Click on any of the subjects to the left to display them.
I'll add more when I'm bored.
All of the information provided is my opinions and should not be the basis for your investment decisions.
Bob Hooke
(These statistics were pulled from the Fresno MLS. The
criteria used was the cities of Fresno and Clovis, single family homes,
condominiums, and planned unit development, with in the last 2 years)
Median Home SOLD Price
October 2007
October 2008 October 2009
$260,000.00
$172,500.00 $158,000.00
Number of SOLD Properties Per Month
October 2007
October 2008 October 2009
295
646
671
Average Days on Market (DOM)
October 2007
October 2008 October 2009
85 DOM
76 DOM
65 DOM
The Number of Under Contract Properties Per Month
October 2007
October 2008 October 2009
274
583
767
The Number of New Properties Listed Per Month
October 2007
October 2008 October 2009
972
1,068
789
The Number of For Sale Properties By Month
October 2007
October 2008 October 2009
5,628
4,939
2,747
The Number of Expired Properties by Month
October 2007
October 2008 October 2009
857
462
252
Month Supply Inventory
October 2007
October 2008 October 2009
16 MSI
7 MSI
2 MSI
Still time to buy but prices are up a bit & rents are down some. I just rented 3 properties & it was a struggle to find good tenants. Vacancy periods varied from 15 days to 60days. 60 days is way too long. Price & condition are the keys. Remember that advertised rents are for houses that are not rented. They are not what good tenants are paying.
I still think the foreclosure crisis is over-blown!!
If the government would just let the market take it's course the situation would resolve itself in the next year or so. Remember -- 90% of the work force is employed. The longer we bail property owners out the longer it will take for the market to turn around. The vast majority of owners that can't make their payments now will eventually get foreclosed anyway even if their loans are modified. In my 25 years as a property manager I found that it was always best to evict someone rather than let them get farther behind in their payments. They never get caught up. The same goes with foreclosures. If they can not make the payments then they need to move and ... move on. I have never had a tenant end up on the street -- they get a cheaper place or move in with family or friends or find subsidized housing.
There are some great deals out there and rent vs value is terrific. Time to buy.
The sub prime loan and foreclosure crisis is over-blown!!
Check out this article from a recent Fresno MLS news letter. click here
Why are so many people looking for somebody to blame for their own mistakes?
This might be a good time to buy!!! Be selective!!!
Everybody has been crying about the drop in home prices & the sub prime loan problem. I'm not very sympathetic. I collected MLS data for 3 zip codes (93720, Northeast; 93722, Central Unified; and 93726, midtown). In those areas during the past 2 years home values have dropped about 16% but from 1998 to 2005 they increased an average of 207%. Wow!!! They are still up 160% from 1998. (See attached spreadsheet ,Price chart & percent chart).
Some interesting observations: Most real estate agents were saying that the greatest price appreciation would take place in the northeast part of town (93720). (I even believed it and bought there). The northeast actually had the lowest percentage increase of the three zip codes I checked. The highest rate of increase was in 93726 (midtown). The rate of increase was also higher in the Central Unified area (93722). Why? Northeast prices were constrained by the prices of new homes. Existing homes just won't sell for more than similar new homes. New homes can not be built for $250,000 or less so prices were not constrained by the new home alternatives in the lower priced areas. The total increase in the 3 areas from 1998 to 2007 are as follows:
Zip code % increase $ increase
93726 173% $141,765 midtown
93722 163% $162,213 central unified
93720 148% $181,474 northeast
So who made the most money? The investors who got in early with the least amount of down payment. If you bought a house with $10,000 down in 1998 for $100,000 and it went up $161,000 you got a return of 1610%!!!! If you put $20,000 down your return was only 805%. If you paid all cash your return was 161%.
So who lost money? The investors that got in late.
Who is in the best shape now? Those who do not have big negative cash flows. Better yet... those with positive cash flows.
If you do have big negatives you can remedy the problem by reducing the principal balance on your loan and trying to get the bank to "re-amortize". If they won't, at least your actual loss will decline since you will pay less interest every month.
Lesson: If you are a gambler, finance as much as possible & pray prices go up.
If you are a conservative investor, make big down payments so you will always have a positive cash flow.
More observations:
Annual rents are now about 6% of value.
Houses that rent for around $900 can be purchased for around $175,000 in the 93726 area... 6.2%
Houses that rent for around $1000 can be purchased for around $200,000 in the 93722 area... 6.0%
Houses that rent for around $1250 can be purchased for around $300,000 in the 93720 area... 5.0%
These loan to value ratios are what we have seen traditionally in the Fresno market. So I doubt that there will be much more decline in the market prices especially in the $200,000 range.
Recommendation:
If you have cash, buy homes in the $200,000 range. Try to buy at prices 10% below what you think is the market value. Make sure your negative cash flow is no more than the income tax savings. There are lots of "fixers" available so if you have the time and the ability you can get some "sweat equity". "Fixers" should not require moving walls, major kitchen remodels, structural work, etc. "Fixers" should only need things like paint, carpet, appliances, yard work and maybe a re-roof. You should get a price discount on a "Fixer" roughly equal to 2 times the cost of the fix up.
If you don't have cash and like to gamble or just need a place to live, you should be able to do "no down" deals by taking a house "subject to the loan". In that case the seller gives the buyer a Grant Deed & the keys and the buyer starts making the loan payments. Be sure the paper work is done properly.
Fresno Market Status at the end of April 2007
Well I finally got bored or interested enough to check the market again.
The number of existing homes for sale under $500,000 has increased dramatically since this same time last year (1892 last year vs 2941 this year). However, prices have not taken a big hit. The average listing price in MLS last year was $315,883 vs $301,508 today---- a 4.6% drop. Sold price differential were even less dramatic $285,929 vs $283,236---- less than 1%. The above data is for the period from 1/1/07 to 3/10/07.
click here for statistics 2007
click here for 2006 statistics
click here for 2005 statistics
During the period from 3/20 to 4/20/07 sold prices were higher this year. $294,114 vs $293,315 but the houses were bigger this year. Average price per sq ft declined from $195 to $175. The number of homes sold dropped from 418 to 281.
more sold statistics for April 2007
The rental market for houses is also slowing. Rents do not seem to be increasing this year and most property managers report higher inventories.
What does this all mean? I conclude that demand has dropped off while supply has increased. Two things could be happening 1. Population growth is slowing or 2. Average household size is increasing. Both are probably true. As the economy slows people tend to look for work elsewhere and out of work folks give up their homes and move in with relatives & friends (especially singles). Home prices should be dropping significantly but they are not which may mean that many of the people that have their homes listed for sale don't really care if they sell.
What is going to happen? I do not know but I'm not selling. As long as rents keep edging up I'm happy. I don't really care what happens home sale prices.
If you are looking for bargains to buy you may be able to do so now but you may have to make a lot of offers. There will certainly be an opportunity to buy property "no down" "subject to" existing loans but those deals may not be at bargain prices. If you are young, cash poor and can tolerate risk and negative cash flow go for the no down deals. If you have cash go for the conventional purchase at a lower price.
Fresno Market Status at the end of Sept 2006
The number of existing homes being sold is declining but the drop in home prices is not as dramatic as being proclaimed in the press. In fact it looks like prices are still going up a bit in the more affordable areas in the Central Union High, mid town & southeast parts of town. There are definitely fewer sales but sellers are resisting the "low-ball" offers.
I think there will be some opportunities to make "no down" or very "low down" deals from desperate sellers this year & next but the cash flow on rentals will continue to be low. If you are young it will be a good time to buy and hold for the long run (10 years or more). Just make sure you can carry the negative cash flow.
If you already own rentals it will be a good time to invest in your own property --- pay those loans down. If you have loans that have been paid way down you can improve your cash flow by refinancing for 30 years.
Click here for Statistics as of 9/26/06
The rental market is still resisting rents over $1300 per month but I predict a change next year.
It appears that prices have declined slightly in most areas. In the zip code areas I checked (see the chart below) average home prices under $500,000 dropped 1.2% since the end of May and median prices dropped 3.2% during the same period. In most areas there was a big drop in June with prices going back up in July. There are definitely more houses for sale but sellers are still holding out for higher prices.
Average time on the market for homes under $500,000 listed for sale is 59 days (was 47 days in March), pending properties is 48 days and properties sold during the last 2 months averaged 47 days on the market. There are currently 2711 homes listed for sale under $500,000 on MLS in the Fresno & Clovis urban area.
I was unable to duplicate the comparison of similar home sales that I did above. There were not enough sales but there were plenty of listings and the asking prices have not changed much.
Northeast areas (Clovis Unified) fared much better than northwest (Central Unified) during the last 2 months.
Click here for STATISTICS as of 8/1/06
The rental market for homes has tightened up considerably. Rents have increased 5% or so over the last few months and vacancy is dropping. I think this trend will continue since people are not inclined to buy a house now and are taking a wait & see attitude. We still appear to have population & job growth which keeps the demand for housing up. It is just shifting from sales to rentals. So you can expect the cash flow for rental homes to improve over the next few years. Increasing rents should exceed cost increases. Keep your eye on property tax assessments. Don't let the assessor overvalue your property.
Home Prices are still climbing
It's not over until it's over. An analysis of MLS data for the last few months indicates that the boom is over but home prices are still going up. They definitely are not going up as fast as they did in the last few years. I compared similar houses in three different parts of the trade area: West of hwy 99 in Central Unified School District (93722), The area north of Hoover High in Fresno Unified (93710) and an area around Maple & Herndon in Buchanan High, Clovis Unified (93720). (The sizes and/or ages of the houses were the same within each area but not from area to area. The houses in 93720 are larger & newer). Houses are also taking longer to sell than a year ago.
The only one of these three areas that had an actual drop was 93710 where it looks like prices got out of whack in the first part of last year.
|
Increase |
per sq |
ft |
days on |
|||||
|
zip code |
period |
avg price |
price/sq ft |
6 months |
one year |
market |
||
|
93722 |
05/05 |
$245,000 |
$165 |
3 |
||||
|
10/05 |
$263,000 |
$176 |
$11 |
6.7% |
33 |
|||
|
05/06 |
$273,000 |
$178 |
$2 |
1.1% |
$13 |
7.9% |
30 |
|
|
93710 |
05/05 |
$257,500 |
$170 |
5 |
||||
|
10/05 |
$297,700 |
$210 |
$40 |
23.5% |
12 |
|||
|
05/06 |
$308,300 |
$192 |
-$18 |
-8.6% |
$22 |
12.9% |
31 |
|
|
93720 |
05/05 |
$356,500 |
$199 |
20 |
||||
|
10/05 |
$399,600 |
$209 |
$10 |
5.0% |
32 |
|||
|
05/06 |
$371,300 |
$218 |
$9 |
4.3% |
$19 |
9.5% |
21 |
It looks like buyers shifted from the high priced areas in Clovis and north Fresno during 2005 and drove prices up in adjacent areas.
Click here to check the statistics and see what I mean: STATISTICS
In April 2005 the average price for homes under $500,000 in the zip codes studied was $300,265 and the median price was $290,000.
In Oct 2005 the average price for homes under $500,000 in the zip codes studied was $318,301 and the median price was $307,000.
In April 2006 the average price for homes under $500,000 in the zip codes studied was $322,277 and the median price was $320,00.
The housing market boom is definitely over in Fresno. Prices peaked in October or November and have declined slightly. Anecdotal evidence indicates that prices have dropped around 10%. Prices are taking the biggest hit in the $300,000 to $400,000 range which includes most of Clovis and northeast Fresno. These were the areas where the boom started several years ago and these are the areas which peaked first.. The $200,000 to $300,000 range appears to be a little more stable.
Homes are staying on the market much longer. The average listing in Fresno MLS has been on the market for 49 days. A year ago it was less than 20 days. 37% fewer homes sold in the first 2 months of 2006 than in 2005.
The links below are to statistical data for Fresno & Clovis homes under $500,000.
click here for the sold information for the same period in 2005.
There is a silver lining to this cloud. We appear to be experiencing a higher demand for single family home rentals. Visits to www.rentfresno.com were up 87% over the average for 2005 in February. Some of the increase is due to greater use of the internet but we are getting better applicants for rental homes. Families moving into the area are not in a big hurry to buy a new home. They are choosing to rent for a year or so to see what happens. This is especially true in the $1100 & up rent range. This is resulting in slightly higher rents for homes - maybe 5%.
We can anticipate that rents will continue to increase and home values to decline until rents as a percentage of home values will once again be roughly equal to the mortgage interest rate. This will happen gradually as investors with highly leveraged properties sell their properties (big loans) because appreciation is not offsetting their negative cash flow. Builders may also lower the prices on new homes.