Wednesday, July 30, 2014
PLACERVILLE, CALIFORNIA
99 CENTS

Thankful for many blessings but not declining home values

By
November 24, 2009 |

Democrat columnist

The number of county home sales this year has been gradually increasing. The 179 reported sales last month by the El Dorado County Association of Realtors was better than September or August and 10 percent ahead of October of 2008. It was the most active October since 2005. The 1,500 residential year-to-date sales exceed last yearÕs by 9 percent, and with pending sales (in escrow but not yet closed) running ahead of last year. It appears that 2009 will end as the first year in four to be better than the previous year. The same optimism cannot be said for home values.

Increasing sales activity has been little consolation for county sellers watching the continued erosion of their home equity. Although sales activity is rebounding, the countyÕs median sales price continues its slide downhill. The median selling price last month of $285,000 was $100,000 less than October of 2008 and $180,000 less than October of 2005. Since August, the countyÕs median selling price has been below $300,000. There are a number of reasons for the increased interest in county home sales at 2002 prices.

One reason for the continued median price deterioration is the large percentage of financially distressed properties selling each month. Of the 179 homes that closed escrow during October, 42 percent were bank REOs. Lenders have little incentive to get the highest price for a home repossessed through foreclosure. Taxpayer TARP dollars are subsidizing their losses. But lenders do have an incentive to rid themselves of the liability of non-performing assets and critical bank examiners looking over their out-of-balance books. Individual sellers, whose objective is to sell their property for the highest amount or at least enough to pay off the mortgage, are frustrated by the competition from lenders who have no mortgage restraints.

Wall Street lenders, who are responsible for much of our collapsing housing market, have little regard for local neighborhood values. Their predatory home pricing insures that their REOs will sell with little regard for the effect on comparable neighborhood homes. Property values will only increase when we see significant reductions in REO housing inventory, which has consistently remained at 40 to 45 percent of all county home sales.

In an effort to avoid the time-consuming foreclosure process entirely, lenders are beginning to look more favorably on approving short sales, allowing the seller to sell the property for less than the amount of the existing mortgage. The 36 short sales reported during October accounted for 20 percent of all home sales. It was the largest number of short sales closing escrow in a single month so far this year. Unfortunately, the number of short sale listings is increasing exponentially. Currently, 200 short sale listings are listed without any offers and another 200 short sale listings are listed as Òactive contingentÓ (waiting for the lender to accept the offer). Today, one in every three county listings is a short sale; one in 10 a bank REO; and 60 percent of all reported sales are both.

Declining property values is perpetuating an exodus of county homeowners that has been steadily increasing in severity since 2006. According to the El Dorado County Economic and Demographic Profile 2009-2010, ÒIn 2006 the county experienced its first negative, or out migration, in more than 10 years.Ò The number of El Dorado County residents permanently moving out of the county, continues to increase as property values decrease.

The number of vacant homes currently for sale is at an all time high. Currently, the MLS is showing more than 600 vacant homes that are for sale or in escrow. Add to that another 300 homes in some stage of foreclosure where the owners have already left and another 100 vacant single-family rentals and the number of unoccupied homes is probably close to a thousand. The downward spiral of declining prices, foreclosures and short sales becomes self-perpetuating and intertwined as more homeowners who are forced to relocate leave the county and their over-mortgaged homes behind.

When families abandon their homes and leave the county for greener pastures, local businesses suffer lost revenue. Employers are forced to react by trimming expenses, frequently by terminating employees. School enrollment declines and school districts consider closing neighborhood schools. Declining property and sales tax revenue puts many county programs at risk.

The federal tax credit for first-time home buyers is another reason for the increased interest in buying a home while lowering the median selling price. First-time buyers, who accounted for less than 20 percent of all county home sales three years ago, now account for the majority. Forty-two percent of all sales last month were priced under $300,000 while only 12 percent of all sales were priced higher than $500,000. The county has 14 months of inventory of homes priced over $450,000 and a two-year supply priced over $500,000.

The home buyerÕs federal tax credit has been extended through April and the new legislation also provides a tax credit for existing homeowners who want to buy another home. ThatÕs not likely to happen in our county where homeownerÕs equity is disappearing faster than the turkey drumsticks. The problem for move-up buyers is the dilemma of what to do with their existing home that may not sell and most rentals encumbered with a mortgage will not generate cash flow. Homeowners who would like to move up to another property are generally stuck between their declining property value and the difficulty in obtaining a loan with their existing home and mortgage.

The trend of declining property values will only turn around when more families start moving into the county instead of moving out. The Board of Supervisors will consider such a hopeful proposal this month.

Ken Calhoon is a real estate broker in El Dorado County. He can be reached at www.kencalhoon.com.

Comments

comments

.

News

District 2 candidate statements tell of goals

By Dawn Hodson | From Page: A1

 
Sand Fire nears containment: 66 structures destroyed

By Cole Mayer | From Page: A1 | Gallery

 
Tails wagging over dog park approval

By Julie Samrick | From Page: A3

Quarter-acre fire in Kelsey

By Rebecca Murphy | From Page: A3

 
Schedule for Highway 50 blasting closures

By News Release | From Page: A3

.

Opinion

My Turn: Privatization of public services

By Mark Belden | From Page: A4

 
Policy book

By Mountain Democrat | From Page: A4

 
.

Letters

GDPUD management report

By Letters to the Editor | From Page: A5

 
District 2 supervisorial special election

By Letters to the Editor | From Page: A5, 4 Comments

Piano replaced

By Letters to the Editor | From Page: A5

 
Comments sign-in policy

By Letters to the Editor | From Page: A5, 1 Comment

Save the Guinea Worm

By Letters to the Editor | From Page: A5, 1 Comment

 
Large bangs

By Letters to the Editor | From Page: A5, 2 Comments

Private property gets no respect

By Letters to the Editor | From Page: A5, 2 Comments

 
.

Sports

Ex-Bruin lends a helping hand

By Steven Shaff | From Page: A8 | Gallery

 
Sierra Sharks finish middle of the pack

By Democrat Staff | From Page: A8

Roundup: July 29, 2014

By Democrat Staff | From Page: A8

 
Taz pull through for SSL trophy

By Patty Pope | From Page: A8

.

Prospecting

Nuns discover a pleasant place

By Lexi Boeger | From Page: B1 | Gallery

 
Bargains can be found everywhere

By Democrat Staff | From Page: B2 | Gallery

At a glance: Game time

By Mimi Escabar | From Page: B2

 
Barbecue dinner to benefit Blue Star Moms

By Mount Aukum Winery | From Page: B2

Stagecoach story takes riders on a trip

By Wendy Schultz | From Page: B3

 
Help needed to make cool ties

By Sew 4 | From Page: B3

Stroke and osteoporosis screenings planned

By Life Line Screening | From Page: B3

 
Gold Rush Days activities cancelled this year

By Sacramento Convention And Visitors Center | From Page: B4

Master Food Preservers: Tomato time

By Monique Wilber | From Page: B4

 
Build an author platform at the Library

By El Dorado | From Page: B5

 
Sacramento area museums offer summer fun

By Sacramento Association Of Museums | From Page: B5

.

Essentials

Weather stats 7-29-14

By Michael Raffety | From Page: A2

 
Building permits 6/2-6/2014

By Michael Raffety | From Page: A2Comments are off for this post

Crime Log: July 17

By Cole Mayer | From Page: A2

 
.

Obituaries

Lisa Oliver Rose

By Contributor | From Page: A2

 
Wallace Murrel Thomas

By Contributor | From Page: A2

Merlyn Wilbur Adams

By Contributor | From Page: A2

 
.

Real Estate

.

Comics

.

Women’s Health

Love the skin you’re in

By Noel Stack | From Page: WH4

Dump stress and improve your health, productivity

By Wendy Schultz | From Page: WH7Comments are off for this post

Women’s Health Expo

By Marshall Medical | From Page: WH8

Find the confidence you need to fight back

By Special to the Democrat | From Page: WH12

Our choices directly affect our health

By Special to the Democrat | From Page: WH14

They’re NOT your mother’s hearing devices!

By Marshall Medical | From Page: WH17