Making Sense of the Market July 2010

Making Sense of the Market Today

August 2^nd, 2010

This time around, let's look at some basic trends to see where the
Placer County Real Estate market is now that we have an economy
teetering on recovery. One of the most basic weather vanes is to look
at Absorption Rate. That is the percent of homes that are sold in any
one month (or looked at another way – how many months will it take
to sell all the homes currently for sale). A neutral market is one
that has 4 to 6 months of inventory on hand. A seller's market has
less than 4 months (more buyers than sellers); and a buyer's market
is one that has over 6 months of inventory (more sellers than
buyers).

Let's also break the market into two sections. One with homes
that sold under $300,000 and the other $300,000 and above.

Placer County Absorption Rate (All Homes Under $300,000)

It is easy to see in this graph that over the past 2 years we have
moved from a Buyer's market to a Seller's market with between 2 and 3
months of inventory over the past 13 months in the under $300,000
price range. I'll break the home sales down to REO (Bank
Owned/Foreclosed homes), Short Sales (homes owners are negotiating
with the bank) and Non-Distressed homes (no direct bank involvement).
If we look at homes sold during this time period we see what started
out as an REO market in January of 2009 has turned into a pretty
equal mix of REO, Short Sale and Non-Distressed Sales. Non-Distressed
sales are those where the bank is not involved in the transaction and
currently makes up 37% of the sales with the remainder made up of
Short Sales at 33% and REO at 30%. With the combined REO and Short Sale
listings, distressed sales still make up
nearly two thirds of all the sales in the under $300,000 range.

Placer County Market Trends Under $300,000 (Metrolist)

Here is the last graph of the under $300k showing inventory, sold
and pended homes.

Placer County For Sale - Sold - Pended (Metrolist)

This is an interesting chart because it shows that we have had a
fairly significant increase in inventory over the past 4 months while
sales have had a slight increase. Increased pendings does not always
reflect an immediate increase in the number of sold homes – as you
can see with the numbers for last summer. Some offers are canceled
and many short sales take longer than 30 days to close.

Over
$300,000

For the over $300,000 price range we are currently looking at
nearly 5 months of inventory with 22% of the homes selling each month.
That is considered to be a neutral market.

Placer County Absorption Rate for Over $300,000 (Metrolist)

And here below, is the market breakdown for the homes sold in Placer County
looking at REO, Short Sale and Non-Distressed sales. Over the past 18 months
Non-Distressed sales have made up 57% of the reported sales on Metrolist
listing service. April 2010 was 58%, May was 59% and June was 58%. Compare
that to the 63% distressed sales in the under $300,000 price range.

Placer County Market Trends for Over $300,000 (Metrolist).

Placer County For Sale - Sold - Pended Over $300,000 (Metrolist)

As you can see below, we are starting to see a rebound in the sales of
homes over $300,000 this year in the county area.

There are some significant differences in home sale trends
when you compare the under $300k to the over $300k homes.

Besides the
overall basic trends described here, I cannot stress enough that home prices are extremely specific
to your location. If you have questions about the value of your home, please
feel free to contact me at (916) 303-0257.