Supporting two Paradise Realtors and their families who lost their homes in the recent Northern California wildfires…

the Chico Association of Realtors will put on a bowling tournament to be held August 19th at Orchard Lanes in Chico. Teams of four will seek donations from the community to support these two families as they rebuild from their losses. Proceeds will go directly to the families. So, if you would like to help, please contact me or, Peggy Mead at the Chico Association office.

It promises to be a fun and most worthwhile event!

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Here is what C.A.R. (California Association of Realtors) had to say about it:

This morning President Bush signed the “Housing and Economic Recovery Act of 2008.” For the past several years, C.A.R. and the NATIONAL ASSOCIATION OF REALTORS® have aggressively lobbied for Congress to pass numerous provisions found in this historic bill. Many of you participated in these efforts by communicating with your Members of Congress.

Thank you to all of you who responded to these Calls-for-Action. Your efforts have made a difference. This federal housing bill is a significant move in the right direction for California homeowners. It will aid in stabilizing our economy and help stem foreclosures, while also providing support to first-time homeowners.

The legislation will assist an estimated 400,000 homeowners facing foreclosure, many of whom reside in California, by allowing them to refinance their current mortgages with a Federal Housing Administration (FHA)-backed loan.  The bill also will permanently increase FHA, Fannie Mae, and Freddie Mac loan limits in high-cost areas.

The bill permanently increases the conforming loan limit to $625,500.  C.A.R. has long advocated for higher conforming loan limits.  In February, the Economic Stimulus Act of 2008 was signed, temporarily raising the conforming loan limit in high-cost areas to $729,750 from $417,000 until December 31, 2008.

Although we would have liked Congress to make permanent the current $729,750 loan limit, C.A.R. is pleased with the new permanent loan limit of $625,500. It will allow California homeowners to refinance their loans into safe affordable loan products and allow first-time home buyers to enter the market.

The new loan limits for Fannie Mae and Freddie Mac are the greater of either $417,000 or 115 percent of an area’s median home price, up to $625,500.  The new FHA loan limit will be the greater of $271,050 or 115 percent of an area’s median home price, up to $625,500.  Both new loan limits will be effective at the expiration of the economic stimulus limits on December 31, 2008. 

C.A.R. also supports the following bill provisions:

• A temporary increase in mortgage revenue bonds to refinance subprime mortgages.  

• New regulator for Government Sponsored Enterprises to restore investor confidence in GSE loans and help the market and economy stabilize.

• First-time home buyer tax credit, which allows first-time home buyers to receive a tax refund worth up to 10 percent of a home’s purchase price, up to a maximum of $7,500.  The refund serves as an interest-free loan and the homeowner is required to repay it in equal installments over 15 years.

• Temporary raise in the loan limit for the Veterans Affairs home loan guarantee program to the same level as the economic stimulus limits until the end of 2008.

• Adjustment to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), allowing sellers to provide the non-foreign affidavit to a qualified closing entity and not just the buyer.

• The setting of minimum requirements for mortgage originators, which mandates fingerprinting of loan originators and establishes a nationwide loan originator licensing and registration system.  The requirements do not apply to those only performing real estate brokerage activities unless they are compensated by a lender, mortgage broker, or other loan originator.  States will have the ability to implement more stringent laws.

• The creation of a National Affordable Housing Trust Fund to help cover the cost of the FHA rescue plan for the first five years and develop affordable housing in subsequent years. 

Other provisions in the legislation: 

• The Treasury Department’s proposal to create a federal backstop program to insure the financial well-being of Fannie Mae and Freddie Mac.

• The FHA’s inability to insure loans that utilize a seller-funded down-payment assistance program.  Down-payment assistance from family, employers and other nonprofits is still allowed.

• The Community Development Block Grant Programs’ $4 billion allotment for communities to purchase and refurbish foreclosed homes.

C.A.R. wishes to thank those California Members of Congress who supported the bill:

Senator Barbara Boxer, Senator Diane Feinstein, and Representatives Joe Baca, Xavier Becerra, Howard Berman, Mary Bono Mack, Ken Calvert, John Campbell, Lois Capps, Dennis Cardoza, Jim Costa, Susan Davis, David Dreier, Anna Esho, Sam Farr, Bob Filner, Elton Gallegly, Jane Harman, Mike Honda, Duncan Hunter, Barbara Lee, Jerry Lewis, Zoe Lofgren, Dan Lungren, Doris Matsui, Howard “Buck” McKeon, Jerry McNerney, Gary Miller, George Miller, Grace Napolitano, Nancy Pelosi, Laura Richardson, Lucille Roybal-Allard, Linda Sanchez, Loretta Sanchez, Adam Schiff, Brad Sherman, Hilda Solis, Jackie Speier, Pete Stark, Ellen Tausher, Mike Thompson, Maxine Waters, Diane Watson, Henry Waxman and Lynn Woolsey.

Thank you everyone for your efforts in support of this bill!

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The good news, however, is that the smoke seems to be lifting with most of the evacuation orders in the fire affected areas of places like Paradise and Concow. Let’s hope that the worst is behind us.

One home that was spared from the fire, was the spec house we had in escrow located just below Paradise on Tuscan Dr. The day after my first fire blog post of June 11th, I found a window of opportunity early in the morning to drive up the Skyway towards the fire and our home. I spent all morning and into the afternoon with a friend from Magalia cutting hand line and laying hose and sprinklers in preparation for the fire that was burning just below us to the West.

My main concern, as the smoke below gradually moved South, was that we would get fire in the brush filled canyon that chimneys up to the road at the end of the Tuscan Dr. cul-de-sac. And, as these pictures show, that is exactly what happened. The total lack of fire resources on our street, prompted me to call the fire information number I somehow remembered from the previous nights local news cast.

It was sometime around 2:00 in the afternoon when the flames started up the canyon and towards the homes on our street and the many others that eventually burned just to our south off of Neal Rd. and adjacent neighborhoods. I advised the gentlemen on the phone that we had fire coming at us and that I was concerned that I had not seen, even a single fire engine in our area. He explained that he did not know where that street or subdivision was, but he would look into it and see what he could do. Within minutes, there was first one state employee, followed closely by about 2 strike teams of OES Fire Engines and Personel.

The last photo seen in this slide show was taken just after the police demanded we evacuate. Stuck in Paradise that night, due to road closures, I spent a long night at friends’ and checked on the house the next morning. It, and each of the others in our subdivision, were all fine. Unfortunately, that was not the case for the many others that were lost that night.

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2nd Quarter 2008:

• 242 Single Family Homes Sold
• Average price of $339,282
• Median price of $289,750
• Average Days on Market, 65

1st Quarter 2008:*

• 133 Single Family Homes Sold
• Average price of $341,549
• Median price of $292,000
• Average Days on Market, 92

*Revised slightly from my market snapshot posted on May 23, 2008

Despite a barrage of negative financial and housing news, the Chico real estate market appears strong.

IndyMac Bank may be down the tubes. Fannie Mae and Freddie Mac are getting help from the government in an attempt to stave off investor worries. And, perhaps scariest of all, Budweiser, the all American “King of Beers”, is being taken over by a Belgian company!

But, as the numbers show, the Chico, CA housing market may be settling in at, or near, a bottom.

Average home prices are down only a mere 1% during the second quarter from the previous quarter, while median prices are up about the same percentage.  Home sales volume is up 45% from the previous quarter.  And, homes are selling 39% faster.

Inventory is down about 8% from 440 available homes as recent as May 27th, to 403 available homes today. In fact, the number of homes sold during the second quarter of this year is down only nominally from the number of homes sold during the second quarter of 2006, when 253 homes sold.

I hope you find this information helpful as you navigate the real estate market and ponder sales and purchase decisions. Check back often. Or, better yet, sign up for new article updates sent directly to your inbox. And, don’t hesitate to contact me with questions and further assistance.

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Now I know this isn’t really real estate sales related information. And, maybe I’m playing a bit too much reporter… But, the “fire dog” in me felt compelled to share a pic, or two.

I first noticed this fire while driving East on Hwy 32 on my way up to Paradise from Chico. I didn’t have my camera at that time. At that time it was probably about 5 acres and initial attack was still responding and air support had yet to arrive. These photos were taken about an hour later when it was probably a couple of hundred acres.

My first concern is for any people, homes and animals located in the fires path to the South. My experience with fire in these conditions has me doubting that this fire will be stopped before threatening homes, especially in the areas in and around Stilson Canyon. And, even scarier if it gets into Butte Creek Canyon. When pushed by 25 mile an hour North winds, fires in these tinder-dry conditions are extremely difficult to stop without some sort of reprieve from mother nature.

I wish everyone well.

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Since the previous Market Report 5/12/2008:

27 Single Family Homes have sold in the greater Chico, CA area with an average sales price of, $306,052 and a median sales price of, $285,000. Average days on market of those sold was 53. The most active market with 4 homes sold, was the $280,000 to $284,999 price range.

These figures reflect a 21% decrease in sales activity from the previous 2 week period, a 9% decrease in average sale price and 3% decrease in median sales price. Average days on market improved substantially, from 79 to 53, representing a 33% reduction in days on market for homes sold.

Currently:

440 Single Family Homes are for sale (including those reported as contingent and temporarily off market). 121 Homes are Pending sale. Average days on market of available homes is, 111. The ratio of Pending homes to Active homes is down 3% to 25%.

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1st Quarter 2008:

• 132 Single Family Homes Sold
• Average price of $340,955
• Median price of $292,000
• Average Days on Market, 91

1st Quarter 2007:

• 207 Single Family Homes Sold
• Average price of $366,835
• Median price of $330,500
• Average Days on Market, 92

1st Quarter 2006:

• 187 Single Family Homes Sold
• Average price of $374,134
• Median price of $339,000
• Average Days on Market, 69

Analysis:

The Chico, CA real estate market has experienced continued home price declines in home values as reported during the 1st quarter of the past two years.

• 7% reduction in price from 1st Qtr. 2007 to 1st Qtr. 2008
• 2% reduction in price from 1st Qtr. 2006 to 1st Qtr. 2007

That’s a total of only 9% reduction in average home values comparing 1st Qtr. 2006 to 1st Qtr. 2008, indicating a healthy market correction, but certainly not a collapse in Chico, CA home values. Look for further analysis here as I will compare our local figures with others around the region and the nation.

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“I Heard on the news that the Real Estate Market will continue to Decline, so I’m going to wait and see What Happens Before I Buy”

You know what I’m talking about. You’ve probably heard something similar to this from clients dozens of times in recent months. Or, you’ve heard it from friends and colleagues. It is the kind of attitude that frustrates markets and stagnates economies.

But, it works both ways. Think back, if you will, to the frenzied activity of just a few short years ago. Back then, when the real estate market was really cooking, the “buzz” was about enormous value gains and fortunes being made. These reports-stimulated by the media- helped to fuel the biggest real estate boom in history. Consumers were driven, despite rationality in many instances, to to jump in and buy because of what they had heard.

Consumers Act Out of Fear

OK. Sure. There are other emotions that drive behavior. Love, greed, anger, etc., I’m sure all play a role in human behavior and decision making. But, from my, perhaps cynical and non-clinical view on this issue, each can be broken down to a baseline sense of fear when talking about consumer behavior.

Look at it this way… When someone is willing to pay tens of thousands of dollars over any rational assessment of value for a home or piece of property, they are not doing it strictly because they love the white picket fence, or because they are angry with competitive buyers or the seller. They do it because they are fearful they are going to miss out on an opportunity someone else might get (OK. That’s kind of greedy).

The flip side is true in a softer, declining kind of market. People are afraid of the opposite- that they will pay too much. In both instances, fear is the primary emotion causing behavior and decision making. So, in a declining market, people tend to wait and see what the next guy is going to do.

Once enough brave people have recognized and acted on the opportunities created by the fearful, “wait and see” people, the cycle will begin again and the “wait and see” people will be chasing the market fearful that they will miss their BIG deal. And, so it goes.

People are Afraid of Looking Stupid

Nobody likes to look stupid. In a rising market- “Everybody’s buying houses and getting rich. Why aren’t you?” “You should have paid that extra 10 grand to get that house. Now, someone else has it!”

Or, in a declining market- “Why did you buy that house? Haven’t you heard that prices are going down even more?”

We may never actually hear these kinds of things, but somewhere in the back of our minds we feel that acting contrary to expected behavior will make us look stupid.

Following the Herd

Yes. Like it or not, in spite of the way we like to view our perceived independence and individualism, our sense of uniqueness and self-worth, we do tend to do as other people do.

“My neighbor just bought a Hummer.” “I had better get me one of them too.” It doesn’t really seem to matter that gas is 4 bucks a gallon (see previous paragraph about looking stupid), or that you will never take it off road and parking it is nearly impossible. You just know that other people are doing it. Sadly, that is just the way we are. Well, not all of us. But, enough.

Now, this is probably good in many ways. We are social creatures and a certain social predictability is critical to the formation and stabilization of social constructs, including economies. But, it doesn’t mean that our behaviors are always rational or even in our best interest.

Think for Yourself

Break the heard mentality and break away from the herd. I know. It may feel counter-intuitive. But, don’t be afraid to buck the trends. The best opportunities are discovered when the herd is doing one thing and the brave do another.

Educate yourself. Get away from the 24 hour, round the clock news. I recently stepped back from my growing obsession with the back-and-forth channel flipping between CNN and MSNBC, and allowed myself only 30 minutes of TV news a day. I felt better. There are plenty of other resources from which to draw that don’t create the insidious sense of dread caused by constant news-drama.

Read my Blog. Or, better yet, sign up for my feed or email notifications. You don’t have to buy everything I write. But, I do try to provide informative, relevant information that you should find helpful.

Make your decisions for the right reasons. Don’t do anything, including buying or selling real estate, just because it seems to be the thing to do. If you want to get into the market, then do it. Quit waiting for the rest of the herd to tell you it’s OK. Think about investing as long term and don’t buy what you can’t afford. Get away from the “Heard Mentality” and make your move!

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34 single family homes have sold. 3 Condos have been reported sold.

The average price of Single Family Homes sold: $334,728. Median Price: $293,500. Average Days on Market: 79.

Currently:

425 Single Family Homes and 43 Condos are for sale.

120 Homes are Pending sale. 8 condos are Pending Sale.

The ratio of pending sales to active listings is 28% (down 2% from two weeks ago).

“Upper End” Market Snapshot (Figures for homes sold above $600,000):

1st Quarter 2007.

18 homes sold with an average price of $748,640 and a median price of $738,000. Days on Market, 154.

2nd Quarter 2007.

26 homes sold with an average price of $758,902 and a median price of $756,232. Days on Market, 133.

3rd Quarter 2007.

15 homes sold with an average price of $824,355 and a median price of $765,000. Days on Market, 113.

4th Quarter 2007.

16 homes sold with an average price of $764,403 and a median price of $739,000. Days on Market, 156.

1st Quarter 2008.

12 homes sold with an average price of $769,917 and a median price of $712,000. Days on Market, 165.

April 1, 2008 to current (roughly 1st half of second quarter).

8 homes sold with an average price of $851,000 and a median price of $733,750. Days on Market, 118. Of those homes sold in Chico (excluding one in the Durham area that was listed for $3,000,000 and sold for $1,550,000) the average ratio of sold price to listing price was just a fraction under 95%.

Looking back at the same period 2006 (4/1/2006 to 5/12/2006).

7 homes over $600,000 sold with an average price of $850,000 and a median price of $780,000.

Average price is up slightly this year, compared to two years ago. Median price is down slightly (roughly 6%).

Source: Sierra North Valley Multiple Listing statistics.

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This past Saturday we were treated to the sweet sounds of the Cowboy Junkies at Laxon Auditorium, one of Chico’s premiere venues for music and a variety of performing arts. Promoted and sponsored by Chico Performances California State University, the Cowboy Junkies are just one of many terrific shows available throughout the year right here in Chico, CA.

Where’s Jane?

Enthusiastic about hearing a few of their new songs, we missed hearing the classic cover, Sweet Jane, one of the Junkies most popular songs. But, just in case you want a listen, I have included it here.

I have to give props to Austin Texas’ Monahans, who opened up for the headliners with only two members of the band playing guitar, percussion and vocals. They put out a lot of sound for only two musicians.

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