For the last few years, we real estate agents were being told by government and banking interests to expect a wave of foreclosures on the market. We know there have been a great many foreclosure and pre-foreclosure homes in any neighborhood around here. Yet, here in the Spring of 2012, we are suffering with some of the lowest level of housing inventory for sale we’ve seen in years. What happened to the so called shadow inventory?
A possible clue came in the form of a recent phone call I took.
“Mr. Murphy, we represent an investor group looking to buy a pool of 585 REO homes. 4 of them are in the Redding area. We’d like you to go out and look them over, and let us know what you think they are worth in today’s market. In return, if we decide to go ahead with the purchase, we will use your services if we decide to market the properties in your area.” The caller said they represented a group of investors with a Very Hedge Fund sounding name I’d never heard of.
So I do a free, drive by appraisal, on the flimsy chance that I may get some business out of it. As always, it’s relatively easy to get a real estate agent to work for nothing. It’s common. We are a hopeful bunch.
I never got any call about those properties after that. I’ve spoken with other agents who have experience with “pool” buyers, too. Were those homes bought and quietly rented out? I don’t know, and as I understand it, Hedge Funds are only minimally regulated. All I know for sure is that we have way fewer local homes for sale than we’ve had in years, and it’s a real problem for buyers in certain market segments. Notably at about $150K level. What happened to the shadow inventory wave? We’re still waiting…

“March home sales and price report from the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).
For release:
April 16, 2012

California median home price posts first year-to-year increase in 16 months;
low inventory demonstrates limited need for bulk REO sales, C.A.R. says.

LOS ANGELES (April 16) – California home sales declined in March from February’s pace, while the median home price snapped a 16-month annual price decline and posted its first year-over-year gain.

‘While home sales were down statewide, the housing market continued to perform at a solid pace by historical standards. In fact, sales jumped significantly in most regions of the state, with many areas experiencing double-digit gains,” said C.A.R. President LeFrancis Arnold. “Tight inventory and robust home sales, particularly in the San Francisco Bay Area, fueled the substantial increase in the March median home price.‘”

Read more of this interesting California Housing price trend article at the C.A.R. website, at the link.

Here locally, it certainly feels like prices are up, as demand has spiked. Still, Local housing prices are not necessarily subject to the traditional free market laws of supply and demand. With so much of our available inventory under direct control of the government and big banks, prices are set elsewhere.

We have more buyers than homes to sell. That’s evident in the inventory trend shown here, and we definitely feel it. Sales are up again this month. Not by a lot. Still, it’s a small trend. Our experience is that sales would be higher yet, but there’s just not much to sell lately. Here’s the chart:
Again, this is our own data from the Shasta MLS, and includes more than just Shasta County by taking in sales in Lake California. We use sales from the region that impacts our local home sales most, from Shingletown to Whiskeytown, and from Lakehead to Lake California. So you may see other figures elsewhere. This data is what we personally use, as most relevant to our Redding focus.
Inventory is becoming the key issue. If the laws of supply and demand are still in effect, prices should follow. We’ll see about that.

We are a special case here in the Redding area. But it’s interesting to see analysis of statewide trends from the California Association of Realtors.

As mentioned in the prior post, home sales were up slightly February from January 2012. According to the Shasta MLS today, we went from a total 195 homes in January, to 212 sold in February. A hopeful trend. We wondered, what prices have homes in the Redding area been selling for?

In January, the average home sold for $179,587; and the Median Price was $143,500.
In February it was $154,203 on average, with a Median Price of $133,000.

We can attest that homes below the Median price level have been in high demand. Obviously, homes above median are selling, but it seems to us that they are on the market longer, and more often drop prices before ultimately selling.

The most expensive home sold in January was this one on El Capitan, for $875,000.

It started out listed just under $1M, and was on the market over a year. It was beauty, and elegantly decorated. We toured it, but never showed it.

The most expensive home sold in February was this one on Calle Camelia, for $760,000.And this one first listed for $1.35M, so is evidence of our theory about high end price drops from the last paragraph. This one dropped nearly half. We were scheduled to show it, but it was scooped up before our buyers could see it. It was really quite nice.

The least expensive home sold in January was $19,900 on Montana. It listed and sold with no price drop in just over 30 days.
The least expensive home sold in February was $28,000 on Silver. It listed for $59K last October, so had to reduce.

No pictures of the least expensive? No.

And we must mention that these statistics are for the entire MLS which includes some homes outside the Greater Redding, and Shasta County area. And we must add that information seen here is deemed to be reliable, but is not guaranteed. © 2012 MLS and FBS.
Prepared by Skip Murphy on Friday, March 09, 2012 8:31 AM

Up a bit. The ink has barely dried on February contracts, so these numbers should be viewed as early. Still, we like to peek.
We use numbers for “Greater Redding,” so include roughly from Lakehead to Lake California, and from Shingletown to Whiskeytown. You can compare this chart to last months in our prior post. Inventory is actually up this month. Here are the numbers behind the chart:

Overall, inventory is down from 2010. We feel it when we’re out showing. You get to the end of a list much quicker. The Northstate is not an infinite market.

We’ve heard a few comments about how the number of homes for sale in the Shasta MLS dropped sharply last month. Today, its around 735 homes for sale in the Redding area.
In fact, the real number of homes for sale hasn’t changed all that much over the last 6 months.We’ve shown this before, and we should have a new chart reflecting February 2012 in a day or two. Shown again here to illustrate that today’s low inventory has been steadily, but not steeply declining. The dotted red line at the top.

So what happened? Well, they changed the rules on the reports. Previously, short sales that had offers in to the bank/lender (Pending) were still reported as Active, swelling the perceived inventory numbers. The theory was that because the bank/lender had not yet agreed to the transaction, that agents should still show the property, and submit backup offers. In reality, we never like to show homes we can’t sell. So the number of “Active” homes was inflated by the large number of short sales in lender limbo. Removing Pendings from the reported number of Active homes didn’t change the housing inventory, only how it was calculated.

There’s much nuance to the discussion of whether that was a good idea. We think it is. The real number of homes for sale in our area is quite low. Of the 735 homes listed today, oops… now 734 since I last looked this morning, only 607 are in Shasta County. Of those, only 261 are at, or under, $200,000. That’s the very popular price point.

So what’s that mean? Inventory is low. So are prices, and more importantly perhaps, so are interest rates. If you’ve been waiting to sell, waiting for demand to pick back up, here we are. We have buyers out there looking, and they don’t have much to look at.

Here’s our usual monthly chart of local home sales in and around Redding.
Sales are off by a little. The most notable trend is the overall low inventory evident over the last 12 months versus the prior 12. The bars indicate months of inventory available if we sold at our current rate and no new homes came on the market. 6 months inventory is widely considered a healthy condition. You can see, that’s about where we’ve been running. Here’s the numbers behind the chart:
While this seems healthier than than the 2010 numbers, what we’re feeling is a distinct lack of homes for sale in the greater Redding area. Buyers are being told “it’s a buyer’s market,” which is true enough. But when you actually get out and start looking at real homes, it’s pretty slim pickings at the popular price points.

What this means for you. If you’ve been thinking of selling, conditions are much better than they were a year ago. We need listings. Contact us to go over your home’s present value, and learn about our unmatched marketing program at no obligation. (530) 244 7603