Send To A Friend:
Spotlight on Local Real Estate October 2008
Created: 10/20/2008
October 20, 2008 – In this edition, we’ll look at market statistics for Q3-2008 and compare them to year-ago figures for Q3-2007 and to last quarter. We have defined the Western Nevada County market as single family homes west of the Sierra crest, and excluding properties with addresses in Truckee and Auburn.
In our Western Nevada County market, the median sales price for an existing single family home in Q3 2008 was $340,000, a 13.9% decline over the Q3 2007 figure of $395,000. The unit sales figures for the most recent quarter are 181 versus 223 units sold in the year ago period, and 174 units sold last quarter. For 2007, the Q3/Q2 unit sales trend was essentially flat, while it was up 4% for 2008. The “spring pop” (Q2/Q1 unit sales trend) was up 49% this year and has carried over to Q3, suggesting a continued recovery in volume going forward. The shift in sales activity from the upper price ranges to the lower that we saw in Q1-2008 has accelerated rapidly in Q3-2008, with 22% of all transactions below $250K, a level not seen since Q1-2004!
This dramatic shift in sales activity from the mid/upper to the lower price range is largely responsible for the decrease in calculated median prices, rather than a uniform drop in prices across all sectors. As is often the case when a market nears a bottom and buyers recognize opportunity and begin to act, the activity begins in the lower price ranges and moves up from there. We are seeing an increase in distressed sales by homeowners (Short Sales) and by Banks (REO Sales), which also contributes to the shift to lower prices.
The average rate on a 30-year fixed-rate mortgage fell from 6.41% on July 30 2008 to 6.29% today, according to BankRate.com, while the 15-year fixed rate is at 5.98%, up from 5.95% on July 30. A year ago the 30-year rate was 6.25%. The current rates, which are still at historic lows, should have a stimulative effect on home purchases in the near term. With the ongoing stabilization of the mortgage market due to aggressive actions by global financial regulators, the supply of funds for new mortgages is expected to increase going forward. As of this writing, FHA has greatly expanded its programs, and along with Fannie and Freddie account for over 90% of the US mortgage market, offering traditional mortgage products to a wide range of consumers.
Nevada County does not have the issues of excess inventory of new homes that challenges many local markets in the US, and our total inventory has dropped from over 1000 units a year ago to approximately 685 today, a figure that is down from 3 months ago when it was at 800. Approximately 6.3% of the current active listings are short sales and another 4.4% are bank owned properties that have recently been foreclosed upon. Although up from approximately 2.5% for each category in Q2 2008, these are very low figures relative to some areas of California, where foreclosure rates are 30% or more.
With historically low interest rates, reasonable inventory, and prices that appear to be stabilizing, our local prospects are for a continued buyers market in Q4 2008 and some unusually good bargains for qualified home buyers.
Paul Sieving is a Realtor® with Network Real Estate in Grass Valley, a Director and member of the Finance Committee of NCAOR and a former Board President (2004) of the Grass Valley Chamber of Commerce. Comments, questions and thoughts are welcome at Paul@PaulSieving.com or (530) 274-0906.
