Through July 2008

You hear the old news about real estate statistics. You read headlines that could, by themselves, cause a panic. But where are the forecasts? Better yet, where are the forecasts that are relevant to YOU? Some pay thousands to get this information. My treat, to you!

This commentary is my opinion of Sacramento's real estate market using history, current conditions, and the market forces. This is not a crystal ball. If I knew of guarantees, I would not be writing this piece.

This ongoing analysis is similar to the concept used in foreign exchange (forex) currency trading (a commodity much like real estate). While this is most useful to an investor, understanding the market is necessary even when buying or selling your family's shelter, not an investment property. This type of analysis is a speculator's tool to predict the direction of the NEXT data point. And those can be billion-dollar guesses. Explaining history should be done but it's your NEXT action that makes a difference. Refer to this month's charts and note where the Momentum indicator crosses it's zero axis (red axis & typeface) - it has been a predictor of the change in actual volumes. Specifically: 

• Home Sales momentum crossed beneath zero at August 2005 coinciding with the marked decrease in Sales in January 2006. Momentum hit a bottom in December 2007 indicating the Sales spiking in March 2008. And momentum is still positive.
• Permits momentum hit above zero first in April 2002, spiked with the last big builder push, and has stayed at or below zero since September 2004. The builders that have survived are not going to repeat the mistake.
• NOD momentum went above zero in November 2005 which points to the increase in NOD volume in the first quarter of 2006. NOD momentum seems to have peaked in August 2007.
• REO Sales momentum went above zero in January 2006 pointing to the marked rise in volume in April and May 2006. REO Sales momentum seems to have peaked in March 2007 and heading down (but still positive).
• Mortgage Rate momentum went below zero in August 2007 pointing to relative drop in rates from October 2007 through May 2008. The momentum is still negative but it's meandering. 
• Median Price momentum peaked in February 2005 which points to Price peak in August 2005. Momentum crossed beneath zero in November 2006 and Prices really started to fall in March 2007. Momentum is still negative.

What does this mean when mixed together? That depends on YOUR NEXT ACTION.

• If you are running for President - Don't increase taxes. Don't increase the size of government. Don't spend beyond your budget. Don't budget beyond your income. Don't leave the door unguarded. 
• If you are a Buyer - Rates are still low. I don't foresee a drastic move by the Fed but our election may have some impact and momentum could turn upward. Loan options are changing. There are still good homes for sale and more every day. Prices are at 2002 levels and could still decline more, especially in certain zip codes. Other areas are doing well. Be prepared for a multiple-offer situation if your target is $350K or less.
  • ACTION PLAN: Hire me. Discuss market and decide on strategy. Put your cash in a bank account in order to prove you have it- increase your buying power. Talk to your lender or ask me for a suggested professional. Be prepared by understanding your housing/search requirements so I can build you a custom and private website for your search results - know your buying power first. Eliminate homes you won't consider. If you're considering a newly built home, I can get you more incentive or upgrades by representing you on your first (and every) visit. Come with me to tour the homes you desire. Make offer(s). Go into contract. Settle all disclosures, inspections, and conditions. Sign, buy, and move! 
• If you are a Seller - If you don't need to sell, wait another year and ask again. Otherwise, you need to know your immediate and general market competition and forces. There is a perception that a REO listing is a better deal. You will have to be very realistic about the price a buyer will offer. Check your emotions at the door. That's what your competition is doing. 
  • ACTION PLAN: Hire me. Discuss market and decide on strategy. Stage your home. Keep home clean and available. Market, market, market your home. Consider offer(s). Go into contract. Settle all disclosures, inspections, and conditions. Sign, sell, and move!

Whether you are buying, selling, or running for President, my service commitment to YOU is unequaled. If you know someone who is looking for a great Realtor and would appreciate the same service I would give you, please give me their name and number and I'll follow up. You know you can trust me.

Bottom line: Call me to get started. 

See charts @ http://JayEmerson.com/Indicators.asp

Through June 2008

Here are June's market data and momentum. I've added the raw data to each chart to give you a better sense of where the data is coming from. My uncharted "pulse" indicator is a combination of all of these charts -- this is a great market. And since inventory has increased a small amount while the number of sales has increased, there are still choices and fewer multiple offer situations. The media is telling us there is a decrease in resales -- that is a national statistic. Real estate is a local commodity and national statistics cannot tell you how our 3 counties are doing.I have a new indicator called the "pulse" indicator. This is my reading on the activity and psychology of the market in this area including a summary of the momentum indicators shown in the charts below. Real estate is a local commodity and national statistics cannot tell you how our 3 counties are doing.

The pulse is currently rated as dark Amber. That means it is Red hot for those who are able to move quickly when a desired home hits the market. But it is only luke-warm (Yellow) for those who haven't been pre-qualified with a lender and are waiting for the bottom.  And for sellers, the pulse is a light Yellow - there are buyers but they know you're competing with banks and short sellers.

Six of my clients are now in escrow.  And you would be smart to let me represent you.  Whether you're looking at an existing home or a newly constructed home, I can get you a great deal and help you throughout the process (and beyond). 

• The Market: The momentum indicators show another increase in resale activity, month-over-month. But inventory increased. However, the inventory increase was not equal to the number of sales so there is now only 4.5 months' inventory (length of time to sell all Active listings), down from 4.8 last month. Remember, my momentum indicators are no guarantee of how a market will change in the coming months but they are healthy in several aspects. The momentum of REO sales (indicator of bank-owned inventory) is still increasing which is indicative of the number of successful offers and the percentage of listings that are bank-owned. Notices of Defaults (indicator of new, possible foreclosures) are decreasing in numbers and, hence, momentum. The number of resales took another sharp leap upward contradicting the media's reports.  County-wide median price decreased a small amount while the dollar value of closed escrows jumped again. Builders in this region are also going against the national "grain" and are building new homes.
• The Media:  The media are focused on rigging the election but have some time to inject their bias on the real estate market.  If "speculation" didn't occur, prices would be erratic and the market would not have smooth corrections and cycles.  I speculate every day.  Don't you?
• Congress:  And speaking of speculators, Congress is losing their bets.  I want to fire them.  They work for us and are doing a horrible job.  As Glenn Beck would say, "it's time for pitchforks".  The housing bill didn't and won't do much for people other than the banks who sold the bad paper (subprime products to subprime borrowers).
• My counsel to Buyers:  Get pre-qualified -- I'm connected to some great lenders.  Call me to get your FREE web site that can provide more detailed search requirements and daily updates to your inbox.  Eliminate listings that work and call me when you have a short-list to view.  And remember my FREE reports (http://JayEmerson.com/Publications.asp) on making this important buying decision.
• My counsel to Sellers:  Price your home at or below the comparable sales.  Stage it well and make it available with little or no waiting.  Low-ball offers are relative - if you price too high, all offers are low-balls.  I have FREE reports (http://JayEmerson.com/Publications.asp) on selling in this buyer's market.
• My counsel to Investors:  Banks are not accepting blind offers but they are accepting reasonable offers.  Do your homework and call me for an edge in getting access to some great deals. I'm here to help you. Call for any of my FREE reports (http://JayEmerson.com/Publications.asp) on investing in real estate.
• Bottom line: Call me to get started.  And I'm never too busy for your referrals!

See the indicator charts at my website:  http://JayEmerson.com/Indicators.asp

I have a new indicator called the "pulse" indicator. This is my reading on the activity and psychology of the market in this area including a summary of the momentum indicators.  Real estate is a local commodity and national statistics cannot tell you how our 3 counties are doing.  

See the rest of the story here...  http://JayEmerson.com/Indicators.asp

By the way, if you know someone who is selling or buying and who would appreciate my level of service and expertise, send me their name and number and I'll be glad to follow up.  I'm never too busy for your referrals.

If you read the local newspaper, you may have seen that April's home sales made front page news.  By itself, it's a sign that there were more buyers in the market than in March.  But more enlightening, and not understood by the news writers, is that inventory indeed dropped by a more significant amount.  Instead of 8.3 months of inventory (length of time to sell all Active listings, all things remaining equal), there is now only 5.9 months' inventory.  That is a healthy number.  If it's too high, supply is higher than demand.  If it's too low, well, it's the opposite.  Anywhere between 4 and 7 is a sweet-spot.

But stories about the trenches from someone in a cozy tent cannot depict the truth when compared to someone actually in the trenches.  Read my trench story here...  http://JayEmerson.com/Indicators.asp

Banks are aggressively trying to reduce their inventory and there are a lot of buyers submitting offers on these and other homes.  My momentum indicators are no guarantee of how a market will change in the coming months but they are leveling off in many areas like REO sales (indicator of bank-owned inventory) and Notices of Default (indicator of new, possible foreclosures).  Likewise, the number of resales is increasing at an increasing rate (momentum heading upward). County-wide median prices are low but some resilient zipcodes (Fair Oaks, Folsom, Granite Bay) are doing better.

Read the rest of the story here:  http://JayEmerson.com/Indicators.asp

Forbes magazine agrees with my analysis that a lot of areas have stabilized.  Some areas, on the other hand, are still experiencing a glut of bank-owned properties.  My momentum indicators are showing a perfect buying opportunity.  Transaction volume is increasing, median prices are inching upward, interest rates are still low, new permits are very low, and banks are pricing homes to move since auctions are either not successful or a Short Sale is their preferred strategy.    

Read the rest of the story here:  http://JayEmerson.com/Indicators.asp

 

In October, a pie-maker would say "it's time to buy pies".  Mom always says "it's time to call your mother".  And, lately, Realtors say "it's time to buy real estate".  But the ones I watch and hear (other than my mother) are those who have made the right moves at the right times.  Guess what.  They are almost ALWAYS doing exactly the opposite of the crowd.  They are wealthy but not out of sheer luck but because they pounce on opportunity when everyone else is considering it a risk (and they are not pessimists hiding behind the label of "realists").  I'm looking to invest my own money and am even working with local and remote investors to take our "pick of the litter".  The litter is large and my momentum indicators show the perfect pattern of a "bottom".  

• The Market:  Almost 250 homes went pending in the last 48 hours (Sac County).  Banks are pricing correctly because they are not in the business of owning homes -- just the promises to pay for homes.  Buyers are making reasonable offers (since pricing is already reasonable) and are motivated and pre-qualified.  My charts indicate opportunity.  All of my clients, friends, and family benefit from my analysis of the market.  Forward this email or my contact information to anyone who is looking to buy.  It's a great time and the "fish are biting".
• The Media:  It's so easy to disparage the media.  They would NOT be invited to my birthday party.  Does Debbie Downer ring a bell?  The Sacramento Bee is starting to get neutral on the real estate market.  They are experiencing a financial downturn and are realizing that they have to stop raining on everyone's attitudes.
• Congress:  Well, they did something.  And it helps some good people who are in their homes and does not go too far as to helping speculators who should not be helped.  I'm very happy for those who timed the real estate market badly but timed the election cycle perfectly!  If you haven't read the full text of the bill passed by Congress, ask me.
• My counsel to Buyers:  Low-ball offers are getting rejected and even ignored.  Mortgage rates are bobbing up and down like hungry bass in the morning.  The upper limit on mortgages may not help Sacramento like they will the Bay area and L.A., but they might help folks in Granite Bay or other higher-end areas.  Talk to your lender if you are looking to refinance or purchase a home priced at more than $417K.  If you need a good lender, just ask me.  Call for any of my FREE reports (http://JayEmerson.com/Publications.asp) on making this important buying decision.  Naturally, if you need a GREAT Realtor, you know how to contact me.
• My counsel to Sellers:  Preparation, marketing, and resetting your expectations are key elements of selling in this market.  If you don't have to sell, please wait.  If you are relocating, call me.  If you want to move up to a bigger home, this is the BEST time to do that.  Call for any of my FREE reports (http://JayEmerson.com/Publications.asp) on selling in this buyer's market.
• My counsel to Investors:  I'm getting calls from renters who are looking for their first home.  The folks who have to sell short or go through foreclosure have to rent.  So the population of renters is not going to decrease very soon.  And rental rates are increasing.  Let me help you.  Call for any of my FREE reports (http://JayEmerson.com/Publications.asp) on investing in real estate.
• Bottom line:  Don't be kicking yourself in 6 months when this opportunity fades from golden to bronze.  Millionaires are made from OWNING real estate, not selling it.  Let me help you build the asset side of your balance sheet.

Please remember, if you want to get a new home in a new development, don't register without me.  The builder will not honor our relationship if you walk into their "den" by yourself.  And it won't cost YOU anything.  The builder/seller pays for my buyer agency fee.  This is also true for bank-owned properties.  Call me today to get started with your search.

Jay Emerson, Realtor®, 5006 Sunrise Blvd., Ste 202, Fair Oaks, CA 95628. (916-517-9606)  All rights reserved. All statements or expressions of opinion, or any other matter herein, directly or indirectly, are only offers for real estate consultation and representation of buyers and sellers of residential homes or investment properties in California.  While I believe the sources of information to be reliable, I in no way represent or guarantee the accuracy of the statements made herein. I, Jay Emerson, Realtor®, do not provide investment counseling nor act as an investment advisor and am not a registered investment advisor. Unauthorized reproduction of this newsletter or its contents by Xerography, facsimile, or any other means is illegal and punishable by law.