Statistics Anyone?

The statistics all this year, as related to real estate, have had and continue to have qualities that leave you feeling as you do when gazing into a kaleidoscope, interesting at least, exciting at times, but meaningful? The Commerce Department today released figures for new home sales for October. Down 3.2%. More than expected apparently and taken alone probably means something. Also it was reported the median price of a home increased by 2% to $248,500. Remember these are national statistics and we'll hit on that notion of median in a moment. While new home sales were "dropping", the National Assoc of Realtors reported for October the sale of existing homes rose by .5% the first increase since February. While all of this reporting was going on the California Assoc of Realtors announced the median price of a home in California increased to a figure I don't exactly recall but it was significantly above $400,000, and out of reach to everyone except something like 24% of potential buyers. The California figures are simply tragic in my mind. Just to return to this notion of "median" I'll annoy most of you by defining the obvious, but median price is that home which sold for a price exactly half way between the most expensive home and the least expensive home for that time period, in the entire state. The average price of a home in any area, Chico or elsewhere, is entirely unrelated to that median price. And remember that really attractive national median price? Meaningless for practical application. The only purpose it serves is to compare time periods and the ebb and flow of broad market conditions. Determining home prices in a local market requires a study of that local market. Chico, in fact Butte and Glenn counties generally, seem to be following the broader California movement, which is holding firm to slightly upward pressure. The plentiful signs and ads advising of "price reductions" are reductions in the asking prices, prices which are for the most part still skewed to profit taking rather than a sincere attempt to sell the home. Actual closed sales are not reflecting a decline in value.
Remember when you read all of the numbers that you can change their appearance and meaning just as you can change the colorful patterns in your kaleidoscope. It all depends on how you view them.
One more time: Interest rates are low, gas prices are low, unemployment is low (unless you work for Ford), inventory of homes is high. It's a good time to buy if you want a home.

Thanks for visiting.

Some Thanksgiving Sales Data

Finally have the holiday behind us. Retail stores apparently are setting the world on fire, which is possibly a good thing. Depends mainly on whether it's an increase in spending or an increase in consumer debt. Real estate for month to date in greater Chico, single family sales, total 44, down 15% from year ago same time figures. Glenn County sales however are identical 2005 and 2006. Don't know if there is any significance in either case. Everything about the market still favors a buying decision if a home is in your plans. Inventory continues high, interest continues low. Real estate sales characteristically drop off at year end and maybe that is or will be happening, but our activity levels in both offices, Chico and Orland, are up. Not blowing the doors off mind you, but active interest. Our web site traffic is steady, not as many unique visitors as I'd like, but time spent and page loads are high. Christmas shopping sites are probably occupying most attention.
I'm anxious for our commercial lending endeavor to kick off. We'll start a small mailing to try to generate some referral business from CPA's and insurance brokers, then in January start running ads in the North State Business Journal to directly attract commercial real estate borrowers. We have such great programs for the small $100,000 to $1.5 million range that I'm sure we'll be able to do some good for people. All commercial real estate lending is available of course, but our strength is in the smaller loans.
I hope the holiday was kind to you and yours.
Thanks for visiting.

Is Activity Up?

MLS reported single family sales for the month to date in the greater Chico are 39 compared to 42 for same time last year, pretty much the same. If I haven't pushed the wrong buttons the pending sales show 99 properties in the same geographic. That's a bunch, but of course not all of those are going to close. We have some of those "pendings" and one of them is very doubtful. Still, that's a lot of activity. The buyer inquiries in our offices are up and our attitude is quite buoyant. One of the activities I watch are the length of visit for those who visit our web site. The activity level is about the same, but the length of average visit is up quite a bit. I interpret that as a sign of seriousness of intent. Part of the excitement in our office stems from our extension of mortgage services into the commercial arena. We have located some lenders with an aggressive approach to the business, making it much easier for borrowers to qualify. Commercial lending need not be as difficult as banks tend to make it. With these new avenues open to us we're going to extend our geographic reach a bit, and at the risk of seeming to load this blog for the search engines I'll name some of the cities we'll be serving. From Marysville, Yuba City on the Southeast, Williams and Colusa on the Southwest, up through Oroville, Chico, Orland, Willows, Corning, Red Bluff and stopping at Redding on the North. Although we are a "hands on" office, maintaining close ties with our clients, the nature of commercial lending doesn't require the repeated personal contact that residential sales does, so we can handle the broader territory without straining our resources.
To touch on the business outlook again in residential real estate, we repeat our position that now is a good time to buy a home, and the increase in activity would seem to indicate that people are agreeing with us. Interest rates as of this writing for 30 year fixed rate mortgages are well under 6%. Gas prices have inched up, but only a bit. Just the usual seasonal greed from the oil companies. Employment remains high, and certainly the high inventory of homes makes the buying environment very favorable indeed. The lenders we deal with are very responsive and if you wish to do so you could very easily be in place to watch Santa come down the chimney in your brand new home this Christmas. We'd naturally like to be part of the process.

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Choose your agent with care

A problem that I thought had gone away has reared up again. Here's the story and my interpretation. A listing client of ours whose home has not sold in the approximate 75 days of listing, and frustrated by the seeming lack of interest or progress, called two different agents, each working for major franchises and each top producers in the Chico market. Since his property is listed for a flat fee with us and 2% to the selling mls agent, each of these people told him they don't show properties listed at 2%, and each of them of course angling for the listing. They in essence assured him this is the reason his property hasn't sold. There are so many problems revealed here I'll try to treat them individually. First, I suppose, the message would appear to be that these agents are too valuable or too important to show property at what they view as a reduced percentage. This is a very important character revelation about these agents. They say that in all cases and at all times their first and only consideration is themselves, always with their interests placed ahead of those of their clients. That should be a show stopper all by itself. Why would anyone want to do business with someone who was primarily looking out for themselves? That consideration aside, let's look at the legalities and ethics involved. When a property is listed on the MLS, every member agent becomes an agent for the property owner and owes the duty of representation to that owner. The member doesn't have a greater or lesser duty to any property owner based on the amount of money the property owner has agreed to pay. Discriminating between properties based on agents financial interest is a violation of board rules and a violation of Dept. of Real Estate regulations. In other words, a license losing proposition. It is also an ethical and legal violation to withhold from a client information about a property which might fill their needs because of the agents concern for compensation. If this attitude exists in the head of your chosen agent, how in the world can you tell you have had the opportunity to compare all of the homes in your range of price or interest. If you are only shown the ones that pay your agent the most you may very well have been denied access to some dandy buying opportunities. The behavior of these agents in telling a prospective client that they won't show properties unless the commission percentage is high enough boggles my mind on two counts. First, the need to appear important is so pervasive that it over-rides the fear of punishment for the illegality of the behavior, and second, what is the actual meaning of the statement. 2% of a $300,000 house is the same as 3% of a $200,000 house, so is the money not important? Only the perception of self-worth? Where is the client in all this?
Those of you who have read my blogs in the past are aware that I believe the use of percentages to arrive at a fair price for the services of a real estate agent are nonsense in the first place, but to arbitrarily arrive at a figure and then decide that dignity won't permit the use of any other number is truly ludicrous. We're in a service business and the client is our only concern. Those who forget that do so at their peril.
We naturally hope you'll select us for your real estate business; listing, buying, mortgages, etc., but for those who don't; ask many, many questions, and if you're a buyer, insist on a list of all the properties in your range of interest.

Thanks for visiting.

Just some updates

Really too soon to be bothering everyone again, but in this real estate "news" environment maybe one small voice chipping away at the pile of misinformation, or at least incomplete information, may have some salutary effect. This link, http://articles.moneycentral.msn.com/Banking/HomebuyingGuide/HomePriceReport.aspx leads you to presumably reputable sources and factual reporting and I'm willing to grant them accuracy. But. Watch the language and the use of data and interpret carefully for yourself. Something like 61 markets out of almost 280 showed some decline. That means 75% of markets are stable or still increasing in value. Figures indicate the "steepest decline in rate of increase" since whenever. Wow. Startling news, however a decline in rate of increase is still an increase, not a decline. An area in which I feel particularly competent, being a mortgage broker after all, is the segment noting the level of interest rates. This link appeared today, November 11 yet cites interest rates from August 31 and uses them for comparative purposes. As of November 10, 30 year fixed rate was available, from our office and I assume from other brokers, at 6% zero points and 5.75% if you chose to pay 1 point. That would get you a 30 lock. Next in order is the absence of Chico from the towns declining. That's because we're not. Redding yes, but that is a Redding problem. I'm just being picky at noting the disparity in interest because if a half point difference is keeping you from buying a home, you probably shouldn't be buying one anyway. What I urge, almost beg, is that everyone do their own diligent examination of the facts. Don't get your information from "news" articles, TV talking heads doing their sweeps week rabble rousing, etc. The "experts" and gurus cited here in this link, and elsewhere, remind me of stock tip sheets and that special breed of touts that hang around horse race tracks, willing to share the absolute certain winner for a very modest fee. For the record: Interest is low, gas prices are low, unemployment is low, home prices are stable. If you want one, buy one.
A new feature has been added to our brokerage. Everyone knows we list and sell for a flat fee, we give money back to buyers who use our services (with some exceptions), we provide full mortgage service to home buyers. Now we are offering commercial lending, both purchase and refinance from both of our office locations. Details on our web site.

Thanks for visiting.

Chapter Two of the media misinformation

Chico 12 & 24 "news" ran segment two of their "bursting real estate bubble", and no surprise, simply a reprise of their misinformed maundering. Reference is repeatedly made to the real estate expert who reports a 20% drop in prices, with more to come apparently, but no supporting evidence. No facts. They interviewed other real estate people for this segment but those people reported factually about the market, and those facts didn't align with the preset intention to scare everyone so they were excluded from the aired segment. No fun just reporting facts.http://www.zillowblog.com/zillow_blog/2006/11/today_zillow_re.html
This link is offered to remove the "he said we said" quality from our comments and to offer the view of evidence gathered from a mountain of data. Whether you like or don't like Zillow, their data base is huge, and objectively presented, and paints an entirely different picture from that presented by our local "news" stations. The time of using a home as a speculative investment is probably over, and why not? Why would any normal person expect to buy something that's readily available elsewhere and expect to sell it to someone else for more than they paid for it? In fact there are very few things a person can buy, use for a while, and then sell , without suffering a substantial reduction in value. Check out the furniture, the vehicle in the driveway, or your favorite golf clubs. Most of them worth less than purchase price probably. Is there some rational reason your home should be different? If anyone thinks their home is worth more than market value they are likely going to call it home for a while. Unless or until the demand again exceeds supply, home prices are going to be stable. Real estate has always had long cycles, simply because it takes time to sense a change in demand, more time to respond, time to clear government hurdles, time for financial markets to adjust, etc. We are simply seeing one more adjustment within a cycle of indeterminate duration and only a fool would presume to predict the top, bottom, or the end of this phase. So long as interest rates are low, employment is high, gas prices are low and home prices are stable, if you want to buy a home, do it. If you want to sell your home at a realistic price sell it. Circumstances are perfect. If you want to extract more money from your house than it's worth, good luck. You might include a few shares of Enron in your offer to sell to sweeten the deal.
Thanks for visiting.

The "news" media

Quite soon for a new blog, but the local nut cases on channels 12 & 24 are at it again. Tonight they tried a special on the "bursting of the real estate bubble". The word "panic" to describe sellers was used at least twice, and prices were described as "falling faster than a box of rocks". This segment, which promises to continue tomorrow night, is being provided by a guy who is barely articulate when reading the teleprompter. Why he is permitted to produce, or read, or whatever his role, this tripe, defies imagination. Anything for shock effect, except facts of course. Exaggeration and hyperbole are to be expected in that inquiring minds want to know rag, but not on an evening "news" show. The falling asking prices of homes are not falling prices. Selling prices of homes are prices. Asking prices are wishes, and the lowering of wish expectations are not a market measure. October single family home closes, 69. October 2005 single family home closes, 67. (Chico mls). These are market measures. Home values have ceased their accelerating climb. This is not the same as a collapse. This "news" segment described choosing the opportune time to buy a home as akin to catching a knife falling from a table. The suggestion of course is you wait til it hits bottom, or lands. Give us a break guys and go back to writing copy for the circus where the elastic use of the language is more appropriate. People buy homes for the purpose of living in them, it is not a speculative game. To repeat previous blogs, interest rates are low, unemployment is low, gas prices are low, home prices are "stable". Is there a better set of circumstances for a home buyer? No. Is it a good market in which to sell a home? You bet. Price it realistically and it will sell. If you are one of those still trying to extract a profit from your home, you waited too long. The only thing happening in the real estate market in our area is the restoration of sanity and the decline of the greedy feeding frenzy, and in the opinion of this small voice in the wilderness, that's a very good thing.
Thanks for stopping by.

Time To Buy?

We've been saying for a while now that the available data doesn't seem to support the pervasive gloom presented by the media concerning the real estate market. And guess what? We're going to say it again. Data today puts unemployment at the lowest level in five years. http://http://www.businessweek.com/ap/financialnews/D8L5QQ480.htm Interest rates at Friday's close, for 30 year fixed, A credit, 80% LTV averaged 6.125 to 6.250, zero points. Gas prices are down. I have to buy premium fuel and my price yesterday was $2.48.9, over 90 cents less than just a few short weeks ago. Home prices are flat and those homes appropriately priced are selling in reasonable time periods. For October the greater Chico area recorded 69 closed transactions, (MLS) figures. For October 2005 there were 67 recorded same time period. Year to date we're a little over 80% of last year closes. Not all that bad really when you consider that now most of the speculative buying has been removed.
We have had calls from people threatened by loan difficulties and today we went to visit one couple. Bought their home in 2005. Zero down, seller concessions to pay the closing costs, huge payments. These youngsters have a new baby, two mortgage payments they can no longer afford and balances that exceed the value of the home by at least $25,000. This is their first home and the faith they placed in their real estate agent and loan broker was entirely misplaced. No consideration beyond the siren call of a commission entered their heads. No consideration whatever for naive clients who placed their trust in presumed professionals, licensed, (supposedly), to help them. I suppose we will have more of these meetings with other couples. Real estate agents who encourage these transactions deserve out utmost scorn and possibly some official censure. The loan broker involved in the above transaction should be jailed. We understand from the couple involved that he can't be located and has presumably left town.
We try very hard to make our operation as transparent as possible. We try very hard to keep our fees low and realistic. We try very hard to attract you to our store. But! Wherever you go for your real estate or mortgage guidance, check, verify, compare.
If you have suggestions for our web site that would make it more valuable to you, please let us know. Phone call is best, email if you prefer. Thanks for reading.