No BS Real Estate – 2016 December

December 2016

Swing Coming?

see video / hear audio

An EKG can tell a cardiologist a lot about the health of a heart. My Swing Indicator, similar but not identical to an EKG because of the granular elements (zip codes), tells me when the general direction (via momentum) is increasing or decreasing. In the chart below, I have labeled the Swings where a distinct change occurs between Up and Down markets. There has always been a swing, except for the last 12+ months. Since June 2015 (Trump announced), when a Swing could have been expected, there has only been “flatline” behavior.

There are 2 possibilities this flatline behavior can indicate: 1) Commodity has reached the Holy Grail of equilibrium, and 2) Commodity is undergoing extreme flattening of throughput (like when a deer freezes in headlights). There is no general move upward or downward. The Holy Grail of equilibrium is only a theory and has no chance of occurring when humans are involved in establishing the value of the Commodity. Humans introduce changes in value; appraisers protect banks from imperfect humans.

These momentum swings map to the price declines and increases in the underlying zip codes and counties. The elongated Down market maps to the “bubble popping” in late 2005 through 2009. In the last 7 years, we have seen mostly increases, rising from the vacuum which resulted from the popping bubble, with intermittent down swings that release some overzealous price goals.

Like any economist, I can say “it depends”. Whether we can appreciate at normal rates or have to reset again to find a logical sense of value; it depends on the all-important employment and family creation in our future.


Pie And Hope

see video / hear audioThere are setbacks, in the pursuit of happiness and prosperity, which require attention. But they get no attention if the setback is not obvious to others or some kind of propaganda diverts our collective attention. But now there is hope that logic is making a comeback. Prices, hopefully, remain affordable for the comeback of employment and logic in our area.

Costs and regulations are driving employers and employees out of our State. California’s demise, as witnessed in Venezuela, is not impossible. It is avoidable but only if we pay attention to the logic of “pie”; a metaphor for happiness and prosperity.

If my pie is increasingly taken by “authorities” while those same authorities are negatively impacting the growth of my pie, the logic tells me that the authorities will eventually have my entire pie. Of course, that is an extreme outcome of the logic and falsely assumes the fixed expenses are not fixed. But how much pie should we sacrifice? I have hope that the pie-thieves will start taking less.


Your Specialist

When you decide to sell or buy a house, there are certain specialists you should hire to maximize your profits and leverage while minimizing your risk. Unless you are representing yourself and using cash only, you will need a licensed agent and lender to successfully purchase a home. Unless you are marketing and selling your house by yourself, you will need a licensed agent to manage the whole event (with the buyer’s agent and lender).

In making these critical decisions, risk and leverage should be the most important factors. That is, what are the risks and how can they be minimized (or eliminated) for a seller and buyer? Or what is meant by leverage and how is it achieved and maintained through and beyond escrow?

Being an “area specialist” is not an important characteristic for my profession to perform in the areas of risk and leverage. My opinion is that your biggest benefit provided by a licensed agent is that they know the market, the contract, and how to negotiate to achieve your goal. I’m licensed to sell anywhere in California. I’m hugely experienced in Sacramento, El Dorado, and Placer counties. My goal is to be Your Specialist. That includes the Area and Terms you want. Don’t be pigeon-holed by an Area Specialist who gets outside their area of specialization.

Risk and Leverage will be a central theme of my performance for you. That is, YOUR Risk and Leverage are intangible but can help or hurt you as a principal. My job is to make sure you understand your Risk and Leverage. The transaction is always at risk of falling apart until the minute it records at the County office. That means the principles in the transaction, the seller and the buyer, are either moving forward blindly or in full awareness of the constant risk. Each principle has contractual rights and required duties to perform. I know how to advise you at every moment and how to mitigate your risks through diligence and forethought.

Leverage and ‘contingency plans’ are living organisms that are constantly discussed, used, and refined throughout the listing, negotiation and escrow processes. In most markets, the seller holds the gold. That is, you start with more leverage than a buyer who desires to own your house. Maintain and increase your leverage before and during your listing and escrow processes.

Making a risky decision may increase your leverage. It may not. Be cautious. You have to know the consequences of your decision [or non-decision] to feel comfortable.

Don’t think that an Area Specialty helps you as much as market, contract, and negotiation specialties.


Sacramento County Summary

audioNovember 2016 is a Seller’s Market

The number of for sale listings was down 7.5% from one year earlier and down 19.7% from the previous month. The number of sold listings increased 13% year over year and decreased 11.9% month over month. The number of under contract listings was down 5.3% compared to the previous month and up 11.2% compared to the previous year. The Months of Inventory based on Closed Sales is 1.4, down 22.6% from the previous year.

The Average Sold Price per Square Footage was the same as compared to the previous month and up 6.9% compared to last year. The Median Sold Price increased by 1.6% from last month. The Average Sold Price also decreased by 0.6% from last month. Based on the 6 month trend, the Average Sold Price trend is “Neutral” and the Median Sold Price trend is “Neutral”.

The Average Days on Market showed a upward trend, a decrease of 12.1% compared to the previous year. The ratio of Sold Price vs. Original List Price is 97%, a decrease of 1% compared to the previous year.

Property Sales (Sold) – November property sales were 1376, up 13% from 1218 in November of 2015 and 11.9% lower than the 1562 sales last month.

Current Inventory (For Sale) – Versus last year, the total number of homes available this month is lower by 162 units of 7.5%. 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 19.7% compared to the previous month.

Property Under Contract (Pended) – There was a decrease of 5.3% in the pended properties in November, with 1435 properties versus 1516 last month. This month’s pended property sales were 11.2% higher than at this time 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. The November 2016 Average Sold Price per Square Footage of $202 was the same as last month and up 6.9% from $189 in November of last year.

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 November 2016 was 29, up 3.6% from 28 days last month and down 12.1% from 33 days in November of last year.

The November 2016 Months of Inventory based on Closed Sales of 1.4 was decreased by 22.6% compared to last year and down 12.6% compared to last month. November 2016 is Seller’s market.


El Dorado County Summary

audioNovember 2016 is a Seller’s Market

The number of for sale listings was down 19.4% from one year earlier and down 15.1% from the previous month. The number of sold listings increased 15.2% year over year and decreased 18.5% month over month. The number of under contract listings was down 11.5% compared to the previous month and up 18.2% compared to the previous year. The Months of Inventory based on Closed Sales is 2.9, down 31.3% from the previous year.

The Average Sold Price per Square Footage was up 1.9% compared to the previous month and up 10.9% compared to last year. The Median Sold Price increased by 5.4% from last month. The Average Sold Price also increased by 4% from last month. Based on the 6 month trend, the Average Sold Price trend is “Neutral” and the Median Sold Price trend is “Neutral”.

The Average Days on Market showed a upward trend, a decrease of 19.3% compared to the previous year. The ratio of Sold Price vs. Original List Price is 96%, an increase of 2.1% compared to the previous year.

Property Sales (Sold) – November property sales were 190, up 15.2% from 165 in November of 2015 and 18.5% lower than the 233 sales last month.

Current Inventory (For Sale) – Versus last year, the total number of homes available this month is lower by 133 units of 19.4%. 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 15.1% compared to the previous month.

Property Under Contract (Pended) – There was a decrease of 11.5% in the pended properties in November, with 201 properties versus 227 last month. This month’s pended property sales were 18.2% higher than at this time 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. The November 2016 Average Sold Price per Square Footage of $214 was up 1.9% from $210 last month and up 10.9% from $193 in November of last year.

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 November 2016 was 46, up 2.2% from 45 days last month and down 19.3% from 57 days in November of last year.

The November 2016 Months of Inventory based on Closed Sales of 2.9 was decreased by 31.3% compared to last year and up 3.6% compared to last month. November 2016 is Seller’s market.


Placer County Summary

audioNovember 2016 is a Seller’s Market

The number of for sale listings was down 18.2% from one year earlier and down 18.1% from the previous month. The number of sold listings increased 20.5% year over year and decreased 3.6% month over month. The number of under contract listings was down 7.3% compared to the previous month and up 16.9% compared to the previous year. The Months of Inventory based on Closed Sales is 1.7, down 31.8% from the previous year.

The Average Sold Price per Square Footage was up 1.9% compared to the previous month and up 9.6% compared to last year. The Median Sold Price decreased by 2.3% from last month. The Average Sold Price was the same as last month. Based on the 6 month trend, the Average Sold Price trend is “Neutral” and the Median Sold Price trend is “Depreciating”.

The Average Days on Market showed a upward trend, an increase of 4.9% compared to the previous year. The ratio of Sold Price vs. Original List Price is 96%, was the same compared to the previous year.

Property Sales (Sold) – November property sales were 476, up 20.5% from 395 in November of 2015 and 3.6% lower than the 494 sales last month.

Current Inventory (For Sale) – Versus last year, the total number of homes available this month is lower by 181 units of 18.2%. 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 18.1% compared to the previous month.

Property Under Contract (Pended) – There was a decrease of 7.3% in the pended properties in November, with 470 properties versus 507 last month. This month’s pended property sales were 16.9% higher than at this time 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. The November 2016 Average Sold Price per Square Footage of $217 was up 1.9% from $213 last month and up 9.6% from $198 in November of last year.

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 November 2016 was 43, up 26.5% from 34 days last month and up 4.9% from 41 days in November of last year.

The November 2016 Months of Inventory based on Closed Sales of 1.7 was decreased by 31.8% compared to last year and down 14.9% compared to last month. November 2016 is Seller’s market.


Zip Code Indicators

Fair Oaks – (www.JayEmerson.com/Fair-Oaks/) November 2016 is a Seller’s market! The number of for sale listings was up 14.4% from one year earlier and down 19.5% from the previous month. The number of sold listings increased 17.4% year over year and increased 14.9% month over month. The number of under contract listings was down 7.4% compared to the previous month and up 8.7% compared to the previous year. The Months of Inventory based on Closed Sales is 1.9, down 5.1% from the previous year.
Folsom – (www.JayEmerson.com/Folsom/) November 2016 is a Seller’s market! The number of for sale listings was down 13.1% from one year earlier and down 20.4% from the previous month. The number of sold listings increased 14.3% year over year and increased 7.5% month over month. The number of under contract listings was down 30.1% compared to the previous month and down 12.1% compared to the previous year. The Months of Inventory based on Closed Sales is 1.2, down 25.5% from the previous year.
Orangevale – (www.JayEmerson.com/Orangevale/) November 2016 is a Seller’s market! The number of for sale listings was down 6.5% from one year earlier and down 21.8% from the previous month. The number of sold listings decreased 15.8% year over year and decreased 17.9% month over month. The number of under contract listings was down 16.7% compared to the previous month and down 10.3% compared to the previous year. The Months of Inventory based on Closed Sales is 1.3, up 8.3% from the previous year.
Granite Bay – (www.JayEmerson.com/Granite-Bay/) November 2016 is a Neutral market! The number of for sale listings was down 4.1% from one year earlier and down 15.3% from the previous month. The number of sold listings increased 30% year over year and increased 4% month over month. The number of under contract listings was down 35.3% compared to the previous month and up 15.8% compared to the previous year. The Months of Inventory based on Closed Sales is 3.6, down 26.5% from the previous year.
Rocklin (95765) – (www.JayEmerson.com/Rocklin/) November 2016 is a Seller’s market! The number of for sale listings was down 9.9% from one year earlier and down 11% from the previous month. The number of sold listings increased 9.8% year over year and decreased 13.5% month over month. The number of under contract listings was down 25.5% compared to the previous month and up 2.7% compared to the previous year. The Months of Inventory based on Closed Sales is 1.6, down 20.2% from the previous year.
Roseville (95661) – (www.JayEmerson.com/Roseville/) November 2016 is a Seller’s market! The number of for sale listings was down 1.9% from one year earlier and down 13.1% from the previous month. The number of sold listings was the same year over year and the same month over month. The number of under contract listings was down 19.4% compared to the previous month and down 6.5% compared to the previous year. The Months of Inventory based on Closed Sales is 1.6, the same as the previous year.
El Dorado Hills – (www.JayEmerson.com/El-Dorado-Hills/) November 2016 is a Seller’s market! The number of for sale listings was down 21.8% from one year earlier and down 21.4% from the previous  month. The number of sold listings increased 36.4% year over year and increased 5.3% month over month. The number of under contract listings was down 29.2% compared to the previous month and up 41.7% compared to the previous year. The Months of Inventory based on Closed Sales is 2.6, down 42.4% from the previous year.
Cameron Park – (www.JayEmerson.com/Cameron-Park/) November 2016 is a Seller’s market! The number of for sale listings was down 25.6% from one year earlier and down 22% from the previous  month. The number of sold listings decreased 5% year over year and decreased 24% month over month. The number of under contract listings was the same compared to the previous month and down 8.3% compared to the previous year. The Months of Inventory based on Closed Sales is 1.7, down 23.3% from the previous year.

Kitchens That Count

Your home should fit your tastes and needs. Kitchens happen to be the most popular target for improvements as we spend a lot of time there. The cost of any improvement is rarely returned in an equally greater sales price. In fact, it is impossible to ever know the value of an improvement. You may feel better about asking a higher price but a buyer has to see your listing, generally agree with your asking price, negotiate a contract price, and hire an appraiser to agree to that contract price. After buyer inspections, the contract price could still change to become a sales price. How any particular improvement is quantified and distinguished among the others in the sales price is a futile exercise. Appraisers have categories, ratings, pictures, and transactional details but still cannot or should not drill to the granularity of a single improvement (e.g., cabinets, counter tops, yards, etc.). An appraiser would assign a “Class” that defines the extent and quality of a property. An appraisal would classify, rate, or adjust a value based on larger groups of property details. A pool and spa would generally get a positive adjustment if a comparable property had only a pool or neither. The amount of that adjustment should depend on quality.

After showing thousands of houses to hundreds of buyers, there are specific things that stand out for my buyers and are noticeable to their appraisers. These also reflect the changes I would or plan to make to my own property. But secondary in the decision to spend money is “future value”. Of primary importance in this decision are our tastes and needs. I’ve learned a lot in this profession and shall also keep a keen eye on improvements with lasting application and relevance.

First of all, a project to improve your kitchen will add stress, noise, and inconvenience to your lives (in the short term, hopefully). You will spend time planning, budgeting, measuring, re-planning, re-budgeting, re-measuring, and repeating until invasive work and noise begins. Quality control and payments to vendors will be intertwined. There will be changes, too, based on new information; back to re-planning.

These are the lasting and coolest kitchen improvements that have been noticeable and alluring to me, buyers, and appraisers:

  • Cabinets — The frequent movement of hinges and guides means the cabinets need to more hardy to withstand the use. The no-slam drawers and cabinets will not only make the use more gentle, it will cut down on noise. Cabinets are usually the most expensive part of a kitchen improvement. But most buyers [and I] can tell if you just cleaned, painted, and changed the hardware.
  • Counters — Granite, concrete, and synthetic counters are popular. Tile and grout will not attract many buyers. And a new sink [with no chips] will need new hardware (gooseneck faucet). And update the backsplash, too.
  • Appliances — Depending on the age of your appliances, and whether they match your new cabinets and counters, a new set (range/oven, frig, dishwasher, microwave) may be nice and energy-saving.
  • Lighting — Dark kitchens hurt a home’s appeal. Adding lighting may help. Under-cabinet lighting is important to me.
  • Open Up — Removing a non-weight-bearing wall or providing visibility into other living spaces can improve allure.
  • Wow — This is that one change which makes YOU say Wow! I like the idea of a pot rack over our island.

So which kitchen features could possibly add the most value to a home?

  • Custom cabinetry: 41% (the price premium: the difference between homes with the feature and homes without in the same ZIP code)
  • Kitchen island: 30%
  • Creative lighting: 21%
  • Granite counters: 18%
  • Large pantry: 14%
  • Stainless-steel appliances: 12%
  • Tile backsplash: 7%

What’s more, research found a growing demand for the “chef’s kitchen.” About 4.7 percent of homes on the market describe the kitchen as a “chef’s kitchen” or “gourmet kitchen,” which is up from 3.3 percent three years ago. Homes with such labels boast a median list price of $589,900.

Some of the most common features of a chef’s kitchen: Oversized fridge; dual commercial-quality ovens; six-burner stovetop; and a butler’s pantry. Other popular features may include a wet bar and wine fridge too.

Don’t bite off too much. But don’t skimp on what you want.



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