No BS Real Estate – 2016 October

October 2016

Here to Help

Nothing about our recent election years can be considered normal, expected, or ethical. Our government agencies, at all levels, have become unmanageable and are inserting themselves into any and all industry factions. Being the military and taxing force is not enough when you realize that nobody who CAN resist you WILL. And if you can infiltrate the election faction, you just created your own golden ticket (hint: Don’t require ID and buy the election machines). And then be given the ability to “educate” future generations (i.e., public schools)? And the ability to affect society and law for more generations (i.e., Jurists)? Wow! Who wouldn’t see the possibility for corruption and self-interest in this government?

Real Estate is the major industry faction which supports my family. All humans need (want) shelter and some don’t want to rent a shelter. That makes a market for real property (“dirt with a house”). There will always be those who prefer or are forced to be renters. Our country is rare in how individuals may be the rightful owner of property (“dirt”) on this planet. I prefer to own. When the mortgage is paid off, there is no more rent. And appreciation goes to my side of the ledger, not a landlord’s.

Since the RE industry feeds me and my family, I have a selfish desire to protect it from corruption and wrong-doers. The last thing I want is to tarnish this profession [any more]. In fact, my Raving Fans will attest to my ability to help clients succeed.

Where is corruption coming from? The Consumer Financial Protection Bureau (CFPB) is a new “regulatory” body which deems itself the arbiter of “good” in the RE lending industry. They do not answer to the U.S. Congress and rarely answer to anyone else. This Bureau has implemented new requirements in the loan process which affect the entire real estate purchase process. They disguise their “consumer protection” by using words like “simplified”, “accountable”, and “equal”. In reality, their new requirements play havoc with consumers during the purchase process; stress, failed escrows, and major inconveniences ensue.

No longer can a seller trust a lender’s pre-approval letter or time-to-close. There are reps, processors, appraisers, underwriters, appraisal reviewers, and funders who all use incongruent checklists on incongruent timelines to complete their work. No longer can a buyer or seller trust that the many layers behind their loan representative consider the PRINCIPAL’s goal with required prioritization or urgency. The many layers become hurdles as time-zones, vacations, commitments, milestones, and even coffee-breaks add hiccups to the over-emphasized milestones for the loan. The purchase milestones (i.e., Inspections, Appraisal, Loan) are no longer focus areas. Rather, it is adherence to the CFPB rules which now rules.


Momentum Swings

This proprietary chart includes annotations to show where the Up markets, Down markets, and Swings are in the ~20 year history. The extended period of no Swing since August 2015 (?) tells me the market is wandering. There are still sellers and buyers. There are multiple-offer situations. There’s not a lot of growth in employment and some major employers are reducing their workforces. Whatever you think about your individual economy, the general malaise has not ended for many. And whatever you think about the impact a change like Trump, we need it more than ever. All I ask is that you use reason and logic that has been missing and is still being depleted. Millenials don’t believe those in leadership positions. And why should they? The entire planet wants us to be the shining light on the hill. We have lost our way and must re-take the hill.

See the full charts (3Yr / 19yr) on my Indicators page.


Sacramento County Summary

September 2016 is a Seller’s Market

Sold – Average Sold Price is Neutral – Median Sold Price Momentum (p) is unchanged – September property sales were 1534, down 4.2% from 1602 in September of 2015 and 13.7% lower than the 1778 sales last month.

For Sale – Average For Sale Price is Depreciating – Versus last year, the total number of homes available this month is lower by 55 units of 2%. The number of current inventory is down 1.1% compared to the previous month. This year’s smaller inventory means that buyers who waited to buy may have smaller selection to choose from.

Pended – There was an increase of 3.9% in the pended properties in September, with 1831 properties versus 1763 last month. This month’s pended property sales were 17.3% higher than at this time last year.

Average Sold Price per Square Footage – Neutral – The September 2016 Average Sold Price per Square Footage of $202 was down 1.5% from $205 last month and up 7.4% from $188 in September of last year. (The Average Sold Price per Square Footage is a great indicator for the direction of property values. Since Median Sold Price and Average Sold Price can be impacted by the ‘mix’ of high or low end properties in the market, the Average Sold Price per Square Footage is a more normalized indicator on the direction of property values.)

Days on Market – Neutral Trend – The average Days on Market (DOM) shows how many days the average property is on the market before it sells. An upward trend in DOM trends to indicate a move towards more of a Buyer’s market, a downward trend indicates a move towards more of a Seller’s market. The DOM for September 2016 was 25, up 13.6% from 22 days last month and down 16.7% from 30 days in September of last year.

Sold/Original List Price Ratio – Steady – The Sold Price vs. Original List Price reveals the average amount that sellers are agreeing to come down from their original list price. The lower the ratio is below 100% the more of a Buyer’s market exists, a ratio at or above 100% indicates more of a Seller’s market. This month Sold Price vs. Original List Price of 98% is up 2.1% % from last month and the same as in September of last year.

Months of Inventory (MOI, number of properties for sale divided by the number of properties sold) – Seller’s market – The September 2016 Months of Inventory based on Closed Sales of 1.8 was increased by 5.8% compared to last year and up 19.4% compared to last month. September 2016 is Seller’s market. A comparatively lower Months of Inventory is more beneficial for sellers while a higher months of inventory is better for buyers.

  • Buyer’s market: more than 6 months of inventory
  • Seller’s market: less than 3 months of inventory
  • Neutral market: 3 – 6 months of inventory

Absorption Rate (ratio that measures the inverse of MOI and represents how much of the current active listings (as a percentage) are being absorbed each month) – Seller’s market – The September 2016 Absorption Rate based on Closed Sales of 56.3 was decreased by 2.3% compared to last year and down 12.7% compared to last month.


El Dorado County Summary

September 2016 is a Neutral Market

Sold – Average Sold Price is Neutral – Median Sold Price Momentum (p) is Down – September property sales were 220, down 2.2% from 225 in September of 2015 and 21.1% lower than the 279 sales last month.

For Sale – Average For Sale Price is Neutral – Versus last year, the total number of homes available this month is lower by 119 units of 14%. This year’s smaller inventory means that buyers who waited to buy may have smaller selection to choose from. The number of current inventory is down 7% compared to the previous month.

Pended – There was the same number of pended properties in September, 269 properties. This month’s pended property sales were 21.7% higher than at this time last year.

Average Sold Price per Square Footage (The Average Sold Price per Square Footage is a great indicator for the direction of property values. Since Median Sold Price and Average Sold Price can be impacted by the ‘mix’ of high or low end properties in the market, the Average Sold Price per Square Footage is a more normalized indicator on the direction of property values.) – Depreciating – The September 2016 Average Sold Price per Square Footage of $204 was down 3.3% from $211 last month and up 3% from $198 in September of last year.

Days on Market (The average Days on Market (DOM) shows how many days the average property is on the market before it sells. An upward trend in DOM trends to indicate a move towards more of a Buyer’s market, a downward trend indicates a move towards more of a Seller’s market) – Neutral Trend – The DOM for September 2016 was 42, up 10.5% from 38 days last month and down 25% from 56 days in September of last year.

Sold/Original List Price Ratio (The Sold Price vs. Original List Price reveals the average amount that sellers are agreeing to come down from their original list price. The lower the ratio is below 100% the more of a Buyer’s market exists, a ratio at or above 100% indicates more of a Seller’s market) – Steady – This month Sold Price vs. Original List Price of 96% is the same as last month and up from 3.2% % in September of last year.

Months of Inventory (MOI, number of properties for sale divided by the number of properties sold; a comparatively lower MOI is more beneficial for sellers while a higher MOI is better for buyers) – Neutral market – The September 2016 Months of Inventory based on Closed Sales of 3.3 was decreased by 13.3% compared to last year and up 17.8% compared to last month. September 2016 is Neutral market.

Absorption Rate – Neutral market – The September 2016 Absorption Rate based on Closed Sales of 30.1 was increased by 13.6% compared to last year and down 15.2% compared to last month.


Placer County Summary

September 2016 is a Seller’s Market

Sold – Average Sold Price is Neutral – Median Sold Price Momentum (p) is Unchanged – September property sales were 507, down 6.3% from 541 in September of 2015 and 11.1% lower than the 570 sales last month.

For Sale – Average For Sale Price is Neutral – Versus last year, the total number of homes available this month is lower by 209 units of 16%. This year’s smaller inventory means that buyers who waited to buy may have smaller selection to choose from. The number of current inventory is down 6.9% compared to the previous month.

Pended – There was a decrease of 3.5% in the pended properties in September, with 581 properties versus 602 last month. This month’s pended property sales were 14.8% higher than at this time last year.

Average Sold Price per Square Footage (The Average Sold Price per Square Footage is a great indicator for the direction of property values. Since Median Sold Price and Average Sold Price can be impacted by the ‘mix’ of high or low end properties in the market, the Average Sold Price per Square Footage is a more normalized indicator on the direction of property values.) – Neutral – The September 2016 Average Sold Price per Square Footage of $212 was down 0.9% from $214 last month and up 5% from $202 in September of last year.

Days on Market (The average Days on Market (DOM) shows how many days the average property is on the market before it sells. An upward trend in DOM trends to indicate a move towards more of a Buyer’s market, a downward trend indicates a move towards more of a Seller’s market) – Neutral Trend – The DOM for September 2016 was 33, down 2.9% from 34 days last month and down 15.4% from 39 days in September of last year.

Sold/Original List Price Ratio (The Sold Price vs. Original List Price reveals the average amount that sellers are agreeing to come down from their original list price. The lower the ratio is below 100% the more of a Buyer’s market exists, a ratio at or above 100% indicates more of a Seller’s market) – Falling – This month Sold Price vs. Original List Price of 94% is down 3.1% % from last month and down from 2.1% % in September of last year.

Months of Inventory (MOI, number of properties for sale divided by the number of properties sold; a comparatively lower MOI is more beneficial for sellers while a higher MOI is better for buyers) – Seller’s market – The September 2016 Months of Inventory based on Closed Sales of 2.2 was decreased by 8.3% compared to last year and up 4.8% compared to last month. September 2016 is Seller’s market.

Absorption Rate – Seller’s market – The September 2016 Absorption Rate based on Closed Sales of 46.2 was increased by 11.6% compared to last year and down 4.3% compared to last month.


Zip Code Indicators

Fair Oaks – September 2016 is a Neutral market! Active inventory was up 22.6% YOY and down 9% MOM. Solds increased 20% YOY and decreased 18.6% MOM. Pendings was up 5.8% MOM and down 3.5% YOY. The Months of Inventory based on Closed Sales is 3.2, up 3.2% YOY.
Folsom – September 2016 is a Seller’s market! Active inventory was up 0.7% YOY and down 6.4% MOM. Solds decreased 5.5% YOY and decreased 18.1% MOM. Pendings was down 8.8% MOM and down 23.1% YOY. The Months of Inventory based on Closed Sales is 1.7, up 6.3% YOY.
Orangevale – September 2016 is a Seller’s market! Active inventory was up 5.9% YOY and up 4.3% MOM. Solds decreased 15.9% YOY and decreased 26% MOM. Pendings was down 17.6% MOM and down 12.5% YOY. The Months of Inventory based on Closed Sales is 1.9, up 25.9% YOY.
Granite Bay – September 2016 is a Neutral market! Active inventory was up 1.7% YOY and down 5.4% MOM. Solds increased 7.4% YOY and decreased 6.5% MOM. Pendings was the same MOM and up 30.4% YOY. The Months of Inventory based on Closed Sales is 4.2, down 4.5% YOY.
Rocklin (95765) – September 2016 is a Seller’s market! Active inventory was down 5.7% YOY and down 4.8% MOM. Solds increased 56.4% YOY and increased 7% MOM. Pendings was down 9.7% MOM and up 5.7% YOY. The Months of Inventory based on Closed Sales is 1.6, down 40.9% YOY.
Roseville (95661) – September 2016 is a Seller’s market! Active inventory was down 4.6% YOY and down 8.8% MOM. Solds decreased 22.2% YOY and increased 12.9% MOM. Pendings was up 5.1% MOM and up 51.9% YOY. The Months of Inventory based on Closed Sales is 1.8, up 27.7% YOY.
El Dorado Hills – September 2016 is a Seller’s market! Active inventory was down 8.1% YOY and down 5.7% MOM. Solds increased 10.8% YOY and decreased 22.6% MOM. Pendings was up 4.2% MOM and up 27.6% YOY. The Months of Inventory based on Closed Sales is 3, down 16.7% YOY.
Cameron Park – September 2016 is a Seller’s market! Active inventory was down 44.8% YOY and down 11.1% MOM. Solds decreased 11.5% YOY and decreased 23.3% MOM. Pendings was up 6.9% MOM and up 14.8% YOY. The Months of Inventory based on Closed Sales is 2.1, down 35.9% YOY.

Red and Gray

Of these leading 8 zip codes, only 2 are green (Up). The market has been ‘flat’ since August ‘15. I think it’s due to the election year impact. This market is “finicky” and patient. That is, there is demand for clean and unique houses that have been well-maintained, smartly updated, and easy to expose. But the days-on-market are getting higher for those with issues or restrictions. And with a changing demographic and lenders scrutinizing borrower’s economic futures, demand will remain stifled. And because of new government regulations (they’re here to help), borrowers undergo stricter underwriting which is meant to limit over-extended borrowers. That affects demand. That, in turn, affects supply. And so it repeats.


Zip Code Details

The table below shows all 51 zip codes (and 3 counties) which I track in my No BS Real Estate system; sorted by Median Price and inclusive of data back 19 years. The Swing Indicator is an aggregate view of these momentum changes. When evaluating the value of your home, this level (zip code) is also not very meaningful but it is applicable to understanding the general market in our 3-county area.


Granite Bay usually tops the list and Arcade Creek or Fruitridge are usually at the bottom. Those areas in Red (counties in Blue) are further represented with charts on my website. (I hope you’re not vision-challenged.) The zip codes for Loomis and Rio Linda can be highly variable. This is proof that a good valuation has to go deeper than zip code.

Fair Oaks – 30% off HIGH, 178% over LOW

Folsom – 17% off HIGH, 154% over LOW

Orangevale – 25% off HIGH, 190% over LOW

Granite Bay – 23% off HIGH, 150% over LOW

Rocklin (95765) – 15% off HIGH, 77% over LOW

Roseville (95661) – 28% off HIGH, 78% over LOW

El Dorado Hills – 16% off HIGH, 52% over LOW

Cameron Park – 29% off HIGH, 86% over LOW



Defy Time

Owning a house is a beautiful thing. It comes with regular maintenance and attention or the house ages quickly – age that is not mitigated can reduce the value of the house. Regular maintenance, therefore, can maintain your value (defy time). And some maintenance tasks help the health and safety of your family.

Because my rain gutters are sometimes neglected, I just hired a Gold Team professional to clean and fix the gutters on our house. After a regular rain, my gutters overflow – they need attention. The unseen damage is what should motivate their cleaning. Water that touches wood can create ‘dry-rot’. Extensive dry-rot can get unhealthy (mold) and expensive (rafter tails connected to rafters, rafters connected to underlayment, underlayment connected to everything). I’ve experienced dry-rot, fungus, mold, odors, and expensive repairs. Avoid some of these situations.

My clients experience the gambit of issues which could have been avoided if there was a little maintenance. And the regular maintenance is so much cheaper. So, this is a great list of maintenance items and some benefits of each (could be priceless):

  • Clean gutters – Eliminate the water pouring on your head as you walk under the eaves. Reduce the chance of errant water causing more severe issues. Eliminate standing water which can provide mosquito havens.
  • Replace air filter – Reduce the possibility of respiratory issues and minimize undesired odors. Extend the life of your HVAC system.
  • Repair caulking – Reduce the chance of water going where it shouldn’t like outside tub/shower or through counter to plywood.
  • Clean windows – Regularly eliminate dust, debris, and even dead insects. Keep track of cracks or breakage which can destroy the climate control in your house.
  • Manage drainage – Ensure any water drains away from your house to reduce the chance of foundation or sub-floor issues.
  • Clear flora – Reduce the chance of plants creating siding and foundation damage by keeping them from touching the house. Eliminate the path that critters use to go from trees to your roof (and then inside).
  • Service HVAC – In the Spring and Fall, a system service can reduce the costs of cooling and heat. We get both extremes and should manage this critical system.

This is not a complete list of tasks a homeowner should perform. Use my Gold Team.


Seller Disclosures

If are considering the sale of your house, you might feel wary of telling all potential buyers of known problems which could discourage them from submitting an offer or from committing to the purchase. But not revealing them could get you in expensive legal trouble. You should not let any risks survive your sale. Here are some basic rules for sellers.

When in doubt, disclose it. Sellers should disclose any known facts about the physical condition of the property, existence of dangerous materials or conditions, lawsuits or pending matters that may affect the value of the property, odors, noises and nuisances that may affect quiet enjoyment, and any other factors that may influence a buyer’s decision. But how can you possibly know what might influence a buyer’s decision? Maybe a window leaks a little bit when it rains or the basement just barely floods every now and then. Do you really need to disclose it? After all, you’ve learned to live with those things, so the buyer should be able to deal with them, too, right? Wrong! If the buyer later discovers that a repair job was botched, you could be on the hook for additional repairs.

What you don’t know won’t hurt you. Although the threat of a lawsuit can be scary, there’s one thing you don’t have to worry about: The courts won’t hold you accountable for failing to disclose issues you’re unaware of. Let’s say your house is infested with termites. But you’ve never seen one, or they were missed by an inspection (or maybe there never was an inspection). You can’t be held responsible for not disclosing this defect if it’s discovered by the buyer a few months after closing. In fact, at a certain point the burden falls on buyers to do their due diligence to uncover any problems.

Don’t guess. Buyers can ask things you’ve never even thought about. One common problem area in disclosure is measurements of the home. Even if you’ve had an appraiser check out your home, you may have no idea how many square feet it truly is because, as it turns out, there’s no single agreed-upon way to measure a home. Yep, that’s right. Three different appraisers can come up with three different measurements. In a situation like that, it can be tempting to just guess or come up with an average. Don’t! Otherwise the buyers can come back later and say you lied or misled them about a material issue. If you really don’t know the answer to a question the buyers are asking, just say you don’t know-and put it on them to find out the answer. And if they push you, make sure you properly attribute where those numbers came from. Including a clause in the purchase contract that any square foot measurement quote is an approximation, and if this is a material issue for the buyers, it’s their responsibility to investigate it further. Just remember: Don’t be afraid of scaring them off with too much information. It is much better to lose a buyer by clearly disclosing all known issues than it is to spend two years and tens of thousands of dollars in litigation.



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