Spotlight on Nevada County Real Estate-Midyear 2009

July 2, 2009 – From Boom to Bust and Beyond…

Looking back at the recent market cycle, there’s a lot to talk about. We have heard all the angles and most of us will admit to knowing the story from 2004-2008. Click here for a graphical look.  From the peak in Q4 2005 to the valley in Q4 2008, median prices in our market have declined 30%, while sales volume has fallen 53%. What’s on our minds today are the mixed signals of the last six months and what is to come.

Looking at Q1 2009 vs. Q4 2008, we note a 20% drop in volume and a 9% drop in median price. This seasonal adjustment is common in all markets for this time of year.

Comparing Q2 2009 to Q1 2009, we also see the normal uptrend in figures, 4% price, and 79% in volume. Down in winter, up in spring, although one might admit this is a large volume increase. The only year in the recent past (04-08) where this normal spring market behavior was broken was in 2008, when volume was up, but price was down. In 2009, price is up again after an anomalous dip for the year-ago period and volume is up in a big way.

What of it? No way of knowing without more information, yet an inflection point is behind us. The only way to truly call the bottom is in hindsight, as an observer.

As participants in the local market, whether buyers, sellers, REALTORS® or observers, we have to ask what we can do as individuals to assist in the recovery. In a word, participate. Be calm, look for the signs, and act in the interest of the market and a sustainable recovery.

The biggest challenge we face in regaining a healthy local market is the increasing number of bank owned properties (REO) coming onto the market. These properties are priced very low and act to drive down prices throughout the market. It’s a two edged sword, as there are some incredible values available, yet too many of them can have an overall negative effect.

As professionals, we know that the best contribution we can make is to work towards getting these REO properties back into private hands as quickly as possible in order to relieve the downward pressure on prices. This is also a boon for buyers who are fortunate enough to be in the market today. The duty of professionals and the opportunity for buyers is in alignment with restoring health to our local market in a way that comes only rarely. Market activity in the last 6 months supports the idea that we are getting it done.

It’s a great time to be in business and we have the opportunity to contribute to the health of our local market and to the financial well-being of our community members.