Every year at this time, I begin thinking about writing a little holiday newsletter to go into cards I send out to my past clientele, and other contacts. Yesterday, a close friend of mine, found this one I had sent to her via email 5 years ago. It is interesting to look back to 2003, and revisit our thoughts on how the housing market was doing, and wonder about the direction it would take. I have reposted it below. What a difference 5 years makes.
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Hi -
It's difficult to believe we are once again at the end of another banner real estate year.
The Golden State's housing market seems to belie the long-standing maxim that for home sales to sizzle; so must the job market.
In a widely watched employer survey, the state reported last month that payroll employment in the Sacramento region and statewide had fallen below 2002. In the region encompassing Sacramento, Placer and El Dorado counties, for example, the survey showed a loss of jobs compared to last year.
But some economists contend nowhere near enough homes were built over the past five years to meet the demand created by huge employment gains statewide. Estimating the shortfall in the hundreds of thousands of units, they say homes being built today are still satisfying that leftover demand, helping to explain how home sales could be so strong when job creation isn't.
In addition, the housing market is feeding off the lure of low mortgage rates, which help more first-time buyers qualify for a loan, and for existing owners to tap big equity gains to move up to a better house.
In the Sacramento area, robust population growth and Bay Area transplants -- including telecommuters and super-commuters who make the long haul daily -- add substantial demand for housing here.
Some experts contend that continued concerns in the integrity of the stock market, has prompted many people to conclude housing is among their safest investment bets. The percentage of homes purchased by investors looking to rent them out has risen locally and statewide in recent years, though it remains below levels seen just before the housing market tanked in the early 1990s.
Explanations as to how home sales could be so strong absent a big rebound in the job market, a minority of housing analysts, believe prices are rising on a speculative bubble prone to bursting. That would mean prices are likely to tumble.
If there is a bubble, however, it's certainly proved itself resistant to pinpricks, such as the uncertainty cast over the housing market by official talk of big state worker layoffs, the war in Iraq and the lackluster performance of the job market.
The bubble theory is out there, and it's not wholly unbelievable, but given it hasn't burst yet ... it looks more like it was just the lack of building over years and years that's led to much of the housing market's strength this year.
While most economists and analysts don't anticipate a crash, many say they'll be far more concerned if home price appreciation doesn't cool in the next six months. They say prices are approaching levels that aren't sustainable based on household incomes, employment levels and limitations on how much a home could fetch in rent, among other factors.
This coming year will mark my 23rd year as a Realtor. Some of you receiving this will be among my very first clients. Each face, each experience and each relationship built from my association with you is treasured. I continue to look forward to working with you and your families in the future.
With sincere hope, I wish for you and your loved ones, to have the most joyous of holiday seasons.
Sincerely Yours,
Myrl Jeffcoat, Realtor
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