Making Sense of the Market Today

August 2^nd, 2010

This time around, let's look at some basic trends to see where the Placer County Real Estate market is now that we have an economy teetering on recovery. One of the most basic weather vanes is to look at Absorption Rate. That is the percent of homes that are sold in any one month (or looked at another way – how many months will it take to sell all the homes currently for sale). A neutral market is one that has 4 to 6 months of inventory on hand. A seller's market has less than 4 months (more buyers than sellers); and a buyer's market is one that has over 6 months of inventory (more sellers than buyers).

Let's also break the market into two sections. One with homes that sold under $300,000 and the other $300,000 and above.

Placer County Absorption Rate (All Homes Under $300,000)

It is easy to see in this graph that over the past 2 years we have moved from a Buyer's market to a Seller's market with between 2 and 3 months of inventory over the past 13 months in the under $300,000 price range. I'll break the home sales down to REO (Bank Owned/Foreclosed homes), Short Sales (homes owners are negotiating with the bank) and Non-Distressed homes (no direct bank involvement). If we look at homes sold during this time period we see what started out as an REO market in January of 2009 has turned into a pretty equal mix of REO, Short Sale and Non-Distressed Sales. Non-Distressed sales are those where the bank is not involved in the transaction and currently makes up 37% of the sales with the remainder made up of Short Sales at 33% and REO at 30%. With the combined REO and Short Sale listings, distressed sales still make up nearly two thirds of all the sales in the under $300,000 range.

Placer County Market Trends Under $300,000 (Metrolist)

Here is the last graph of the under $300k showing inventory, sold and pended homes.

Placer County For Sale - Sold - Pended (Metrolist)

This is an interesting chart because it shows that we have had a fairly significant increase in inventory over the past 4 months while sales have had a slight increase. Increased pendings does not always reflect an immediate increase in the number of sold homes – as you can see with the numbers for last summer. Some offers are canceled and many short sales take longer than 30 days to close.

Over $300,000

For the over $300,000 price range we are currently looking at nearly 5 months of inventory with 22% of the homes selling each month. That is considered to be a neutral market.

Placer County Absorption Rate for Over $300,000 (Metrolist)

And here below, is the market breakdown for the homes sold in Placer County looking at REO, Short Sale and Non-Distressed sales. Over the past 18 months Non-Distressed sales have made up 57% of the reported sales on Metrolist listing service. April 2010 was 58%, May was 59% and June was 58%. Compare that to the 63% distressed sales in the under $300,000 price range.

Placer County Market Trends for Over $300,000 (Metrolist).

Placer County For Sale - Sold - Pended Over $300,000 (Metrolist)

As you can see below, we are starting to see a rebound in the sales of homes over $300,000 this year in the county area.

There are some signifcant differences in home sale trends when you compare the under $300k to the over $300k homes. Besides the overall basic trends described here, I cannot stress enough that home prices are extremely specific to your location. If you have questions about the value of your home, please feel free to contact me at (916) 303-0257.

Linux for Realtors?

A few days ago I went to a local Linux User Group (LUG) meeting at the library here in Lincoln, California. While I had used Linux several years ago when I worked at an electronics company, I have not kept up to date on the technology but rather sticking with Windows Vista for my Real Estate and Photography needs.

And complaining about Windows Vista...

So, after attending the LUG I decided to give it a try... and after a few days I have it running everything I need for both my real estate and photography needs. In general, it is relatively easy to install and manage a Linux system. Once you have it set up, regular updates are performed automatically just like Windows or Apple OS/X.

First, you need to select what type of Linux to run. Based on what I heard at the LUG, I decided to try Ubuntu Linux. It is the most popular installation. I downloaded the installation file and created a cd so I could “run it live” without damaging any of the Windows components. I liked what I saw, so next I backed up all of my data files to a USB hard drive.

Next, I attempted to set up by PC (An HP G60 Laptop) in a dual-boot mode where I can use both Windows Vista and Linux. This broke my PC and I decided to 'go for broke' (now I know where that term came from) and do a Linux only installation. That's how we learn, right?

Installation was done right from the live CD version of Ubuntu. It automatically recognized my HP LaserJet 3200 on my office network and the HP OfficeJet 6300 All-In-One attached via USB. Firefox browser allowed full access to all the features on our local Multiple Listing Service (Metrolist in Sacramento), and my web pages... everything except Adobe Lightroom for Photography and ZipForms 6. Lightroom was not a show stopper because the current version of Linux has some good photography software that will read and do non-destructive modifications to RAW files. I use my desktop PC for heavy duty photography work where I use Lightroom and Photoshop to organize and do final edits. ZipForms 6 proved to be a bit of a problem for a while. I was getting Java error messages even when I had a later version of Java installed than what it said it needed. I finally installed VMware (the only package requiring a purchase) to run XP within Linux to access ZipForms 6 professional over the web (XP is still a better operating system than Vista in my opinion and it runs faster in Linux!)

I have full access to my printers – including the USB OfficeJet 6300 that I drag around when needed from XP as well as Linux. Open Office comes with the Linux installation and is fully compatible with Microsoft Office... for free. I've been using Open Office for the past two years even though I had an extra copy of Microsoft Office available. I can either save files in MS Office format or use the default format because MS Office can read Open Office docs (spreadsheets, presentations, document files).

Summary

I now have a faster laptop, that I use to preview photographs as well as do all things real estate related. I do have to jump into XP when I write up or modify a contract but that's not a big deal. I think I'm going to stick with Linux rather than upgrade to Windows 7.

Everything on the G60 laptop was recognized by Linux automatically – my wireless and wired LAN, Windows Network Shares, Printers and USB hard drives. Everything on the keyboard works like a champ – adjusting the brightness, audio, etc. I watch YouTube and Hulu videos (after downloading some addons that are done just like MS Internet Explorer when it sees something you need).

What didn't work (for those more technical)

I mentioned that it took me a few days to get everything running.... well specifically trying different things for ZipForms 6 and Lightroom. For ZipForms 6 I tried upgrading Java to the latest “free” version, then manually installed Java from Sun (free also). This was a bit of a chore... since I didn't read the instructions first (wink), and didn't resolve the issue.

So I tried a windows emulator called Crossover. It did not work for either the web based ZipForms 6, the Standard stand-alone ZipForms 6 version or Lightroom. Then I tried VMware Workstation and it worked running a 'virtual' copy of XP for ZipForms 6. A free version of virtual machines called VirtalBox is another option and I didn't test that solution. I suspect that ZipForms 6 professional will work using Firefox and a standard Sun Java installation one of these days.

In the meantime I'll keep updating Java and Firefox and when they work I won't need the virtual XP any longer.

Now... do I replace my old Blackberry Curve with an iPhone4, the Samsung Captivate or the new Blackberry 9800 Torch/Slider that's coming out in August? There are certainly more apps available for the iPhone4 such as ZipForms 6 professional access, and California Association of Realtor apps too.

Hmmmm, any suggestions here? Think I'm crazy? Well, that's why they call me Crazy Jeff.

Jeff Engle

Realtor and Photographer in Lincoln, CA

Hello Neighbors,

Fun news.

Neighborly is now partnered with several different large companies in Northern California and the Bay Area. Most are tech companies, which happily takes us back to our previous lives...

Neighborly has been working for several months to get these relationships in place, and they've all gone live simultaneously.

Neighborly now offers special programs to employees of:

- Hewlett-Packard
- Intel
- Apple
- Oracle
- Microsoft
- Yahoo
- AMD
- Genentech
- KeyPoint
- Sony Playstation
- Levi Strauss
- Meriwest Credit Union
- CommonWealth Central

If you work for one of those companies, how do you get access to Neighborly's special employee programs?

Log into your employee discount portal and search:

a) Home & Garden > Real Estate category or
b) Finances & Money > Real Estate category


What is your employee discount portal called?

It could be different at each company. Examples:

1) HP's system is called "Passport”
2) Microsoft’s system is called “Benefits Prime”
3) Intel’s system is called “Vault”
4) Apple’s system is called “Passport Unlimited”
5) Weyerhaeuser's system is called "MyDiscount".


Contact your internal HR rep for help with your system.

Many thanks!

Jeff Engle
http://www.PlacerAreaHomes.com

Strategic Defaulters May Not Buy Again Soon

After the much publicized article in the LA Times where the author encouraged individuals to 'walk away from their home' this is an important note about the impact of this action.

Here is an excerpt from CNN via Realtor Magazine:

How long will it be before former home owners who walked away from their mortgages can buy again? Mortgage lenders are saying that in the future, losing a home because of illness or job loss will be seen differently than choosing to abandon a mortgage obligation for other reasons.

"If you made a strategic decision to default on paying your mortgage, it will work against you," says Bill Merrell of the National Association of Review Appraisers and Mortgage Underwriters. It will probably be seven or eight years before walkaways are able to buy another home, says Jay Brinkmann, chief economist for the Mortgage Bankers Association. "Credit scores are only one component of a complete credit decision," he says. "[In these cases] credit scores are not a good indicator of their willingness to continue to pay their mortgage."

Source: CNNMoney, Les Christie (05/28/2010)

If you know of someone who needs to explore options regarding their home, please introduce them to me. I understand these decisions are difficult and emotional, and it is important to get all the facts and understand the options available first.

Jeff Engle

http://www.PlacerAreaHomes.com

SFR (Short Sale/Foreclosure Certification)

 Strategic Defaults, Borrowers Walking Away, Homes in Foreclosure

 Hello Neighbors,

 60 minutes did a story last night on something we see in this business on a daily basis.

 "Strategic Defaults".  When a home owner CAN afford their mortgage, but they decide to walk away from their home and let it go to foreclosure.

 Here's the link:

 http://www.cbsnews.com/video/watch/?id=6470184n

 Although I agree with the depression-era view - that losing your house is the last straw - it's clear not everyone else does.

 Regardless of your moral or ethical view of this trend, the economic impacts are something to find concerning.  We simply don't have economic models for this behavior.

 We know banks are sitting on foreclosed homes and not releasing them to the market.  If 1 of every 5 upside down borrowers is choosing to walk away, then the foreclosure rates are going to continue to be record setting for years to come.

 If you need to short sell, give Neighborly a call.

 Please don't walk away.  We can help you protect your financial future by doing the right thing.

Jeff

http://www.PlacerAreaHomes.Com

Neighborly Realty