Aaron Cullen : Folsom + El Dorado Hills + Sacramento Area, CA Real Estate

National & Regional Snap-shot: The election has come and gone and the national focus has returned to the economy, the credit crisis and the slumping housing market. The roller coaster ride continued with 30yr fixed mortgage rates rising from 6.07%* at the beginning of October to 6.47%* at month's end. No sooner than Paulson and Bernanke talked voters and Congress into the "mortgage bailout," it evolved (was switched) to a different plan of injecting money directly into banks and other financial institutions as opposed to buying mortgages through reverse auctions. Officially, $125 billion was given to the nations 9 largest banks with another $125 billion slated to be injected into smaller banks across the country. From a regional standpoint last month, 2,084 homes sold in Sacramento County, 1354 were bank owned (70%), 205 were short sales (10%) and the median home price rose 1% from $192k in September to $194k in October.

El Dorado Hills: Sales in El Dorado Hills did not change much, dropping from 66 in September to 64 in October. The number of "distressed sales" fell in both categories with 17 bank owned homes (26%) and 6 short sales (9%). The average sales price increased from $528k last month to $570k in October. The supply of homes dropped from 378 in September to 374 in October. Despite the credit crisis, and volatile interest rates, homes are continuing to sell.

Aaron's take on the markets: The real estate markets continue to be influenced by the credit crisis and foreclosures. Unemployment filings are on the rise, which will also pressure home prices. The expectation is, home prices will continue to soften in the coming months with the key to stabilizing the markets being stopping bank foreclosure liquidations. Banks such as Bank of America, JP Morgan, and Citibank have all recently announced they will seek out borrowers who are in trouble and offer to rework their loans. Problem is, unless you are behind on your payments and your loan amount is 90%+ of your homes value, there may not be any help available to you. If you are thinking of buying or selling, let's chat.

Personal note: On November 4th, voters across the country helped make history by electing the first African American to be our president. Without any political bias being offered, I think we as Americans have come a long way and we have officially entered the 21st Century. Congratulations to those who supported and voted for Barack Obama.

Have a great Novermber and Thanksgiving! Aaron Cullen, Brokers Inc. Residential Real Estate

National & Regional Snap-shot: The election has come and gone and the national focus has returned to the economy, the credit crisis and the slumping housing market. The roller coaster ride continued with 30yr fixed mortgage rates rising from 6.07%* at the beginning of October to 6.47%* at month's end. No sooner than Paulson and Bernanke talked voters and Congress into the "mortgage bailout," it evolved (was switched) to a different plan of injecting money directly into banks and other financial institutions as opposed to buying mortgages through reverse auctions. Officially, $125 billion was given to the nations 9 largest banks with another $125 billion slated to be injected into smaller banks across the country. From a regional standpoint last month, 2,084 homes sold in Sacramento County, 1354 were bank owned (70%), 205 were short sales (10%) and the median home price rose 1% from $192k in September to $194k in October.

Folsom: Home sales rose from 49 in September to 64 in October. Compared to last month, sales increased by 31%, and when compared to October 2007, sales also increased by 31%. There were 21 bank owned home sales (33%) and 8 short sales (12.50%). The biggest change in Folsom was the number of short sales, which doubled from last month, suggesting the banks are making a bigger effort to sell homes prior to foreclosing. The average home price dropped from $439k last month to $422k in October. The total supply of homes rose from 259 on 10/1/08 to 284 on 11/1/08.

Aaron's take on the markets: The real estate markets continue to be influenced by the credit crisis and foreclosures. Unemployment filings are on the rise, which will also pressure home prices. The expectation is, home prices will continue to soften in the coming months with the key to stabilizing the markets being stopping bank foreclosure liquidations. Banks such as Bank of America, JP Morgan, and Citibank have all recently announced they will seek out borrowers who are in trouble and offer to rework their loans. Problem is, unless you are behind on your payments and your loan amount is 90%+ of your homes value, there may not be any help available to you. If you are thinking of buying or selling, let's chat.

Personal note: On November 4th, voters across the country helped make history by electing the first African American to be our president. Without any political bias being offered, I think we as Americans have come a long way and we have officially entered the 21st Century. Congratulations to those who supported and voted for Barack Obama.

Have a great Novermber and Thanksgiving! Aaron Cullen, Brokers Inc. Residential Real Estate

National & Regional Snap-shot: The presidential election and Hurricane Ike became after thoughts in September as the credit crisis on Wall Street spread to Main Street. The hope for an election year rally in the stock market has been put on hold, as the Federal Reserve and Treasury Department have scrambled to utilize every tool in their arsenal (including getting congress to authorize a $700 Billion bailout) to calm the markets and keep the American economy flowing. From a regional standpoint last month, 1934 homes sold in Sacramento County, 1354 were bank owned (70%), 200 were short sales (10%) and the median home price dropped another 11% from $215k in August to $192k in September.

Folsom: Seasonal slowness in Folsom dropped sales from 67 in August to 49 in September. However, when compared to September ‘07, home sales increased by 136%. "Distressed home sales" more than doubled from August '08 with 19 bank owned home sales (40%) and 4 short-sales (8.50%). Over the past year, foreclosure sales in Folsom increased 850%. The biggest change in Folsom from August '08 to September '08, was a more than 50% increase of bank owned homes available for sale. The total supply of available homes dropped from 280 on 9/1/08 to 259 on 10/1/08.

Aaron's take on the markets: The national, regional and local markets continue to be influenced by bank owned homes. Banks continue to liquidate their inventories, putting downward pressure on home prices. If you have to sell your home in the next year, I would suggest moving quickly and pricing it at, or slightly below, the market. If you don't have to sell, then now is not the time to test the waters. The good news is, it is an excellent time to purchase a home. Prices are relatively affordable and interest rates remain low. If you are looking to upsize, sell your home quickly, then get a great deal on your dream home! Real estate always moves in cycles, and so far, this cycle has not bottomed. When financing becomes easier and repo's subside, prices will stabilize and the recovery will begin. The big questions are: Will the bail-out of Wall Street work? Will our government help "upside-down" home owners stay in their homes? Will the Paulson Plan some how stop foreclosures all together? Stay tuned...

Personal note: I just listed a beautiful home for sale at 1042 Houston Circle in The Parkway in Folsom: $439k. This 1-story home is in excellent condition and ready for a new family. 4 Bed, 3 bath, 3 car-garage, 2,250 s/f. Please tell a friend!

Have a great October! Aaron Cullen, Brokers Inc. Residential Real Estate

National & Regional Snap-shot: The presidential election and Hurricane Ike became after thoughts in September as the credit crisis on Wall Street spread to Main Street. The hope for an election year rally in the stock market has been put on hold, as the Federal Reserve and Treasury Department have scrambled to utilize every tool in their arsenal (including getting congress to authorize a $700 Billion bailout) to calm the markets and keep the American economy flowing. From a regional standpoint last month, 1934 homes sold in Sacramento County, 1354 were bank owned (70%), 200 were short sales (10%) and the median home price dropped another 11% from $215k in August to $192k in September.

El Dorado Hills: El Dorado Hills was a bright spot last month with the sales rising from 50 in August to 64 in September (unusual to see this type of reversal in September). The "distressed sales" theme continued in EDH with 22 sales (33%) being bank owned and 11 sales (17%) being short-sales. The supply of homes for sale dropped from 401 on 9/1/08 to 378 on 10/1/08. Serrano continues to be the neighborhood of choice for banks liquidating homes at below market prices. Inside scoop: If you aspire to live in Serrano, due to all of the foreclosures, there are excellent, rock-bottoms deals available under $135 per square foot.

Aaron's take on the markets: The national, regional and local markets continue to be influenced by bank owned homes. Banks continue to liquidate their inventories, putting downward pressure on home prices. If you have to sell your home in the next year, I would suggest moving quickly and pricing it at, or slightly below, the market. If you don't have to sell, then now is not the time to test the waters. The good news is, it is an excellent time to purchase a home. Prices are relatively affordable and interest rates remain low. If you are looking to upsize, sell your home quickly, then get a great deal on your dream home! Real estate always moves in cycles, and so far, this cycle has not bottomed. When financing becomes easier and repo's subside, prices will stabilize and the recovery will begin. The big questions are: Will the bail-out of Wall Street work? Will our government help "upside-down" home owners stay in their homes? Will the Paulson Plan some how stop foreclosures all together? Stay tuned...

Personal note: I just listed a beautiful home for sale at 1042 Houston Circle in The Parkway in Folsom: $439k. This 1-story home is in excellent condition and ready for a new family. 4 Bed, 3 bath, 3 car-garage, 2,250 s/f. Please tell a friend!

Have a great October! Aaron Cullen, Brokers Inc. Residential Real Estate

Hip-Hip-Hooray! The United States government just formed the world's biggest hedge-fund and US taxpayers are the source of the funds. Good, bad, not sure, don't know? Agreed...

Here is what I think I know: Wall Street, mortgage brokers, borrowers, lenders, bankers, and our government, all participated in the perfect storm that led to the boom and bust in real estate in our country over the past six years. After the devastation of 9/11/01 (both physically and psychologically), the aftermath led to a low interest rate environment that gave way to the housing boom. As the good-times rolled, consumers turned their homes in to ATM machines, brokers originated and sold off loans without caring about the risk of default, loan-to-value ratios in many cases went beyond 100%, consumers and loan originators told half-truths, underwriters turned a blind eye to the truth and everyone in the chain, from borrower to closing company made big bucks.

Having a career in residential real estate, I interact with home buyers, sellers, mortgage brokers and bankers and industry professionals on a daily basis and each one of them has a different spin on where we have been and where we are going. Here is my take on this week's activities:

The housing markets have been correcting across the country for a couple of years now. In some markets they have been crashing and in others they have simply lost their steam and slumped. For the most part, consumers who are not following the different markets believe that the sky has been falling and that there is no end in sight. The rate of mortgage defaults has reached all-time highs and the banks are liquidating homes at record pace while bringing down the markets they are selling in. Should something be done? Don't spend too much time thinking about the answer, because the decision has already been made and our government has stepped in. With the blessing of our congress, the Fed, the Treasury and we, the taxpayers, are bailing out Wall Street in an effort to mitigate a crisis that is believed by many to carry systemic risk.

With the depth and breadth of AIG's existence, I do not think there was any choice other than bailing them out earlier this week. I believe if our government had not stepped in, we could have seen the swift destruction of our equity markets, the abrupt halt of the "American Dream" of home ownership and perhaps the "Great Depression - Part 2." Sure all things go in cycles, and an eventual recovery would have taken place without intervention, but I don't think a decade of misery in return for allowing capitalism to take its course was a reasonable alternative.

One of the strongest forces that drives Wall Street and that is largely unknown to most consumers is "shorting stocks." Working like a pack of wolves, in recent weeks, the hedge funds and others have chased down the weakest financial firms, shorting their stocks, and moving on only after the buyout or bankruptcy was completed. Today the rules changed, and the shorts were told to go home or go to jail. For the next 10 days, it is illegal to short 799 publicly traded financial stocks. The hope is, by eliminating the shorts from the market, the financial institutions will get a breather and time to fix their balance sheets in an orderly manner without being annihilated by the relentless and profiteering groups with short interests.

Honestly, I recognize there is a great deal of complexity surrounding all of this and that I don't have the training or I.Q. of Chairman Bernanke or Secretary Paulson. My gut has been telling me lately that if something was not done to stop those who were profiting from the demise of our financial system, and if we did not then step in quickly with a solution or at least a tourniquet, to buy time for the markets to regroup, then our country was headed for a very deep, very dark, black-hole. It is with this in mind that I place my trust in our government and their experts while believing something had to be done. My hope is that they find a way to make this work, progress in an orderly manner and rein still the consumers' trust in our markets and financial system, while heading off another depression.

If the bail-out / intervention by our government works out, here are some near term benefits for the average consumer:

1. Better availability of funds for loans and lower interest rates. If AIG had failed, the odds of getting a loan today would have been slim and none. If you are a home buyer or seller, I believe you are much better off today than you were a week ago. Borrowers continue to get loans and sellers still have the chance to sell their homes. According to FreddieMac.com, 30 year, fixed rate mortgages have dropped for a 5th straight week. I think a 30 yr. fixed loan at 5.75% with no points will be available soon. Whether you are looking to buy or refinance, don't miss this opportunity to get a great rate.

2. The near-term benefit of eliminating the short interests will be stability in the financials and in turn, the opportunity to refocus on cleaning up balance sheets and dealing with the housing crisis. I know that shorts play a vital role in our markets, just as sharks are an integral part of the food-chain, but keeping them out of the water for at least the next 10 days should allow the markets to normalize. Although it may take a great deal of time for the "good times" to return in housing, I think the housing market's stabilization is within our grasp on a local level.

3. With our government's intervention and a shifting of who will be holding the paper behind the bad mortgages, a great number of families who were seeing no option other than hitting the streets, should be able to come to terms and stay within their homes. To me, one of the biggest travesties of the housing bust is the children and families being displaced by foreclosure.

In closing, it makes me nervous that we have banned short selling of the financials and that this bailout is going to initially cost at least $500 billion dollars. I believe as a nation, we are understanding, resilient and will eventually ride out this turbulent time and persevere. It has even been suggested that if this bailout is handled properly, it may ultimately turn a profit (in the past 48 hours, the value of our investment in AIG has increased by $18 billion dollars.