Archive for November, 2008

Folsom’s Market Insulation: Is the Fire Still Lit? There’s a Chill in The Air!

As the market continues to change… Is Folsom’s insulated real estate market beginning to feel the chill?

Folsom has been one of the Sacramento areas strongest and most resilient markets-

While other areas have been inundated with foreclosures and shortsales (pre-foreclosures), Folsom has enjoyed one of the Sacramento Metro real estate’s strongest and least affected markets, with the lowest percentage of distressed properties (Bank owned, and short-sales) making up our available homes for sale.  Subsequently, with less ‘have to’ sellers on the market, and more of our market consisting of well maintained, move in-ready properties, we have led the area for strength.

The fact is; our inventory in Folsom has never hit ‘critical mass’ like other areas have… That is, in some areas there are so many listings that in order to move them, new listings of distressed homes are priced by banks and folks in preforeclosure well below the current market value. This makes homes sell quickly and with multiple offers, but causes prices to trend lower and lower very quickly, (see Elk Grove, Natomas). Our market here in Folsom has seen less than a 13% drop from it’s high water mark. Compare that to a well over 50 % drop in some local areas: Sacramento County’s $195,000 median price is 34.9 percent below October 2007 and 49.6 percent below its August 2005 high of $387,000.and a total drop of 49% in median prices for Sacramento County as a whole.

Now, don’t get me wrong; I am definitely an optimist; you could consider me a ‘Bull’ as a Folsom Real Estate Market Analyst, we have so much to brag about here, so much to be grateful for; A great jobs market, the area’s best schools (arguably) thriving local businesses… but I can only say what I see: the percentage of vacant homes on our market (a leading indicator) has grown almost two-fold in the last three months… my research indicates a mass majority of these homes are either bank-owned or  Short sales. Very few are “equity sales” (a term stolen from another time; ie. early 90’s shortsale market… it’s a nickname for a traditional sale, are they becoming that rare?) The number of REO (Real Estate Owned, or bank owned) properties here in Folsom has also more than doubled in just the past sixty days. Another indicator of a market headed for slower times?

Bundle up; it could be long winter….

Forth Hoyt

Keller Williams Folsom

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Folsom’s Maket Insulation: Is There a Chill in The Air?

As the market continues to change… Is Folsom’s insulated real estate market beginning to feel the chill?

Folsom has been one of the Sacramento areas strongest and most resilient markets-

While other areas have been inundated with foreclosures and shortsales (pre-foreclosures), Folsom has enjoyed one of the Sacramento Metro’s strongest and least affected markets, with the lowest percentage of distressed properties (Bank owned, and short-sales) making up our overall market of available homes for sale.  Subsequently, with less ‘have to’ sellers on the market, and more of our market consisting of well maintained, move in-ready properties, we have led the area for strength.

The fact is; our inventory in Folsom has never hit ‘critical mass’. That’s  where there are so many listings that in order to move them, new listings of distressed  homes entering the market are priced by banks and folks in preforeclosure well below the current market value, causing prices to trend lower and lower very quickly.  (see Elk Grove, Natomas.) Our market here in Folsom has seen less than a 13% drop from it’s high water mark. Compare that to a well over 50 % drop in some local areas: Sacramento County’s $195,000 median price is 34.9 percent below October 2007 and 49.6 percent below its August 2005 high of $387,000.and a total drop of 49% in median prices for Sacramento County as a whole.

Now, don’t get me wrong; I am definitely an optimist; you could consider me a ‘bull’ as a Market Analyst, but I can only say what I see: the percentage of vacant homes on our market (a leading indicator) has grown almost two-fold in the last three months… my research indicates a mass majority of these homes are either bank-owned or  Short sales. Very few are “equity sales” (kind weird, that we have a nickname for a traditional sale, they are becoming so rare!)  Our number of REO (bank owned) properties has also more than doubled in just the past sixty days…

Bundle up; it could be long winter….

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The Bailout ‘Half-Off’ sale… The Silver lining to Sacramento’s housing cloud

Sacramento Counties median home price has made another breakthrough recently to $195,000.  The new median price is 34.9 percent below October 2007 and 49.6 percent below its August 2005 high of $387,000. That is so close to ‘half off’ that we’ll just call it that!

What that statistic represents, though, is that more people can afford a home–  according to the California Association of Realtors, the percentage of households that could afford to buy an entry-level home in Sacramento County rose to 71 percent in the third quarter, considerably higher than the 46 percent for last years third quarter.

Some say this is the ‘bailout’ we need.  Just let the markets react. Nationwide, we are seeing affordability levels we haven’t seen in at least a decade. 

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Central California’s Unprecedented Foreclosure Turmoil

We might think we have it bad here in the Sacramento area, but we have neighbors to the south who are facing far worse numbers than we are in terms of foreclosures.  Latest reports by DataQuick say there were 35,252 homes and condos between Stockton and Bakersfield  that received mortgage default notices between January and June of this year.

And according to RealtyTrac, Stockton had the highest foreclosure rate of any major metropolitan area in the nation between April 1 and June 30, with Fresno, Merced and Modesto all in the top rankings nationwide.

The big question of late is weather or not any of the $700 billion dollar rescue plan will ever make it to main street to help families or if it will go to ease capital crunch for major banks and/or the auto makers…  and if it does finally tickle down to homeowners, if it will get here on time to help. 

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Insider Projections for the Future of the Sacramento area REO market…

Assignments (homes assigned to agents by banks and in pre-marketing and pre-listing status) have slowed dramatically in the past few weeks. We haven’t gotten a new assignment for a long time, and every Bank Owned Listing Agent I talk to has told me they are experiencing the same.  Changes to State laws are the reason for the backlog, as banks are busy training and equipping their loss mitigation and foreclosure departments to comply with new requirements. However, There is a huge wave of them coming!

The inventory of unsold homes is actually growing right now, even though we have seen higher sales numbers for seven straight months, the Sacramento Business Journal says in a related article. these area homes that have been reposessed but have not been marketed, a lot of them obviously haven’t even been assigned. 

One Keller Williams Bank Owned  Mega Agent said in a panel discussion we had the other day that several servicing companies he is working for have cancelled all vacations for their Asset Managers for the next few months, because they have so much work…

This is going to be a very interesting next few months to see how our market reacts to another glut of inventory; if it comes.  We have seen such a huge increase in demand, and banks are finally realizing that price sells (they just keep pricing them lower, knowing that they will sell quickly). The Bank’s Loss mitigation or pre-foreclosure departments are also now closing short sales at a much faster and more predictable rate, this will also help to quicken the pace of getting these distressed properties off the market.

The Sacramento Association of Realtors RESIDENTIAL RESALE STATISTICS FOR October 2007 says that prices continue to erode, (the median priced home for the Sacramento area in October fell another 4.4% to just $305,893, which is a 15% decline in the last year. But transaction numbers are still rising.

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The rise of the Shortsale in Sacramento… Is it Finally Here?

Notices of Default numbers and Foreclosure Sales have really tapered off since the new schwarzenegger law  took effect in early Sept. that forces banks into attempts to contact the homeowner.  Has the pipeline only temporarily been squeezed? As banks re-adjust and implement new systems, it will be interesting to see if it has any long-lasting affect on the market.

It looks like short sales and loan modifications will be the new buzz for 2009.  Not to say our market is in  recovery, or that people will not be moving around, just that banks and servicers will find other solutions besides taking more inventory at foreclosure auctions.

Here’s some more good reading on the subject.

 

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Three Important Tips for every REO Buyer… or how to get your offer accepted…

As a bank owned listing agent here in Folsom, Orangevale, and in the greater Sacramento area; I see firsthand which offers are being accepted by Asset Managers.  Even though we have had Bank Owned Assets on our market for some time now, I am sometimes surprised at how naive some agents can be to the process.

Writing a great offer that stands a chance at acceptance is really just a three step process.

1. Write a strong, simple, easy to understand, easy to convey offer that has some hair. If the asset (the House) has only been listed for a short time and seems like it is under priced, it probably is. Don’t waste ink trying to ‘Steal’ it. Do your due diligence, study the comparable sales in the area with your agent, but also look at the competitive listings and check out the homes that are in escrow.  Sometimes they can be the best indication of a local trend…  learn what the market value of the home is and only write if you like the house enough to pay market value. Educating yourself takes time and you might not get a good feel of the market until you have written on several homes. Don’t ask for anything but a pest report on the initial offer. If you have done your work and know the market, you would be wise to come forward with your highest and best offer right away. There will probably be many over-full-price offers… but it’s not always just about price… See number 2 & 3.

2. Get pre-approved;  I mean Be Approved… and make sure you have a well written, short lender letter that says you are approved by a major bank. Make sure your letter has verbiage in it that is easily understood, short and to the point. It should be very clear that there has been a complete and thorough review of documents that are in the file including Paystubbs, Tax Returns, Bank Statements, Verification of Assets and Credit Report, and that the loan is ready to fund. Make sure the letter makes it clear that all you are waiting on is an appraisal and a title report. 

3.  Make sure your agent verifies the offer has been received. (Sometimes listing agents can get hundreds of faxes and emails; things can get lost sometimes, believe it or not).  To make it even more acceptable; have your lender call and email the Listing Agent too.  Even if they have to leave a message on several lines and finally only talk to an assistant, have your lender go to bat for you! Ask the lender to make sure the listing agent has your Approval letter, that it is with your offer and that they have been submitted.  Have the lender tell your story, build up your strengths, portray professionalism and a commitment to close the deal…  and make sure they make it clear that they can be contacted quickly if there are any questions.  The Buyer, Agent and Lender should project that you are a winning team of professionals.  You want to show strength so that the listing agent will steer the Asset Manager towards your offer at every opportunity. But this only works if you do HAVE STRENGTH!

Asset Managers want easy. 

Asset Managers  want fast.

Asset Managers want simplicity.

Asset Managers want strength and professionalism.

Asset managers want deals that close.

Remember, Bank owned homes sell at a discount. They are a steal.  And as such they are not the easiest to purchase.  Even though over 70% of the listings in some Sacramento areas are either short sales or REO’s, there area still conventional ‘equity sales’ out there.  If you have issues that are limiting your strengths as a buyer; such as a limited amount of down pament, etc., you may want to go find a seller who has some equity and would be happy to work with you.

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