Elizabeth Weintraub • Sacramento Short Sale Agent • Land Park

I hear a lot of agents bellyaching about the real estate business in Sacramento. They ask where all the home buyers have gone and wonder if they should quit selling real estate. Well, with an attitude like that, it sounds to me like they have already quit selling real estate, they just haven't made a formal announcement yet.

There will always be home buyers and there will always be home sellers in Sacramento. The real estate business doesn't come to screeching halt just because the economy tanks or inventory rises. It just changes shape. More than half of the sales in Sacramento are foreclosures and short sales, with short sales taking the lead.

Because I list and sell a lot of short sales in Sacramento, I often prepare a comparative market analysis for a wide spectrum of neighborhoods. As a Sacramento short sale agent, I sell from Lincoln to Cameron Park to Galt. I put a cap on how far I am willing to drive this week when a caller asked if I would list a short sale in Rescue. I thought to myself, hmm, that's pretty darn close to Cameron Park -- nope, not gonna do it because before I know it I could be driving to Lake Tahoe.

But my point is I study snapshots of various real estate markets from an analytical viewpoint that other agents might not see in a such a wide scope. I am picking up a repetitive theme. List prices and pending prices are less than the sold comparable sales. We had a slide in Sacramento in early 2008, and I predict there's another dip coming up. It won't compare to the big drop between 2005 and 2007, but I don't see appreciation lurking anywhere within my sight line.

The market is what it is and no single agent is going to change it. I didn't make it. All I can do is adapt how I do business to make sure that I stay in business. By the time a recovery arrives, for most of us, it will be a huge relief; even if it slides in sideways. We have two eyes, we can see it coming. But it ain't here yet. Not by a long shot. Recovery is not around the corner. There's just no way to sugar coat what's going on, nor do I even want to.

I am including several charts here that show you sales are down 33% from last year and inventory is up by almost 45% over last year. We have more homes coming on the market and there are fewer buyers. This is now a buyer's market. Throw in interest rates at 4.5%, and you've got an excellent time to buy, which means buyers are less likely to do it. Don't get me started on why but buyers tend to buy in seller's markets.

If you want to buy or sell a home in Sacramento, give me a ring. I'll still be here.

Data supplied by Trendgraphix.

One of my Sacramento short sales is on the market after previously selling as a short sale, meaning this is the second time around for that home. (It wasn't my previous sale, in case you're curious.) That's because we've had two big downturn waves in Sacramento. There was the beginning, in August of 2005, when the phones stopped ringing. But the second wave of price declines, which nobody is talking about, hit again at the end of 2007, when people figured the market was finished falling -- i.e., because prices could not go any lower -- yet, prices continued to fall.

I was wondering why none of the sellers I helped to do a short sale in 2006 or 2007 was buying again after a short sale in 2008 or 2009. I imagine this is why. They're a little gun shy to enter the marketplace. These are people who were probably promised they could refinance or sell at a huge profit, and it didn't work out. They had the rug pulled out from under them.

To confirm my suspicions, I turned to Trendgraphix to see if the data mirrored my thoughts. Sure enough, you can see it in the square-foot prices. The chart above shows the average square-foot-price in Sacramento from February of 2005 through February of 2010.

Laid out below is the data table from the above chart. The square-foot-price in July of 2005 was $230. By the end of 2007, it appeared to level a bit. Then wham, the rollercoaster plunged. The square-foot price fell from $210 in August of 2007 to $162 in January of 2008. As of last month, that price per-square-foot has dipped to $120.

Just from my own experiences as a Sacramento short sale agent, I could feel the market beginning to recover about this time last year. It's still a little wobbily, but it remains fairly constant. Still, if I'm expecting my former short sale sellers to buy another home shortly, I don't think it's going to happen for a while. I suspect they are sitting out this perfect storm.

Almost every home buyer I run into wants to live in either Land Park or Curtis Park. We've got tree-canopied streets, a gorgeous park, shopping, restaurants, a movie theater, friendly neighbors and we can walk to downtown or Midtown Sacramento. Who wouldn't want to live in Land Park or Curtis Park?

That sentiment is most likely reflected in the rising home sales, too. The number of homes sold in 95818 for the month of July has shot up 85.7% over a year ago. Last July, only 14 homes sold in 95818. This July, the number of sold homes is 26.

Interesting, the inventory (actual number of homes for sale) for July topped out at 70 homes for sale. Of those, 10 were bank-owned homes or offered as short sales. The average price-per-square foot was $258. But inventory is dropping. July's inventory was 2.7 months, meaning it would take less than 3 months to sell every home on the market.

Here are the Trendgraphix charts, used with permission, that show housing trends over the past 15 months in Land Park and Curtis Park:

It's not just conventional lenders -- which may be subject to the Home Valuation Code of Conduct (HVCC) -- that are calling for review appraisals in our Sacramento real estate market. Many FHA loans, once submitted to underwriting, emerge from underwriting with a loan condition for a review appraisal as well.

The HVCC was put into place on May 1 as a well intended but messed-up process to ensure accuracy and honesty in an appraisal. Now, conventional lenders must submit a request for an appraisal to an appraisal management company. This company then plucks an appraiser from a pool of appraisers. The appraiser you get could be inexperienced and clueless or experienced and familiar with your neighborhood. It's the luck of the draw.

Remember, appraisals are only an opinion of value. They aren't etched in gold. They are as good as the appraiser. On top of this, many appraisals are coming in low. Appraisers are scrutinizing value very closely and are much more conservative with their estimate of value than they were several years ago.

As one appraiser said: "If we would give $40,000 for an extra 500 square feet, a few upgrades and a pool 2 years ago, today that plus factor might be only $20,000."

Buyers are advised to expect delays at closings. Better yet, you may wish to ask for a 35- or 40-day escrow period in your purchase contract, just to be safe.

Elizabeth Weintraub is an author, columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout Sacramento. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you.

The Short Sale Savior, by Elizabeth Weintraub, available in bookstores everywhere and at Amazon.com.

A Business Week reporter finally caught wind of what's been going on. Well, to be fair, the reporter had access to a study completed by First American Logic in Santa Ana and tweaked it a bit.

That study showed that most of the top 25 ZIP codes for fast-paced home sales activity are in California. So Business Week narrowed the choices to ZIPs with 10,000 households and picked only one ZIP per metro area. This resulted in the Elk Grove ZIP of 95624 landing in the national number 10 slot of most improved real estate sales for fourth quarter of 2008.

Even though Elk Grove was named the fastest growing city in the U.S. in 2006, some reporters don't know where Elk Grove is located or how to spell it.

The metro area for Elk Grove is called the Sacramento - Arden - Arcade - Roseville metro area. Since I don't have a copy of the report, it is possible the ZIP selected is incorrect, and the sales growth refers to the entire metro area of Sacramento.

Here are the top 10 areas with the fastest growth in home sales, according to Business Week's scrutiny of that study:

1. 94533, Fairfield, Calif. (Fresno)
2. 92376, Rialto, Calif. (Riverside-San Bernardino-Ontario)
3. 91342, Slymar, Calif. (Los Angeles-Long Beach-Santa Ana)
4. 92126, San Diego, Calif.
5. 33914, Cape Coral, Fla. (Fort Meyers)
6. 93065, Simi Valley, Calif. (Oxnard-Thousand Oaks-Ventura)
7. 95123, San Jose, Calif.
8. 85379, Surprise, Ariz. (Phoenix-Mesa-Scottsdale)
9. 93722, Fresno, Calif. (Madera)
10. 95624, Elk Grove, Calif. (Sacramento-Arden-Arcade-Roseville)

But ask an agent in Elk Grove -- or anywhere else in Sacramento metro -- and you'll hear that we don't need a study to tell us that we are running out of inventory and the sales pace is absolutely frantic. We don't even have enough short sales or foreclosures to go around anymore!

The Short Sale Savior, by Elizabeth Weintraub, coming June 2009.

Photo: Elizabeth Weintraub, home in Elk Grove

Sigh. The inventory decline in Sacramento County continues. Our housing inventory (the number of homes for sale) dropped almost in half between 2007 and 2008. Over the past 15 months, it's dropped in half again. The problem is there is very little for sale. That which is for sale, if it's desirable, has multiple offers.

Here is a graph from Trendgraphix that shows the last 15 months of home sales activity in Sacramento County:

The number of bank-owned homes for sale dropped by 20% over the past 30 days. This is due in part to the moratorium on foreclosures and federal aid incentives. Some people believe the banks are hoarding bank-owned homes and just haven't released them yet. Pending sales, those homes that are now in escrow but have not yet closed, are up 4% over January.

Here is how the numbers for February break down in Sacramento County:

• 61% of the sales were under $200,000
• 33% of the sales were priced between $200,000 and $400,000
• 6% of the sales were over $400,000.

You can easily see that homes priced under $200,000 is where the activity is in Sacramento right now. For those who have been waiting for a dream home to go on the market at an affordable price, this is the time to get that preappoval letter and start house hunting. If you're looking for a buyer's agent to help you, call Elizabeth Weintraub at 916.233.6759. I love working with first-time home buyers.

The Short Sale Savior, by Elizabeth Weintraub, coming in June 2009.

Image: Trendgraphix, used with permission, exclusive to Lyon Real Estate agents

Well, according to Fortune Magazine, that is. It released today its Top 10 Worst Real Estate Markets in the country, and Sacramento came in as number five. First, let's define worst real estate market. I guess Fortune believes the worst markets are due to median housing price declines. You know, that is actually a GOOD market for a buyer. I'm excited to be representing home buyers right now, especially with these fabulously low interest rates.

Fortune magazine predicts that Sacramento values will fall again in 2009 but rise in 2010. Interestingly enough, out of the top 10 worst real estate markets, Sacramento is the ONLY market projected to see a price increase in 2010! Perhaps because we were the first to fall. We'll be the first to come back.

2009 will be a very interesting year for Sacramento real estate. Buyers have the best chance in decades to buy an affordable home now in Sacramento. I can't wait for the New Year.

Fortune Magazine gathered its data from NAR and Moody. So, if you believe in NAR and Moody and the Tooth Fairy, here are the stats:

• 2008 median home price: $225,140 (actually, its $185,000)
• 2009 projected change in median home prices: -22.2%
• 2010 projected change in in median home prices: +2.3%

The Short Sale, by Elizabeth Weintraub, coming from publisher Archer Ellison in January 2009.

Photo: Elizabeth Weintraub, William Land Park, Sacramento

Below is a Trendgraphix chart detailing the last 15 months of housing activity in Sacramento County. From September of 2007 through November of 2008, inventory has fallen 39% in Sacramento. Inventory is the number of homes for sale. With fewer homes for sale, buyers have fewer choices, which means the homes that are attractively priced and located in desirable neighborhoods are receiving multiple offers.

This is in contrast with most buyer's markets. Generally, in a buyer's market, inventory rises, but we are witnessing a reversal in Sacramento. The best looking  homes sell the fastest. Of course, there are still neighborhoods where almost every listing is a short sale or a foreclosure and little demand for those areas.

However, in Midtown Sacramento, Land Park, Curtis Park and East Sacramento -- the core neighborhoods close to downtown -- homes priced for first-time home buyers are selling at a brisk pace. Contractors are falling all over themselves to snatch up the fixer-upper homes as well. I probably receive at least one call a week from a contractor searching for that next flipper house.

Sellers are not putting their homes on the market unless they are willing to price them competitively among the short sales and foreclosures. This is good news for buyers: appropriately priced homes plus low interest rates; it's a great time to buy a home in Sacramento!

You will also note the red line, which is the pending sales. It is normal for pending sales (and closed sales) to dip in November. I would not be surprised to see a further dip in pending and sold numbers for December. However, I predict sales will shoot right back up in January. The New Year, if it follows the past several January's, is likely to be strong.

The number of pending sales fell 9% in November over October. However, the long-term trend from September of 2007 through November of 2008 shows pending sales have almost tripled. During that same time period, closed sales have jumped about 225%. This means buyers are actively chasing this astounding market and picking up fabulous deals.

Much of that activity is fueled by foreclosures. I will show you the foreclosure chart tomorrow.

If you're thinking about selling your home as a short sale or you are a first-time home buyer who wants to take advantage of today's Sacramento real estate market, feel free to call me at 916.233.6759. I always answer my cell.

The Short Sale, by Elizabeth Weintraub, coming from Archer Ellison in January 2009.

Image: Trendgraphix