ARE YOU PREPARED FOR THE HOUSING SHORTAGE?
ARE YOU PREPARED FOR THE HOUSING SHORTAGE?
Ready or not, we will be facing a housing shortage in very short order, many experts indicate that it will hit as early as 2011.
It seems ludicrous to think that there will not be enough homes to meet demand after our experience of the past few years. The housing market cycle has fluctuated wildly in recent years with prices skyrocketing year after year and then plummeting. Of course, any pretence of equilibrium in the market has long since disappeared. Banks remain reluctant to approve loans to all but the most credit worthy and new home construction has become a phenomenon of the past.
Our population is still growing and families still need a place to live. The old forces of supply and
demand continue in play. With too little supply, the demand will influence both rental properties and home sales. The prices that we have seen fall so far will start to rebound and rental rates will increase steadily.
The major question is how quickly will the financial institutions react? Will they loosen the reigns and allow more buyers to qualify for financing or will they remain conservative? We are betting that investors will continue to demand higher returns and cause a loosening of credit, although not to the same extent as happened in recent years.
Landlords will reap the rewards from higher rental demands. Perhaps they will make up for some of their losses from the past few years. Homeowners will benefit from the rebound in property values. Although we do not see home prices skyrocketing as they did in 2004 and 2005, they will rebound. Interest rates will also increase. They cannot stay at present low levels very much longer and will rise as the economy improves.
Potential homebuyers may find these conditions are not in their favor. Those in a position to purchase a home would be well advised to do so NOW, while market conditions are working to their advantage. Most of us operate a little behind the curve and miss the best deals because we keep waiting for validation of the present market conditions. Would it not be better to act BEFORE everyone else does and reap the benefits of foresight?
Check out the latest Forbes article on this subject: http://realestate.msn.com/article.aspx?cp-documentid=23505825
Or Money Magazine: http://money.cnn.com/2010/06/15/real_estate/new_housing_bubble/index.htm
REAL ESTATE SALES DATA FOR THE PAST 15 MONTHS–EL DORADO HILLS, CA
This post will list the real estate sales data for all homes in El Dorado Hills, CA for the past fifteen months. Each month the data will be updated as soon as it becomes available. The data is provided in detail.
Unfortunately it takes some time to load. You will find the detailed data worth your wait.
This chart shows the number of homes available, the number of homes pending sale and the number of homes sold by month. THe trends are obvious.
This graph shows the average cost per square foot for all homes sold in El Dorado Hills by month.
This graph shows the average cumulative days on market and the reatio of asking price to selling price for all home sold by month.
This graph shows the average asking price and the average sold price for all homes in El Dorado Hills by month.
This graph shows the available inventory of all homes in El Dorado Hills by month. A neutral inventory is considered six months. Inventories of larger than six months indicate a buyer’s market and inventories of less than six month are considered a seller’s market.
Feel free to call if you have any questions.
What In THe World Is Happening In The Area Real Estate Market Today?
What in the world is happening in the area real estate market today?
If there is one thing that is constant in our lives it is change. Imagine how boring life would be without it. In 2004 & 2005, if you were interested in purchasing a home you had to make your offer before you got back into your car or someone else would buy the home out from under you. In 2006 things changed. In 2007, 2008 and most of 2009 there were not a lot of people thinking about buying a home. Prices were dropping like a rock and no one wanted a depreciating asset.
Today there seem to be three real estate markets. Sales in which the owner/occupant wants to sell their home and 
move on. However, unless their asking price is competitive with the bank owned homes and short sales they are not even getting lookers, much less offers. There are opportunities for buyers to get good deals by purchasing homes in the category. It all depends on how flexible the seller is. Usually, the longer the home is on the market the more flexible they are.
Short sales are those in which the owner is trying to sell their home for less than they owe their lenders, frequently much less. Once they get an offer, the lender has to approve the sale. That process can easily take six months or longer and chances are the buyer will move on long before the lender even responds with an approval or denial. So sellers and their agents have to sell the home over and over again until it sticks–if the bank does not foreclose in the mean time. The opportunities to get the very best deals are available from this category IF the buyer is willing to wait. Unfortunately, there is no guarantee that the lender is going to approve the short sale, so the wait could be for nothing.
Bank owned homes present their own challenges. Many are in such poor condition that only an experienced contractor can salvage them and make them habitable. A few are move-in ready, and if they are well priced get so many offers that they stop accepting any more. Timing is critical in this category. If you time it right and are lucky you may get a very good deal.
The public is use to the 2007 – 2008 market and are convinced that home prices are still falling and that we are still in a buyer’s market.
Some even think that they can pick up a home for fifty to seventy-five cents on the dollar. Most inexperienced cash buyers are convinced that their cash offer will trump all others. As that old song goes, “It Ain’t Necessarily So.”
Today’s market is one in which only the serious should play. Seller’s want to see proof of funds and prior loan approval before they accept a buyer’s offer. Especially in the lower end of the market, multiple offers are the rule rather than the exception.
In order to get your offer accepted you have to have a substantial down payment that you are willing to deposit into escrow right away. With very few exceptions, the days of 100% financing are gone. You have to have a loan approval letter in hand that clearly states that you are approved for the necessary financing. Sellers want a buyer to have as much skin in the game as possible, so an offer with 20% of the purchase price down will trump an offer with 3.5% down all day long. Demanding that the seller pay for some or all of the closing costs is likely to result in the seller declining your offer in favor of one in which the buyer will pay all their own fees.
The key to success is being 100% ready to make your move, backed up with all of the necessary documentation. 
Then you have to be fast out of the gate. We had a buyer find a home he liked the day after it came on the market. When we called the listing agent about the home she said that they already had ten offers and was not accepting any more.
Of course, this situation is not the same for every home on the market. It is more prevalent at the lower end of the market. Property condition is also a major factor. Homes that need work don’t move nearly as fast.
Once you have your paperwork ready select a Realtor with whom you feel comfortable. Be prepared to make your search a priority and be willing to reschedule other tasks when a likely home is identified. You will have to move on it FAST!
Then hang on, it could be one hell of a ride!
The best of luck in your search!
HOW CAN I GET THE BEST DEAL ON A HOME? WHERE DO I START? PART 5
How can I get the best deal on a home? Where do I start? Part 5
If you are still with me at this point—and still awake—you are doing well. Home financing is not the most exciting topic, but it is very important to those who are about to make a long term commitment.
It can be very confusing. If you are lost, join the crowd. Find a loan consultant that you trust and ask lots of questions.
At this point you should be aware of the type of loan that will work best for you and after your consultation with your loan consultant you will know what price range you can afford.
It is a good time to select an agent to help you identify that perfect home and help you complete the purchase. Note
that a licensed agent in California does no have to be a Realtor®. I Realtor® is a licensed agent who is a member of the National, California and a local associations of Realtors®. They subscribe to a strict code of ethics and are committed to providing the highest standard of representation for their clients. I recommend that you select a Realtor®.
I would also suggest that you select a Realtor® who practices their craft on a full-time basis. With the tight economy there are fewer full-time Realtors in the market place. Do you really want John Smith from the accounting department representing you in the purchase of the most expensive asset you will probably own?
Another important aspect real estate law is a concept known as agency. To put it into simple terms, an agent can represent a buyer, they can represent a seller or they can represent a buyer and seller in the same transaction?
Most properties are entered into the local MLS (Realtor’s® Multiple Listing Service) in order to gain the most exposure. When the listing agent enters the property into the MLS they also commit to pay a commission to the agent who brings a ready, willing and able buyer to the negotiating table and completed the purchase transaction. In simple terms, the seller pays the commission. So, it costs the buyer nothing to have professional representation!
Sales commissions are usually split in half, 50% to the listing broker and 50% to the selling broker (the broker representing the buyer). Some buyers assume that if they find a property and agree to let the listing agent represent them in the purchase that they are going to save money. NOT SO! When a listing agent represents a buyer that broker gets 100% of the sales commission. The process is legal and happens every day.
If you are about to make the largest purchase of your life, would you feel more comfortable being represented by an agent who already has a contractual obligation to represent the seller? Or would you feel more confident being represented by an agent who is dedicated to representing you with 100% of their skill, experience and knowledge?
I know which choice I would make. Let’s see now, 100% effort for ZERO out of pocket…
Stay tuned for the next Blog in this series.
HOW DO I GET THE BEST DEAL ON A HOME? WHERE DO I START? PART 4
How do I get the best deal on a home? Where do I start? Part 4
It is essential that you understand some of the pitfalls of mortgage loans when making the determination as to which is the best loan for you. You should be very familiar with each loan program you are considering.
In the rather lengthy Parts 2 and 3 we discussed several loans, how they work and some of the pitfalls related to 
each. Naturally, you should discuss these loans with your loan consultant in detail. Make sure you are completely comfortable before making the decision.
You have communicated with a loan consultant and narrowed your selection to a loan package that you can live with—NO UNPLEASANT SURPRISES. NO PREPAYMENT PENALTIES.
You should have a fairly good idea what your payments are going to be and, although you are not excited about having to pay so much, you can live with the payment. You will have a good idea of what price range you should be looking in. You will be able to obtain a pre-qualification letter from your loan consultant.
(A pre-approval is better. That means that your financial information has been verified and there are no skeletons in your financial closet.)
Armed with the knowledge about what you can afford, it is time to start looking for THE HOME.
Remember the old adage, location, location, location. If you buy in the very best area that you can afford, your property will tend to maintain it’s value and appreciate more over time. A smaller, older home in a better area is a better selection than a new home in a questionable area.
Almost everyone starts looking on the Internet. There are thousands of real estate related sites out there. Select one that you feel comfortable using. Naturally, I recommend two web sites,
and/or
They are both my web sites and provide access to EVERY property available on the Realtor’s MLS in our seven county area. They also provide information about our local area as well as information about the real estate buying and financing process.
While you are performing your property search, try changing your search criteria just a little in one or two categories. You will be amazed at the difference in your search results.
Note that most property search sites require that you enter your name and e-mail address. Not so on my web site.
Stay tuned for Part 6 Enjoy your search!