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I hesitate to make a list
Of all the countless deals I’ve missed;
Bonanzas that were in my grip –
I watched them through my fingers slip;
The windfalls which I should have bought
were lost because I over-thought;
I thought of this, I thought of that,
I could have sworn I smelled a rat,
And while I thought things over twice,
Another grabbed them at the price,
It seemed I always hesitate,
Then make my mind up much too late,
A very cautious man am I
And that is why I never buy.
— Don Weill, The Reluctant Investor
There is going to be some serious money made over the next few years investing in real estate. Buyers have the unique opportunity of buying homes for less than it would cost to build and financing their purchase with the lowest interest rates in modern history. Nearly every housing economist says the real estate market has already bottomed out and property values are on the rise. In our county, property values have been increasing pretty consistently for the last few months, jumping 20 percent in October over a year earlier. Although the final numbers are not tabulated as of this writing, November’s 200 sales are averaging $316,000, up 10 percent from a year earlier.
It isn’t just El Dorado County that is experiencing a revival of property values. According to the California Association of Realtors, the state’s median home price now at $345,000 is the highest it’s been in the last four years. October’s price was up 23 percent from October 2011, marking the eighth consecutive month of annual price increases and the fourth consecutive month of double-digit annual gains.
“This is truly a once in a lifetime opportunity for folks who have the ability to take advantage of exceptional values, historically low interest rates and rising property values.” said Steve Ferry, broker for Folsom Lake Realty. “There are some great deals out there but buyers need to move quickly.”
Steve and I were showing the same new listing in South Shingle Springs last week. The 3,800-square-foot home on five acres with a pool and six-car garage in Milton Estates had sold new in 2007 for $1.2 million and now was on the market for $669,000. Neither of our clients could make a decision but another broker’s client did and the house was a sale pending the next day.
While showing this marvelous custom home, I couldn’t help but feel a bit remorseful for the unknown previous owners who lost it in a foreclosure. They had paid market price, validated by an appraisal and then added many customized features, confident that they would live there for many years. Now, another would take advantage of their loss and reap the rewards of future appreciations. The situation was a reminder that often, despite everything else, luck and timing has much to do with our success or failures in life.
Although most experts agree that the timing couldn’t be better for buying real estate, I have observed a perplexing phenomenon afflicting many potential homebuyers. They have the interest in buying and the capacity but they are hesitant to pull the trigger. These are folks who are well-qualified and they have a legitimate need to buy a home but won’t.
At first I thought it was me. Maybe I needed to improve my sales skills. All my life I have been an easy-going, no-pressure agent. If a buyer wasn’t interested in a house I was showing, no problem, we went on to the next one until they found something they liked. Showing houses wasn’t a sales experience as much as it was an opportunity to get acquainted with a client and help them through the home buying process. But then I began hearing the same concerns from many of my respected colleagues. We were all working with a high number of otherwise good home buying candidates who weren’t. What’s up with that?
My client Jim is holding off buying until something gets better. One week it was his financial situation. The next week he was waiting on the interest rates to improve. Then it was a job promotion. He is like a quarterback holding onto the ball too long waiting for the perfect passing opportunity.
Mary can’t find the perfect house. She isn’t exactly sure what the perfect house looks like but she is confident she will know it when she sees it. After showing her 20 plus homes, I am not so sure.
Tom thinks every house I show him is over-priced. They all go to “sale pending” status within a week so someone must have thought they were priced correctly but Tom is waiting.
Don is an engineer. When we find a house of interest he is compelled to analyze its structural integrity. While in the process, the house sells to another.
This cautious hesitancy is understandable. For the last six years everything we witnessed about the housing market was pretty negative. It’s natural that our past experiences influence our future decisions. That’s good and protects us from making repeated mistakes but the past is the past. This is a different housing environment, offering opportunities that may never be seen again.
Not everyone should be a homeowner. But if home ownership makes sense, it doesn’t get any better than this.
Ken Calhoon is a real estate broker in El Dorado County. He can be reached through his Website at kencalhoon.com.