Spotlight on Local Real Estate July 2008

July 30, 2008 – In this edition, we’ll look at market statistics for Q2-2008 and compare them to year-ago figures for Q1-2007 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 Q2 2008 was $348,750, an 18.9% decline over the Q2 2007 figure of $430,000. The unit sales figures for the most recent quarter are 174 versus 225 units sold in the year ago period, and 117 units sold last quarter. For 2007, the Q2/Q1 seasonal increase in units sold was 32%, while it was 49% for 2008. The "spring pop" was substantially stronger this year than last and bodes well for a 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 grown slightly, with the middle range unchanged.

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.

The average rate on a 30-year fixed-rate mortgage rose from 5.80% on April 30 2008 to 6.41% today, according to BankRate.com, while the 15-year fixed rate was at 5.95, up from 5.39% on April 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.

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 800 today, a figure that is up slightly from 3 months ago when it was at 714. Approximately 2.5% of the current active listings are short sales and another 2.5% are bank owned properties that have recently been foreclosed upon. These are very low figures relative to some areas of California, where foreclosure rates are 20% or more.

With historically low interest rates, reasonable inventory, and prices that appear to be at or near a bottom, our local prospects are for a stable market in 2008 and some unusually good bargains for qualified home buyers.