOs make up 24%, while short sales comprise 26.5% of inventory).

The average home sold for $323,772 in November, down 15.2% from last November’s average of $381,666.  Average sold price per square foot is off 16.6% from a year ago, at 188.35% versus last year’s $225.97.  The median sale price in November was $293,000, down 15.1% from last November’s median of $345,000.  Unit volume is off 25.7% compared to last year, but as we mentioned earlier, is strong compared to recent months.

There are 11.21 months of unsold inventory at present in Sacramento County, down from last month’s figure of 11.61 months.

John should be posting statistics for resales in Sacramento soon. I’m learning it’s tough to try and keep up posting to the blog(s), writing an e-book, getting mailers out to my clients for Christmas and managing an escrow. Huh! That would explain why the days seem to be shorter. No wait. They really are.

And while we’re upset with other people not doing their jobs, let me just throw in a certain title company that cannot seem to provide a Natural Hazard Disclosure for almost a week and a half after I’ve requested it. (It took them one week to get me a preliminary title report!) And all my calls have been of no avail. Today is day 17 when we’re supposed to remove contingencies! I guess we’re all in a holiday mood!

Add to that the software for our transaction not working - or better yet, not letting me into it - and we have the best of all worlds: a —— — Realtor with too much to do!!!!! (Add your own expletives. I’m okay with any of them, really.)