This is a continuation of our three year monthly report on Bank Owned (REO) home sales data for El Dorado Hills, CA.  This report covers Bank Owned homes sold in July 2010.

There were 12 Bank Owned homes sold in July, the same number that were sold the previous month.  REO inventory in El Dorado Hills has actually increased over the past four months from a one month supply in April, a 1.5 month supply in May, a 1.7 month supply in June and a 2.5 month supply in July.  The inventory of all homes available on the market also increased to a six month supply in July.  Six months is considered a neutral market, so we are in a neutral market at this writing.   

The average days-on-market increased from 51 to 55 days. Two of the REO homes that sold had been on the market over 100 days. Only 25% of the REO homes sold were on the market two weeks or less.  This is a smaller percentage than usual.    

The 12 REO homes that sold represent 23% of all homes sold in El Dorado Hills in July. 

The cost per square foot of REO homes in July was $ 144, down one dollar from the previous month.  The cost per square foot of all homes sold in July increased $5 to $ 167. 

The difference between the cost per square foot of REO properties and the cost per square foot of all properties sold indicates that REO homes represented only a 3% savings for REO buyers in June, a much smaller difference than normal.

The overall sales price for REO homes was 99.9% of the final asking price, and 95.9% of the original asking price, and 34% of the buyers paid more than the asking price for REO homes in July.  There is obviously not much room for negotiation in these transactions.

The actual, measurable savings is the difference in cost per square foot between REO homes sold and the cost per square foot of all home sold:  in July, $ 13 per square foot.  That is a $ 32,500 savings on a 2500 square foot home, not a small sum.  

The data follows:

This is a continuation of a three year study of Bank Owned home sales for Folsom, CA.  This report covers REO homes sold in July 2010.

There were only 9 REO homes sold in July, the lowest number for some time and a continuation in the trend of reduced number of REO homes sold in Folsom.  That trend paralleled the reduction in the number of REO homes available for sale.

The average days-on-market for the month was 54, back within the normal range after a statistical anomaly of 84 days the previous month–due to the sale of one home that had been on the market for 525 days.  There were no homes that sold that had been on the market for over 100 days this month.   In July only two of the bank owned homes sold in two weeks or less, an unusually small number.    

The 9 homes sold represent only 20% of all homes sold in Folsom.   

The overall home inventory in Folsom increased markedly to a 5.5 month supply, up from the 3.2 month supply reported for June and the highest reported level of inventory in Folsom for more than 14 months.  A neutral market is considered a 6 month inventory.  So, we are moving from a seller’s market to a neutral market.  The inventory of bank owned homes has also increased.  It is 4.7 months, more than double the 2.2 month inventory reported in June.    Available inventory in Folsom has not reached the six month level in well over a year.

The cost per square foot of REO homes sold in July increased to $ 170, up from $ 165.  It has been running in a narrow range of $ 176 to $ 156 over the past fourteen months. The cost per square foot of all homes sold in January was $ 174, unchanged from the previous month.      

The difference between the cost per square foot of REO properties and the cost per square foot of all properties sold indicates that REO sales represented only a 2% savings for REO buyers.  This is the smallest margin since we started reporting these figures.

The overall sales price for REO homes was 94.2% of the final asking price, and 23% of the buyers paid more than the asking price for their bank owned home in July.  There was only a $ 5 dollar per square foot savings in the purchase of REO homes, compared to the cost of all homes sold.  When we apply that price difference to a 2500 square foot home it represents a $ 12,500 savings, something worth considering when selecting a home.

The data follows:

This is a continuation of my three year monthly report on Bank Owned home sales data for El Dorado Hills, CA.  This report covers Bank Owned homes sold in June 2010.

There were 12 Bank Owned homes sold in June, down 20% from May.  This reflects a very low inventory of 1.7 months supply in June.  Inventory was a one month supply in April and a 1.5 month supply in May.  The inventory of all available homes in El Dorado Hills is presently only a 4.1 month supply.  It had been 7.4 month supply in August of 2009.  Six months is considered a neutral market, so we are still in a seller’s market irrespective of what the media reports..

The average days-on-market jumped to 51 days, up from 33 days in May.   Only two of the REO homes that sold had been on the market for over 100 days.  Only 25% of the REO homes sold were on the market two weeks or less.  The well priced homes are selling quickly as usual.  Those that were not well priced took longer to sell—Real estate 101. 

The 12 REO homes that sold represent only 18% of all homes sold in El Dorado Hills in June. 

The cost per square foot of REO homes in June was $ 145, down from $ 150 in May.  The cost per square foot of all homes sold in January increased  $ 2  to $160. 

The difference between the cost per square foot of REO properties and the cost per square foot of all properties sold indicates that REO homes represented a 10% savings for REO buyers in June.

The overall sales price for REO homes was 99.8% of the final asking price, and 93.6% of the original asking price, and 25% of the buyers paid more than the asking price for REO homes in June.

The actual, measurable savings is the difference in cost per square foot between REO homes sold and the cost per square foot of all home sold:  in March, $ 10 per square foot.  That is a $ 25,000 savings on a 2500 square foot home, not a small sum.  

The data follows:

This is a continuation of a three year study of Bank Owned home sales data for Folsom, CA.  This report covers REO homes sold in June 2010.

There were 16 REO homes sold in June, one less than sold in May.  The days-on-market increased significantly to 84, up from 45 the previous month.  This increase is due to the fact that one home sold after being on the market for 525 days!  (It was in very rough condition.)  Two others had been on the market well over 100 days.   In June only 19% of the bank owned homes sold in two weeks or less.  This is an unusually small segment of the sold REO homes.

The 16 homes sold represent 22% of all homes sold in Folsom, on the low end of the normal range.  There are far fewer Bank Owned homes available on the market and short sale homes continue to have an impact.

The overall home inventory in Folsom increased to a 3.2 month supply, up from the 2.6 month supply reported for May. A neutral market is considered a 6 month inventory.  So, we are still looking at a strong seller’s market.  Available inventory in Folsom has not reached the six month level in well over a year.  It may be a seller’s market in some areas, but that has NOT been so In Folsom.

The cost per square foot of REO homes in June increased by two dollars to$ 165.  It has been running in a narrow range of $ 176 to $ 156 over the past fourteen months. The cost per square foot of all homes sold in January decreased to $ 174, down from $ 176 the previous month.      

The difference between the cost per square foot of REO properties and the cost per square foot of all properties sold indicates that REO sales represented a 5% savings for REO buyers.  

The overall sales price for REO homes was 96.2% of the final asking price.  Only 13% of the buyers paid more than the asking price for their bank owned home in June, an unusually small percentage.  The banks are still pricing these homes well and in June there was a $ 9 dollar per square foot savings, compared to the cost of all homes sold.  When we apply that price difference to a 2500 square foot home it represents a $ 22,500 savings, something worth considering when selecting a home.

The data follows:

This is a continuation of my three year monthly report on Bank Owned home sales data for El Dorado Hills, CA.  This report covers Bank Owned homes sold in May 2010.

There were 15 Bank Owned homes sold in May, down 29% from April.  This depleted the available inventory which presently stands at 1.35 months.  The inventory of all available homes in El Dorado Hills is presently only 3.4 months.  It had been 8.9 months in March of 2009.  Six months is considered a neutral market, so we are still in a seller’s market irrespective of what the media reports..

The average days-on-market dropped to 33, down from 57 in April.   None of the REO homes that sold had been on the market for over 100 days.  A full 34% of the REO homes sold were on the market two weeks of less.  The well priced homes are selling quickly as usual.  Those that were not well priced took longer to sell—Real estate 101. 

The 15 REO homes that sold represent 24% of all homes sold in El Dorado Hills in May. 

The cost per square foot of REO homes in Mayl was $ 150, down $4 from April.  The cost per square foot of all homes sold in January also decreased $ 7 from $167 in April. 

The difference between the cost per square foot of REO properties and the cost per square foot of all properties sold indicates that REO homes represented a 6% savings for REO buyers.

The overall sales price for REO homes was 97.1% of the final asking price, and 96.2% of the original asking price, and 40% of the buyers paid more than the asking price for REO homes in April.

The actual, measurable savings is the difference in cost per square foot between REO homes sold and the cost per square foot of all home sold:  in March, $ 10 per square foot.  That is a $ 25,000 savings on a 2500 square foot home, not a small sum.  

The data follows:

This is a continuation of a three year study of Bank Owned home sales data for Folsom, CA.  This report covers REO homes sold in May 2010.

There were 17 REO homes sold in March, up from 13 in April.  The days-on-market decreased to 45, down from 53 the previous month.  Only one of these homes had been on the market for over 100 days.   In May 30% of the bank owned homes sold in two weeks or less.   

The 17 homes sold represent 20% of all homes sold in Folsom, on the low end of the normal range.  There are far fewer Bank Owned homes available on the market and short sale homes continue to have an impact.

The overall home inventory in Folsom dropped back down to a 2.7 month supply after s spike in a February and April to a 4.2 month supply.  A neutral market is considered a 6 month inventory.  So, we are still looking at a strong or stronger seller’s market.  Available inventory in Folsom has not reached the six month level in well over a year.  It may be a seller’s market in some areas, but that has NOT been so In Folsom.

The cost per square foot of REO homes in May dropped back down to $ 163 from the April $ 175 number.  It has been running in a narrow range of $ 180 to $ 156 over the past fourteen months. The cost per square foot of all homes sold in January decreased to $ 181, up from $ 176 the previous month.      

The difference between the cost per square foot of REO properties and the cost per square foot of all properties sold indicates that REO sales represented a 7% savings for REO buyers.  

The overall sales price for REO homes was 97.5% of the final asking price.  A full 30% of the buyers paid more than the asking price for their bank owned home.  The banks are still pricing these homes well and in March there was a $ 13 dollar per square foot savings, compared to the cost of all homes sold.  When we apply that price difference to a 2500 square foot home it represents a $ 32,500 savings, something worth considering when selecting a home.

The data follows:

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

California homeowners may or may not be aware of Proposition 8.

In 1978 California voters passed this constitutional amendment that allows a temporary reduction in the assessed value of their property when that property suffers a decline in current market value.

When, on January 1 of each year, the market value of a property falls below the assessed value, the assessor is obligated to review the property and enroll the lesser of the two values.  If it is determined that the market value of the property at that time is less than the assessed value your property’s assessed value will be adjusted to the level of its current market value.  This will result in a reduction of your property tax for that year.

To apply, contact your county assessor’s office.  Some counties require the tax payer to complete a form requesting participation in the Proposition 8 outlined process, others will include you in the program based on information that you provide on the telephone.

Some counties have programs in place that review properties based on the purchase date.  It is wise to contact them and ensure that your home is in the program.  For more data go to:

http://www.boe.ca.gov/proptaxes/assessors/htm .

Note that the reduction is not permanent.  Each year on January 1 participating properties will be reviewed until their values return to the former Proposition 13 values.

If you do not agree with the assessor’s findings you may file a formal appeal with the County Assessment Appeals Board or the County Board of Equalization.  These boards are independent bodies established to resolve differences in property value opinions between the county assessor and property owners.

For more information go to:

http://www.boe.ca.gov/proptaxes/pdf/filingperiods.pdf

The first stage is when the loan is in default, meaning that the loan payment is more than 30 days late.  The  second stage is in Foreclosure, meaning that the bank has taken the property back and they now own the property.

The chart also shows the unemployment rate and the underemployment rate, both of which have a direct impact on the delinquencies now and in the future.

As a mamber of the CDPE organization, I agree that we want the public to be aware of the current market conditions.  Feel free to call if you have any questions.

Homeowners should be aware of the fact that there can be a danger to refinancing your home if your existing loan is a “purchase money” loan.

Here is the deal.  California is a non recourse state.  That means that if a homeowner runs into financial difficulty and can not keep up with their mortgage payments, they are better off dealing with their lender(s) if the loan(s) are purchase money loans.  A purchase money loan is one which was obtained strictly for the purchase of a property.  If that home owner ends up in a short sale situation (trying to sell the property for less than they owe the bank) their chances of having the outstanding balance on their loan(s) forgiven is covered by California statute.

If, however, they end up in a short sale situation after they have refinanced their loans, the lending institutions have legal recourse to come after them for the unpaid balance of their loan.  They can loose their home and still owe the bank thousands of dollars. 

It would be a prudent move to check out the impact of a refinance if the probability of delinquency and/or a short sale in the future.  Refinancing to lower loan payments may be a good move but everything has to be weighed carefully before making that move. 

At this writing thousands of adjustable rate loans are about to adjust, increasing the loan payments significantly.  Borrowers facing this reality should have all of the facts before they refinance.

The California Association of Realtors are vocally supporting SB 1178 to extend anti-deficiency protections to homeowners who have refinanced “purchase money” loans and are now facing foreclosure.  

All of this is very confusing for most borrowers.  Feel free to call and ask questions.  If we do not have the answers we will point you in the direction of a reputable organization that can.