NEVADA COUNTY HOUSE HUNTING TIP

As I have reported prior, the inventory of available homes currently on the market in Nevada County is in decline, which is causing many homes to receive multiple offers. Whether you're anticipating competition when you bid or not, you should be pre-approved for a mortgage before you write an offer. When in competition, being pre-approved will make a big difference, particularly if everyone else who is offering is pre-approved as well. It also lets you know what you can afford. And, it puts you in a good bargaining position with the seller.

Buyers aren't the only participants in today's housing market that have heard the news that the market has improved. Some sellers are putting their homes on the market because they've been waiting for a better time to sell. This is good news for buyers who are looking in the low-inventory markets such as Nevada County. In the past seven days 75 new properties have been added to the local MLS.

(If you would like to be added to the automatic MLS email system, which gives you unlimited access to the MLS, click here and sign up.)

You should expect you will have to negotiate. Many of today's sellers are selling for less than they paid. Even though the market has improved a bit, sellers may be disappointed with the current market value of their home. Be prepared to negotiate, not just the initial price, but after inspections are completed as well, especially if items come up you hadn't anticipated. Many Properties in and around Nevada County have had work done without permits, so look closely.

Include realistic contingency time frames in your purchase contract for loan and appraisal approval if you're applying for a mortgage. The recent uptick in the market means that lenders are suddenly overwhelmed with paperwork.

In mid-April, buyers in Nevada County, who were seeking approval for a loan were told they could close a transaction in 21 days. Not only could they not close in 21 days, it took more than 21 days for loan approval due to lender backlog. You will need time.

In conclusion, If you know you will be looking at homes for purchase this summer get pre-approved for a loan, be prepared to negotiate, check all permits and leave ample time to close the transaction.

Scott Hopper - Realtor, 530.477.2277

HOUSING AFFORDABILITY AT NEW HIGH

Nationwide housing affordability hit a new record high for a second consecutive quarter in the first three months of this year, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI), released May 17. Yet tight lending conditions continue to pose a major obstacle to many prospective home buyers.

“Homes in this year’s first quarter were more affordable than they have been at any time in more than 20 years, yet many potential sales are not happening because of overly tight lending conditions that are keeping hardworking families from obtaining a suitable mortgage,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “Without this significant hurdle, the housing and economic recovery could be proceeding at a much stronger pace.”

Among the most affordable major housing markets in respective order were Dayton, Ohio; Lakeland-Winter Haven, Fla.; Modesto, Calif.; Grand Rapids-Wyoming, Mich.; and Buffalo-Niagara Falls, N.Y.; the latter two of which tied for fifth place.

Other major metros at the bottom of the affordability chart included San Francisco-San Mateo-Redwood City, Calif.; Honolulu; Los Angeles-Long Beach-Glendale, Calif.; and Santa Ana-Anaheim-Irvine, Calif., respectively.
Ocean City, N.J., was the least affordable smaller housing market on the list, with 45.9 percent of homes sold in the first quarter affordable to families earning the median income of $71,100. Other small metros at the bottom of the list included Santa Cruz-Watsonville, Calif.; San Luis Obispo-Paso Robles, Calif.; Santa Barbara-Santa Maria-Goleta, Calif.; and Laredo, Texas.

Scott Hopper - Realtor, 530.477.2277

HOUSING RECOVERY

Home prices are projected to rise by just under 1 percent nationwide in the second half of 2012 and Nevada County should keep pace with the national average. The inventory of homes available in the foothill region is drying up and prices are beginning to make a turn.

The report, titled The Shifting Nature of U.S. Housing Demand, stated investors who buy rental properties are leading phase one of the recovery, as opposed to buyers who purchase properties as their own residence.

The rate of returns of T-bills are currently low and their prices are high and when comparing the government guaranteed bill as an investment to that of real estate, which has a much higher rate of return accompanied with beaten down values, large investment firms are seeing value.

In 2013, prices will rise by 1.5 percent and up another 2.5 percent in 2014.

For the second phase, home prices will increase 3 to 3.5 percent between 2015 and 2017.

During the first phase, the demand for rental properties will come from young people hit hard by the recession and immigrants.

The housing recovery will come in a two phase process as reported by dsnews.com, Click here for the full story.

“Over 80 percent of Americans in recent surveys still agree that buying a home is the best long-term investment they can make. What will be intriguing to watch is how their aspirations around home ownership are affected by this period of extended austerity (In economics, austerity refers to a policy of deficit-cutting by lowering spending often via a reduction in the amount of benefits and public service provided),” he said.

According to the report, about $7 trillion in American wealth was lost when home prices dropped 30 percent after the housing bubble burst.

As investors buy up the oversupply of homes to take advantage of low prices and rising rents, the report also predicts that this will lead to the absorption of the existing surplus, which will clear by the start of 2015.

Then, phase two will begin with higher home prices and a return to home ownership.

According to the report, currently, 11 percent of homeowners say they would like to sell their home, but about half of these homeowners say they aren’t listing their property because they won’t get the price they want.

It is predicted that once prices rise by 3 percent in 2015, homeowners will start to return to the market, increasing the volume of home sales.

Credit will also become more accessible as standards ease, leading to more renters to become buyers. The report stated a crash in demand for rental properties is unlikely. Therefore their is a floor in the market.

Scott Hopper - Realtor 530.477.2277

FEWER HOMES GOING TO BANKS

The Sacramento Bee is following suit in the news trend, stating fewer homes are currently being foreclosed upon by lenders. (click here) The number of U.S. homes taken back by lenders in April fell 7 percent from March which is the third consecutive monthly decline, foreclosure listing firm RealtyTrac Inc. said Thursday. Home repossessions fell 26 percent versus April last year.


In Nevada County, homes priced under $200,000 are being snatched up very quickly by buyers, many of which  receive multiple offers within days of the listing agreement being signed. In the past two weeks, I saw an Alta Sierra short sale home priced at $175,000 and the bidding is now over $200,000. All this took place prior to a for sale sign being pounded into the ground.


The market is changing.

Scott Hopper - Realtor, 530-477-2277

NEVADA COUNTY'S UNEMPLOYMENT AND HOUSING

California as well as Nevada County's housing markets often trends with it's unemployment, click here for U.S. Bureau of Labor Statistics. May 11, 2012.  When the unemployment rate rises, a few things occur. The first effect is bond prices get bid higher, therefore reducing it's yield which pushes the cost of borrowing money lower (less expensive to borrow the same amount of money).

Secondly home prices also trend lower, as the economy weakens so does the demand for housing. Over the course of the past two years, statistics show more Californians have found employment. The state's housing markets have shown signs of strength over that same period.

Home builder equities who are traded daily on the NYSE have moved to the upside as much as 50% in the past six months. Two of the largest home builder's equity prices are shown here TOL and DHI. Equity prices in general are said to represent what the the future holds (forward looking indicator). If this is the case, then it could be a great time to purchase real estate.

An under water seller may want to sell into the market's current strength to receive the short sale tax advantages. I have written the tax implications prior to the rule change click here.

Where a buyer may want to wade into today's market as prices of many homes Nevada County homes have come off their highs by as much as 60%.  Mortgage rates are currently at or near all-time lows and there are loan programs which could get you into a home for as little as 3% down.

While no one knows for sure if real estate prices will go higher any time soon, indicators do look positive.

Scott Hopper - Realtor 530.477.2277

STABLE RECOVERY IN PLACE FOR NEVADA COUNTY

Over the course of the past six years home ownership has fallen by one million households per year where as historical data shows there should have been one million new homeowners added. Since the bubble burst six years ago the country has added five million new renters instead. If you consider the statistics which are here at face value it does not sound good, but if you take the time to think about it. You could come to the conclusion that there is pent up demand for housing moving forward which should be good for any local market including Nevada County. As new ownership fell, investors often swept in to buy while often paying cash, so the footing for a recovery is in place. The recovery is being built without leveraged financing so it should be very stable market moving forward at the same time, interest rates are at all time lows and prices are down as much as 60%. The future looks bright.

Scott Hopper - Realtor 530.477.2277

HOME PRICES ON THE RISE AGAIN IN APRIL

Real estate website Trulia released news on May 3 that confirms asking prices as well as rents are on the rise for two or more months. Please click here for the story. Many markets are experiencing double digit growth such as beaten down markets like Miami and Phoenix are leading the way at 16%. Historically Nevada County lags the overall  market by four to eight months. So this is a great sign for our local market.

The chart below depicts the current inventory within Nevada County

Inventory is falling.

Two year window into the real estate market in Nevada County.

Scott Hopper - Realtor 530.477.2277