Dear Sue,
I have been an appraiser in the greater Auburn area for the last 25 years. I would like to share what I have observed over the last three months.
Market values are relatively stable. However, the inventory continues to increase while the sales volume continues to decline.
I compared the current pending sales to the closed sales for the last six months and saw a decline in sales volume of 60 to 70 percent.
These are huge numbers. The decline in sales volume is consistent in other areas such as Nevada County, Rancho Cordova, Rocklin and Elk Grove.
There is an over supply of homes on the market. We currently have an eight-month supply. The over-supply of homes versus the limited number of buyers is increasing the days on market and creating strong competition.
The Auburn area has 174 listings on the market today and only 43 pending sales.
I think that it’s important to note that distressed sales have not been as common in Auburn as they have been in the surrounding areas.
Based on July’s statistics, less than 10 percent of the listings were distressed.
My observations indicate a definite shift in the market. My guess is that we are running low on first-time buyers, not to mention the buyers that have dropped out of the market discouraged by the expiration of the tax credit.
Financing remains a major obstacle. I believe that getting a loan today is right up there with an act of God.
If a buyer has a home to sell in order to buy a new one, they must have some equity on top of the ability to qualify for financing with today’s stringent requirements.
We are experiencing the fallout from the last two years of distressed sales.
Keep in mind that 70 percent of the home sales in 2009 and 50 percent of the sales in 2010 were distressed, which means that the money for the purchases went directly into the banks’ coffers instead of circulating in the marketplace.
An example would be a short sale where the lender takes 100 percent of the proceeds. The home seller walks away with nothing except poor credit and the inability to purchase another home.
This type of transaction effectively eliminates one buyer and one seller from a future home sale.
I will be watching the market very closely and will apprise you of any significant changes.
~Kris Forester, Brockway Properties appraiser
Dear Kris,
Thank you for your observations. I have noticed a definite shift in the market as well.
Homes are not selling as quickly and buyers have so much more to choose from.
The sellers are starting to realize that the way to capture buyers is through aggressive pricing.
I also believe that we are experiencing the effects of the lost buyers, sellers and money in the marketplace.
I also believe that the biggest impact is yet to be seen.
We’ll worry about that tomorrow.
Sue Thompson is owner and sales manager of HomeTown Realtor in Auburn. She can be reached at seesue@seehometown.com, or on the Web at homedollarsandsense.com.
