National & Regional Snap-shot: A slew of new government programs were enacted in November in an ongoing effort to "right the ship." It appears that the focus is now shifting from stabilizing the banking sector to addressing the issue that brought our economy to a halt in the first place: The housing crisis. On November 1, 2008, the average cost of a 30 yr. fixed mortgage in the Western U.S. was 6.47%*. As of December 1, 2008, that rate has dropped to 5.60%*, almost a full 1% reduction. Mortgage insiders are speculating that the Federal Reserve will reduce rates another 1/2 percent at their next meeting and 30 yr. mortgages will be under 5% very soon. From a regional standpoint last month, 1,676 homes sold in Sacramento County, 1,214 were bank owned (72%), 183 were short sales (11%) and the median home price fell 7% from $194k in October to $180,750 in November. A whopping 83% of the sales were distressed home sales.
Folsom: Home sales fell from 64 in October to 43 in November, a decline of 33% when compared to last month and of 25% when compared to November of 2007 (57). Of the 43 sales, 23% were bank owned (10) and 16% were short sales (7), making distressed home sales 39% of the total. The average home price dropped from $422k in October to $411k in November. The total supply of homes fell from 284 on 11/1/08 to 266 on 12/1/08.
Aaron's take on the markets: Clients ask me all the time, "Have we bottomed out yet?" In the spirit of the season, I will answer the question this month while peering through "rose-colored glasses." The housing markets and the value of homes are not going to fall to zero. The markets have been correcting for over three years and we are closer to the bottom now than ever before. Avg. sales prices in Folsom have fallen 24% since the end of 2005 and 18% during the past 12 months. Ignoring strong economic head-winds and a supply of homes that will rise with prices, a moratorium on foreclosures is in the works, 30 yr. mortgages may soon fall to 4.50% and government stimulous is pumping. Although I am not calling a bottom here, I am hopeful that Santa Claus will bring us all a gift we can cherish: A bottom in housing.
Personal note: Markets come and go and the only constant is change. The days between Thanksgiving and Christmas are my favorite time of the year, as I always find myself looking past the markets and working round the clock and focusing on my family and friends. I am thankful for my wife Gwen, my father Tom and kids Jacob and Brooke. Happy holidays!
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