By Ken Calhoon
El Dorado County’s real estate prices haven’t been this low since 2002. Maybe you remember when gasoline was selling for $1.35 a gallon, mortgage interest rates were at 6.7 percent and the median price of a county home closing escrow in September of 2002 was $295,000. Local Realtors and sellers could not believe their good fortune. Buyers were paying $50,000 more for a home that fall than in 2001 and $100,000 more than in 1999.
It was an exciting time. The county’s median selling price would continue its climb until August of 2006 when it hit $502,000. Two months after that, the median fell $50,000 and continued sliding to its lowest level this last month of $275,000.
While home prices continue to fall, seasonal sales are steady. The 175 monthly sales during September were consistent with the past two years. The most active September was back in 2004 when the El Dorado County Association of Realtors reported 288 sales that month. The slowest September was back in 2007 when there were only 118 reported sales. So what’s selling?
Nearly a third of the monthly sales were REOs. The typical selling price of a bank owned home last month was $240,000. It likely had three-bedrooms, two-baths, 1,900 square feet and was on the market for 47 days before attracting an accepted offer that was 99 percent of the listed price.
Another 22 percent of our sales last month were short sales. The median price of the 38 short sale closings, last month, was $275,500. Statistically, the average short sale was a four-bedroom, 2.5-baths, 2,400 square foot home and was on the market for 150 days before receiving an acceptable offer. The fastest turnaround time for a short sale from listing to pending sale last month was 15 days while the longest was 321 days.
The remaining 80 closed escrows for last month were neither short sales nor bank REOs. The median selling price of $332,500 purchased a three-bedroom, 2.5 bath home averaging 2,210 square feet that was listed for sale 74 days.
So, where are the homes selling?
A little over 25 percent of all county home sales last month were in El Dorado Hills where the average selling price of $489,000 was 4 percent less than the average selling price at this time last year. The area has 200 homes currently for sale with a median listed price of $561,000.
Cameron Park was the second most active area for sales with 26 homes closing escrow. The average selling price was $257,500; a decline of $47,600 from September of 2009.
The greater Placerville area reported 14 sales with an average selling price of $226,500. Sales were off a third and the average selling price declined $47,500 from a year ago same month.
Last month the more rural areas in the county experienced increasing prices and sales. What’s up with that?
For example, the Diamond Springs/El Dorado area reported the same number of sales this September as last but their average selling price of $260,000 was a $60,000 jump from last year. Somerset/South County reported 25 percent more sales and a $50,000 price increase. Pleasant Valley/Placerville South reported their averages selling price of $258,600 which was a $42,000 bump in price from last year. The $247,000 average selling price for a home last month in Mosquito/Swansboro was a $65,500 increase and prices in Cool/Pilot Hill were up $24,500 for the month.
On the inventory side we have too many short sales and REO listings competing with individual sellers for the attention of too few buyers. The MLS is currently showing 244 active short sale listings without offers and another 196 listings with offers but waiting for an approval from the mortgage holder. Then there are 173 active REO listings. That adds up to half of our current listings that are financially distressed properties.
So, where to from here?
The California Association of Realtors, is predicting a 10 percent decline in statewide home sales this year over last. Next year isn’t going to be much better with a 2 percent increase in sales. The normally optimistic Realtor association is predicting 2 to 4 percent yearly price gains through 2013.
“California’s housing market will see small increases in both home sales and the median price in 2011 as the housing market and general economy struggle to find their sea legs,” said CAR president Steve Goddard. “The minor improvement in the housing market next year will be driven by the slow pace of recovery in the economy and modest job growth. Distressed properties will figure prominently in the market.”
Less enthusiastic housing economists are saying that real estate values in the country will not return to their 2005 levels until 2025. That’s not surprising when considering 4 million homeowners are not making their house payment and one-third of those who do, owe more on their mortgage than their property’s current market value. There is no bail out for sellers who are current on their mortgage payments and trying to do the right thing by sticking with the terms of their mortgage.
Ken Calhoon is a real estate broker in El Dorado County. He can be reached through his Web site at kencalhoon.com.