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Sacramento County Real Estate Market Update – October, 2010

Here it is the beginning of November, and as usual at the beginning of the month we can start to look backward at the previous month of sales and tell you how things are going. This is one of those economies where one looks at a set of data – house price loss, job loss, or what have you – and what passes for optimism is usually captured in the phrase “less severe than expected”. It’s not that the not that the news is routinely good yet – we can all get out our crystal balls and pretend we know the answer to that one. Instead, the news is less bad than we’ve sometimes seen it in recent memory.

So let me start with that. Compared to many periods we’ve looked at since the turn of the market in 2005 and 2006, the losses we see from October 2009 to October 2010 were “less severe than expected” for Sacramento County. Unit volume was down 16.2% from year to year, from 1711 units sold in October, 2009 to 1434 units sold in October, 2010. Most of this decline was in the number of short sales and non-distressed sales, dropping 18.9% and 18.8%, respectively, while the number of short sales sold dropped only slightly, 6.1%. As a result, short sales made up a larger percentage of overall sales volume this year, not buy much (21% of total sales last year versus 23.5% this year). Short sales still account for less than a quarter of overall homes sold even though they make up more than half of our inventory, probably because most buyers get tired of waiting the three months, six months, or more for an overworked beaurocrat in a bank to open their file.

Home prices also fell from October to October, though very slightly compared to the overall volume. Average sold price per square foot was down 2.5% during this time, from $121.86 in 2009 to $118.80 in 2010. The average price fell 1.3% from year to year, from $200,576 last October to $197,949 this October Meantime the median sale price fell a bit more sharply, from $179,900 last year to $170,000 this year (5.5%).

As a result of the decline in sales and the large backlog of unsold short sales (13 months of short sale inventory), overall inventory numbers have been creeping up. Currently we’re at 6.2 months of inventory, or at the beginning of what is technically a “buyer’s market”. Yes, I know, it feels like we’ve been there awhile, hasn’t it, but the arbitrary cut-off many author’s use to tell the difference is 6 months of inventory. As we move into winter, we expect inventory to continue to increase slightly, meaning more and more choices for buyers. Many of those choices are going to be short sales, however, so what this means for a buyer is that you should plan on looking and starting to write offers as much as three to six months or more before you’re planning to move. You should also consider getting bank-preapproved for a loan, especially to help you take advantage of the small number of REOs in inventory (currently 2.6 months of inventory). Be prepared for a “no” or two in this market, too, because you’ll be competing with cash buyers.

El Dorado Hills Real Estate Market Update

The real estate maket in El Dorado Hills in September is doing relatively well, as one might expect from the richest community in El Dorado County. Although the facile portrayal of the housing downturn as a product of sub-prime borrowers living in poor neighborhoods is an exaggeration, we have noticed that the wealthier communities have generally fared somewhat better in the market. To be sure, they have lost value, and to be sure, there are plenty of short sales and foreclosures to go around, but generally markets like East Sacramento, El Dorado Hills, Granite Bay and the like are the last to feel the downturn when it comes and the first to recover.

Certainly this is true of El Dorado County in September, where both unit volume sold and prices rose since last year. To be sure, in the case of price the gain was not huge but in this market any gain is remarkable. The average sold price per square foot rose 2.2% during this time, from $159.05 per square foot last year to $162.58 this year. Cynics will point out with some justice that a 2.2% increase is not exactly a phenomenon, but any increase in this market is remarkable. Because the average size that sold in September was 5.9% smaller than last year (3022 square feet versus 3210) the average sale price actually shows a loss of 3.8% — from $510,592 to $491,350.

Unity volume is up 13.2% in El Dorado County from last year, with 43 units selling this year versus last year’s 43. Of these, 21 units were non-distressed sales, the same as last year. The profile of the typical non-distressed sale, meanwhile, has changed dramatically, with a noteworthy 240% increase in short sales, from 5 units in September of 2009 to 17 units in September of 2010. Meantime the number of foreclosures has fallen 58.3%.

Unit Volume Data

Units Sold	September, 2009	September, 2010	Change
Foreclosures Sold	12	5	-58.3%
(% of total units)	31.6%	11.6%
Short Sales Sold	5	17	240.0%
(% of total units)	13.2%	39.5%
Non-distressed Sold	21	21	0.0%
(% of total units)	55.3%	48.8%
Total	38	43	13.2%

Price Data

Prices	September, 2009	September, 2010	Change
Sold Price / Square Foot	$159.05	$162.58	2.2%
Square Feet	3210	3022	-5.9%
Average List Price	$515,439	$514,254	-0.2%
Average Sale Price	$510,592	$491,350	-3.8%
Median Sale Price	$441500	$455000	3.1%

Inventory (Based on 12 months of prior sales)

Sale Type	Average Sales Per Month	Active	Months of Inventory
All Sales	50	466	9.2
Foreclosures	12	45	3.5
Short Sales	12	199	16.1
Nondistressed	25	222	8.6

Inventory (Based on 6 months of prior sales)

Sale Type	Average Sales Per Month	Active	Months of Inventory
All Sales	55	466	8.4
Foreclosures	12	45	3.6
Short Sales	13	199	15.1
Nondistressed	29	222	7.5

Carmichael Real Estate Market Update

Like many other areas in Sacramento County, the last few months have seen a healthy inventory sell-off in Carmichael, with sales volume up considerably over last year. For example, in August of 2008, 43 homes sold in Carmichael, up 59.3% from the 27 homes that sold in August of 2007. Over the last six months, an average of 44 homes have sold every month, up from the running twelve month average of 36 homes per month.

Size Matters

This year’s average Carmichael buyer purchased a substantially larger home than last year, with the August crop measuring in at 1967 square feet, 27.4% larger than last August’s average of 1544 square feet. During this time, sold price per square foot fell 26.8%, from $240.50 on average in August of 2007 to $176.05 in August of 2008, but because this year’s average home was so much larger, the average sale price fell only 6.7% during the year, from $371,385 in August of 2007 to $346,409 in August of 2008. Meantime the Median price didn’t know what to do, and fell $17.2%, from $355,000 in 2007 to $294,000 in August of 2008.

Short sales and foreclosures make up about 35% of active inventory in Carmichael, versus 46.5% of the sales in August.

How The East Sacramento Real Estate Numbers Failed To Cheer Me Up This Month

I usually like to check in with my favorite seller’s market, East Sacramento, whenever I need cheering up. Lucky for me I wasn’t starting from a really depressive base line this time, because the usual jolt of happiness I get from East Sacramento is mostly missing from this month’s numbers.

For most of the past several months, our reports about East Sacramento have shown prices holding very steady. This month turned out to be the exception that “proved” (i.e., in the original sense, “tested”) the rule, because February’s numbers saw a dramatic un-East-Sacramento-like dip.

This year the average home sold in East Sacramento for $459,127, down 22.3% from last year’s average of $591,145. The median price fell a less dramatic 5.8%, from $433,450 last February to $408,200. Meantime sold price per square foot dropped 16.8% from February to February, from $388.15 on average last year to $322.87 on average this year.

Unit volume was also down this February, from twenty units last year to thirteen this year. This number of thirteen was also well below the average monthly sales volume for the past year, which was twenty units per month.

Even though February was not a good month for the thesis of an East Sacramento seller’s market, there were a couple of areas where East Sacramento’s numbers still showed strong. First, compared to almost anywhere else in the region, inventory is still extremely low in East Sac at only 2.94 months. Secondly, the average days on market decreased from year to year, from 35 last year to 25 this year.

As we saw last time, overall East Sac put in a performance of about $350.00 per square foot for the last two years. So what we’re seeing in these numbers are unusually high numbers for last February, and unusually low numbers for this February. Of course with small sample sizes like East Sac such fluctuations are commonplace. What remains to be seen is the extent to which East Sac can recover from this month of poor comps.

Sacramento County Real Estate Market Update

Greetings, market statistics fans! Straighten up those pocket protectors and hang on to your slide rules, because it’s time once again for us to catch up on our REM sleep with yet another thrilling installment of our never-ending saga: Sacramento (County) Real Estate Market Updates!

And the crowds went wild.

The good news: 905 units sold in February, up some ten per cent from January. Unit volume was even up marginally from last February — and, yes, this still holds true when you adjust for the leap year. February’s unit volume was the highest since last July, when 977 units sold.

The average home sold for $273,603 in February, up slightly over January’s average of $269,301, but down 29.9% from last February’s average sale price of $390,043. The median sale price of $249,000 was down 29.2% from last February’s median of $353,000. Sold price per square foot is down 28.8% from February to February, at $162.76 this year versus $228.63 last year.

The 905 units that sold in February is not bad for a late winter month where the average over the preceding twelve months was 968 units per month. Currently there are 9,866 homes on the market, which works out to be 10.2 months of inventory. 33.9% of the homes in active inventory are short sales, but as we’ve reported earlier and a variety of our colleagues in other markets have reported since, the closing rate for short sales is much lower, at 6.6% in February. Bank foreclosures (REOs), in contrast, make up 28% of the current active inventory (2,763 of the 9,866 available units), but in February they accounted for 59.2% of the homes that sold in Sacramento County (542 out of 905 total sales).

Sacramento County Real Estate – Market Update January, Part II

In our Sacramento Real Estate Market Update for January, Part I, I began rounding up the usual statistical suspects, but I decided to leave some of them to a future post, since I wanted to spend some time in part one having a discussion about the recent upsurge in demand.

Left out of part one was a discussion of where we are with respect to foreclosures and short sales. In January of 2007, foreclosures and short sales collectively made up only 7.3% of all sales. Foreclosures accounted for 4.6% of all sales, while short sales accounted for 2.7% of all sales. That’s about one home in every thirteen.

In January of 2008, in contrast, foreclosures and short sales accounted for 67%, or just over two out of every three sold homes. Of these, the vast majority are foreclosures, which accounted for 60.5% of the total sales in January, even though they only make up 27.5% of the current active inventory. Short sales make up even more of the active inventory at 32.1%, but in January only 6.5% of closed transactions were short sales.

Sacramento Real Estate Market – January 2008 – Part I

January’s real estate numbers for Sacramento County are in, and so on the one hand we’re ready for usual: a nerd-friendly, statistics-heavy look backward on the previous month.

Yes, I want to spit out all the boring numbers, but at the same time there’s something very exciting going on that’s a bit harder to measure, but it’s nonetheless quite real: we have gotten incredibly busy in January, with buyers who’ve decided that now’s the time to be shopping and writing offers. Not only that, but our buyers are starting to face quite a bit of competition on the best priced homes.

We’ve been answering about six new buyer inquiries per day for the last two weeks or so. and although we’ve averaged about 1,650 daily unique web site visitors for most of 2007, in January that number shot up rather dramatically to 2,207, the highest number ever.

Buyers Who Didn’t Get The Memo

A lot of people are focusing on the supply side of the market, and pointing out — correctly I think — that we still have a lot of Option ARM resets to work our way through. I call that the supply side because more foreclosures of course means more supply of homes. Based on such a the supply-focused analysis of option ARM resets, the market will continue to be bad well into 2009 or possibly later.

However, what I believe is happening in January is what the real estate bears haven’t spent much time on. Yet in retrospect it looks like it is precisely what one should expect to happen when prices fall like a rock: demand increases.

Thus, for example, this January the median price was $250,000 for Sacramento County, down a dizzying 27.5% from last year’s median price of $345,000. The last few months have seen some of the biggest drops in prices since the Sacramento County real estate market started its decline in September of 2005. The average sale price is down 28.4% (from $376,112 last January to $269,301 this January), and the sold price per square foot has fallen 27% to rest this January at $161.65.

Meantime, however, unit volume appears to have reached a bottoming out point. In September of 2007, the worst month for unit volume in recent memory, unit volume was down 41.3% from the same month a year earlier. This January, however, our unit volume is down only 1% from last January, and if the current surge in buyer interest continues, I would not be surprised to see year on year unit volume increases for many months in 2008 over 2007.

Folsom Real Estate Market – 2007 Year In Review

2007 was a year of decreasing real estate prices throughout the greater Sacramento area, with homes in Folsom retaining their value better than the rest of the county, especially later in the year. For 2007 overall, the median sale price in Folsom was $450,000, down 7.2% from 2006′s median of $485,000. 811 units sold in Folsom in 2007 through the MLS, at an average sale price of $490,588, down 5.3% from 2006′s average of $485,000. In both years, homes sold for more than 97% of list price. In Folsom, sold price per square foot fell 8.4% from year to year, and only 8.9% from December to December. In contrast, Sacramento County’s sold price per square foot fell 11.7% for the whole year 2006-2007, and a much more substantial 21.8% from December to December.

In other words, Folsom’s prices have not dropped as rapidly as in Sacramento County as a whole, and the trend does not seem to be accelerating as it is in other areas. The number of short sales and foreclosures taken together are also much lower in Folsom than county-wide averages. Short sales account for 17.1% of active inventory, and REOs only make up 5.8%, for an overall figure of 22.9% — compared to 55.7% for Sacramento County overall.

The other good news in Folsom is continuing low inventory, 5.1 months as of this writing. In Sacramento County overall, the inventory numbers are more than twice as high at 10.4 months. Six months is traditionally the cutoff beyond which we’re said to be in a “buyers’ market”, so one can consider Folsom to be in a bit more of a seller’s market than Sacramento County generally.

Sacramento County Real Estate 2007 Year In Review – Franklin / Freeport

Depending on where you focus your attention, there’s news, there’s good news, and there’s bad news.

We began our look back on Sacramento County real estate in 2007 with a look at the overall “big picture” for the Sacramento County Real Estate Market for the entire year. Later last week, we reported on one area in the county market that’s consistently held it’s value better than others and enjoy’s low inventory and brisk sales, East Sacramento.

This week we turn our attention to an area that may well be the “worst case” in terms of rising inventory and price declines for Sacramento County, Sacramento’s Franklin / Freeport area (95823). I should probably point out before we begin that I have not sampled all the MLS areas, so my sense that Franklin / Freeport may be the worst case comes from the foreclosure numbers. There may be other areas that have fewer foreclosures but more inventory or lower prices, for example.

Franklin’s decline in 2007 has been rapid. Comparing full year numbers first, the average price lost 19.2% of its value from year to year, and dropped 21.1% in terms of sold price per square foot. The median sale price in 2006 was $314,850, in 2007 it fell 20.6% to $250,000. In 2006 one per cent of sales in Franklin were foreclosures. In 2007, that number was 41.6%.

Comparing December of 2007 to December of 2006, we find that by December, the trend of selling more and more foreclosures and deep price drops had continued apace. By the end of 2006 the average sale price was $282,327. A year later the average had fallen 34.9% to $183,914. Another way to say this is that the average home in Franklin lost slightly more than 1/3 of its value in a year. On a sold price per square foot basis, Franklin closed out 2006 at $200.21 per square foot, and had fallen to $126.61 a year later, a decline of 35.8%.

The percentages of short sales and foreclosures available in Franklin / Freeport are staggering. Almost three fourths (73.9%) of inventory in Franklin / Freeport is either a short sale (35.9%) or foreclosure (38.1%). At the same time, if you needed a case study of REOs outselling short sales, Franklin / Freeport is it. Last month no short sales closed, but twenty-five of the twenty-nine closed sales in the area were bank owned properties. That works out to 86.2%, or close to 7/8 of all sales.

The contrast between East Sacramento on the one hand and Franklin / Freeport on the other shows how local real estate markets are. East Sac enjoys less than three months of inventory and a brisk seller’s market where the prices have remained flat while nationwide prices are falling, while Franklin / Freeport currently has almost two years (23.6 months) of inventory, and homes there have lost two thirds of it’s value in a year.

If you’re a buyer or seller, the right question to ask is not “How’s the Market” overall, but “How’s the Market” for your particular area. Is there an area you’re interested in particularly? If so please contact us and we’d be happy to get you specific market data or comparable sales.

Sacramento Franklin / Freeport Area (95832) Real Estate Market

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.

Sacramento’s Pocket Area Real Estate Update

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.

Folsom Real Estate Market

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.

Sacramento County – Foreclosures as a Percentage of Total Sales

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 Real Estate Market Update

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.

Fair Oaks Real Estate Market

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.

Land Park / Curtis Park Real Estate Market – Like Deja Vu All Over Again

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.

East Sacramento Real Estate Market Update

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%).

Sacramento County Condos – Market Update

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.

Elk Grove Real Estate Market Update

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.

The Sacramento Real Estate Market Killed My Father

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.

Sacramento County Real Estate Market Update

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.

Antelope Foreclosures Account for Nearly Half of Sales

Purva recently wrote some excellent advice for home sellers in Natomas, and nearby Antelope home sellers. Based on October’s real estate statistics, I would suggest that nearby Antelope sellers also need to seriously consider how competitive their home is compared to the many foreclosures that are on the market.

In October, bank owned foreclosures (also called REOs for “real estate owned”) accounted for fully 47.5% of sales in Antelope (95843). In October of 2006, none of the forty-six homes that sold were REOs. In October of 2007, forty units sold and nineteen of them were REOs (hence 47.5%). As in other areas, foreclosures outsold non-foreclosed properties by almost two to one. Even though they accounted for just under half of sales, REOs constitute just over one quarter (25.7%) of the inventory.

Moreover, Antelope is no exception to the general rule we’ve that the more foreclosures there are in an area, the more prices tend to plummet. The median sale price in Antelope dropped 20.6% in October from the previous year, from $350,750 last year to $278,350 this year. The average sale price dropped 23.6% during this time, from $360,437 last October to $275,350 this October. Average sold price per square foot dropped off somewhat less, since this year’s average home was somewhat smaller. The decline in price per square foot was 18.8%, from $206.44 last year to $167.69 last year.

Currently Antelope has 12.03 months of inventory.

But Aren’t Foreclosed Properties Sold “As-Is?” Why Are They So Popular?

That one’s easy. Looking at what’s currently on the market in Antelope, here’s how the sold prices per square feet break down:

REO’s are listed on average for $163.19 per square foot.

Non-REOs are listed on average for $183.49 per square foot.

On a 1650 square foot home (which is about average), the difference in price works out, rounding off a bit, to $269,000 versus $303,000. $34,000. Ten per cent.

Buyers aren’t stupid. $34,000 buys a lot of paint and carpet.

Folsom Real Estate Market

Our cavalcade of October market data continues now as we look at the real estate market for Folsom for October 2007. The big story for Folsom in October was the huge difference in unit volume from October 2006 to October 2007. Last year 84 units sold in Folsom, while this year the number was only 46, a 45.2% drop in volume.

The average home sold in Folsom in October for $448,433, down 13.9% from last year’s average of $520,638. On average, however, this year’s home was somewhat smaller than last year. As a result, sold price per square foot dropped less dramatically. Last October it was $241.60, whereas this October it’s $217.16, a 10.1% drop. The median selling price of a home in Folsom fell 8.8% during this period, from $465,424 last October to $424,500 this October.

The number of foreclosures is fairly low in Folsom compared to other areas in Sacramento County, with five bank owned properties selling in October and making up 10.9% of the sales. In active inventory, there are 28 bank owned properties out of a total of 422 homes, or 6.6%.

If unit volume was down in October (and yes, it was), you can’t prove this by looking at inventory numbers. Inventory is 6.2 months in Folsom, which in the seller’s market side of the ledger, but only barely.

Fair Oaks Home Prices and Market Statistics

The Fair Oaks real estate market did better than Sacramento County in general in October, 2007. The average home sold in Fair Oaks in October for $413,430, down only 4.8% from last year’s average of $434,290. And though this year’s home was larger, bringing the average sold price per square foot down 10.8% from last year, October’s median sale price in Fair Oaks declined only 2.4% from October to October, with the median selling price at $415,000 last October and at $405,000 this October.

Compared to the rest of Sacramento County, Fair Oaks also has lower inventory. With county-wide inventory levels approaching one year overall, Fair Oaks enjoys only 7.82 months of inventory. Unit volume this year was better than last year in Fair Oaks, with 29 units selling this year, a 7.4% increase over last year’s 27 units. Also encouraging is the fact that fewer homes expired this year. Together, these two trends have brought the expired to sold ratio down quite nicely. It was 111.1% last year, but this year it was only 69.0%.

Average days on market are up somewhat, from 58 to 63, and foreclosures are also up, from 0% of sold inventory in October 2006 to 24.1% in October 2007.

RELATED LINKS

Browse Fair Oaks Condos

Browse Fair Oaks Single Family Homes

Interactive Fair Oaks Real Estate Map

Fair Oaks Foreclosures

Sacramento Real Estate Market, October 2007

Trick or treat.

As I prepare my report on Sacramento County’s real estate market for October, 2007, I recall my happy youth watching The Flintstones. You remember Fred and the gang. From the town of bedrock, he’s a page right out of history.

One great cartoon gag from the the Flintstones — though surely it has roots all the way back to the Manichean cartoons of the third century — were the Fred Flintstone as devil / Fred Flintstone as angel that would sometimes perch on Fred’s shoulders, whispering instructions.

Sometimes Gazoo would whisper the instructions.

Bloggers, Find Your Voice (From Among Those You Hear in Your Head)

In my case it’s the eternal angelic optimist, Purva Brown, on one shoulder versus the pitchfork-armed bubblers on the other.

Bubbler pokes me with pitchfork: In terms of unit volume, October was the second worst month in recorded MLS memory. 803 units sold in Sacramento County in October.

Purva flaps angel wings: C’mon, John, that MLS data only goes back to October, 2004, so all you have to compare it to are good times. Plus, October’s volume was an increase of 11.7% over September! Look on the bright side, will you.

OK, you two. Behave. Fight it out between yourselves. Let my shoulders be your last battleground.

The Rest of the Numbers

The median price of a home in Sacramento has fallen to $300,000 in October, down 14.3% from last October’s median of $349,900, and 24.9% from their peak of $399,499 of November, 2005. Average sold price per square foot was approximately $189.32 in October, down 18.2% from last October’s $231.23, and down 25.5% from the peak of $254.10 (September, 2005). (Purva: That’s not fair, John — you keep making the houses lose 1/4 of the value by picking high peak values from different months. What are you, some kind of bubble blogger now? ). The average home sold for $327,719 in Sacramento County in October, down 14.9% from last year’s average of $385,233.

Recently we reported that about a quarter of the homes selling in Sacramento County were foreclosures (REOs). The numbers have now risen to slightly more than one third. More precisely, of the 803 units that sold in October, 285 (35.5%) were REOs. Now you bubblers might think you could get an even 50% if you throw in the short sales, but you can’t, because only 31 short sales sold during this period, so the overall total ends up being about 39.4%.

Inventory is 11.61 months for Sacramento County overall.

The Condo Market in Sacramento County

Like the general residential market that is a part of, the market for Sacramento County Condos fell off sharply in September. The median price for a condo sold in September was $195,00, down 18.6% from last year’s median price of $239,595. The average sold price per square foot showed a similar drop of 18.3%, from $220.46 per square foot last year to $180.15 per square foot this year. The actual average was down somewhat less, since this year’s average condo was slightly larger than last. As a result, this year’s average price of $219,964 was a drop of “only” 14.9% from last September’s average of $258,597.

While the actual number of expired listings only rose 5.3%, a sharp drop in the number of sold units pushed the expired to sold ratio up dramatically. As we saw earlier, the number of overall residential sold dropped 41.3% from September to September. Condo sales lost somewhat less ground, but still dropped a sizeable 34.9%, from 86 units last September to 56 units this September. The expired to sold ratio for both months was 110.5% last September versus 178.6% this September.

Bank owned condos are selling slightly less well than their single family counterparts. Typically for single family homes, we see bank owned properties outselling other properties by about 2 to 1 (based on the percentage of bank owned properties in sales versus actives). In condos, the numbers are about dead even. In September, 17.9% of the sales (ten out of fifty-six) were condos. In active inventory, 17.4% of condos are bank owned.

Even with that in mind, however, September’s average condo buyer negotiated a fairly sizeable 7.6% discount from list price. For homes that sold, the average list price was $238,130, while the average sale price of a Sacramento County Condos as we mention above was $219,964.

Market Update – Focus on Cameron Park / Shingle Springs

If you’re shopping for a home around Highway 50, you might want to consider Cameron Park / Shingle Springs. There are some pretty nice homes in this area and the lots around homes are bigger than most other areas. Add to that the fall colors that are so enticing this time of year!

Last year, 317 homes sold in the 95682 zip code which includes both Cameron Park and Shingle Springs. The median value of a single family residence last year was $500,000. Homes stayed on the market 65 days before they were picked up.

This year so far, only 192 homes have sold and 23 more are pending sale. The median price has fallen to $465,000. Buyers can expect a savings of approximately 7% from last year’s prices.

There are currently 227 homes to look at in this area between $240,000 and $3,495,000. Lots to look at!

Ask the Broker: Why has that house been on the market so long?

My recent video about how to sell a home fast in any market was driven home today by a question I got from a buyer who previewed some homes with me yesterday.

The home they asked me about was an absolute keeper, at a price that beat out all the comps not only for its neighborhood, but for any other comparable neighborhood in Sacramento County.

In fact, this was one of a few homes that was such a screaming good bargain that two buyers had asked me about it, and I was really thinking I should post it here but didn’t want to have a conflict of interest with those buyers.

Their question was about whether I could call the agent to find out why it had been on the market so long. Well, I was happy to do that, and knew that while I was looking up her number I could look up the listing history, knowing that the price change would probably tell the tale.

Here’s what I found:

If You Don’t Understand Why The Price Is So Low, Blink

Darn, pending sale — I’d have to tell the buyers that. But there’s more of a tale here.

Of course, the buyer doesn’t have this info readily available, so their question was perfectly natural, “Why has it been on the market approximately six months?” From a Realtor® point of view, however, this isn’t a $299,000 home that’s been on the market for six months, but a $299,000 home that sold after ten days.

In the MLS, the actual pending date is 10/3, but it was entered on 10/4 as you can see above. The price was dropped from $325,000 to $299,000 on 9/24, and now there are three offers on it. 9/24 to 10/3 is ten days.

The price it started at, $395,000, is actually almost justified by the current sold comparable sales. But $299,000 is where it needed to be to finally get it done, in a slow Fall with few buyers.

Fortunately for my buyer, it turns out that there is still a possibility of making an offer on this one, so I let them know that — we even have a pretty good idea about what we need to offer.

The Market Within The Market: What’s Being Sold Here, Anyway?

There are several morals to this story:

Some buyers are waiting for market prices to come down another 25% or so, and some buyers are out there buying homes that are already reduced 25% or so.
If you wait until the market comes down, then you get to compete with a lot of buyers. If you wait until there’s a good bargain on a house you want now, you get to compete with fewer buyers. If you think sellers won’t see you coming ten minutes after all the buyers come back and start adjusting prices upward, then you make the classic mistake of thinking yourself the only greedy party to the transaction.
A lot of people are selling you the market, and if you’re buying a market, then you shouldn’t buy a house. The question a smart buyer asks is “am I buying a market, or am I buying a house?” There are great buys in bad markets, and dumb buys in great markets.

I’ve actually been counseling my buyers to consider some other homes that are lower priced than this, because in their situation it makes more sense and I don’t want them to get overextended. Now the trick is to find them the perfect $340,000 home that’s priced at $260,000.

In fact, instead of writing about the market, which is kind of depressing, I think a really good article series would be “bargain of the day” (or week, or whatever). In his response to Jim Kramer, Gary Keller notes that there is a “market within a market”. As I say above, there are great buys in bad markets, and dumb buys in great markets. Keller makes a similar point.

Whether you’re buying now or later, buy well. If you’re not buying at all, that’s cool, too. If you are, call, and we’ll go bargain shopping.

Sacramento Real Estate Market Update

The real estate market for Sacramento for September, 2007 was the slowest we’ve seen since the MLS data begins in August, with 730 units (down 41.3% from last September’s volume of 1244 units). By itself, this is fairly depressing, but fortunately we have somewhat better news in that 1314 units are pending sale, so it’s possible the unit volume will pick up some for October.

In terms of price, this year’s average home sold in Sacramento County for $342,640, 12.4% less than last September’s average of $391,165. Sold price per square foot declined more, 14.2%, from $235.08 on average last year to $201.79 on average this year. The median price fell 12.1%, from $353,750 last year to $311,000 this year.

The total number of expired listings was down slightly this September, but because of the sharp drop in unit volume, the expired to sold ratio stood at 153.6% in September, as opposed to 96.2% a year earlier.

Bank owned properties, making up just over 25% of sales in August, accounted for 26.2% of sales in September (i.e., 191 of the 730 units sold).

There are currently 11.4 months of unsold inventory in Sacramento County.