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Saturday, Jan. 23, 2010

Andy Krotik: Real estate market, year in review

Did the market hit bottom in 2009?

The year began and ended with Merced County being ground-zero for foreclosures in the nation. Despite that, we are seeing some dramatic and encouraging signs that the worst could be behind us.

Last year, 7,221 properties changed hands in our county a 34 percent increase when compared to 2008.

The pentup demand is being driven by affordable prices for local first time home buyers, and investment opportunities as viewed by, yes, the Bay Area investor. Cash buyers from 415, 408 and 510 area codes are racing into the county and squeezing out locals.

Some would say the same rascals that caused the bubble to burst, are back at it.

Figuring out whether or not the market has hit bottom is like dropping a tennis ball on a cement floor. You don't know its hit bottom until its on the way back up.

President Barack Obama and Gov. Arnold Schwarzenegger have successfully slowed the foreclosures statewide by adding new regulations and forcing more loan modifications. I think that's great with owner-occupied properties.

The investment properties are a different story. They are investments that come with risk for return.

Banks are also beginning to be more willing to do short sales. Far from being easy to work with, but now at least starting a dialogue.

Although, in most situations a bank can foreclose on a house and take it back within 120 days, now a year-long process to foreclose is not uncommon. Last year, 4,239 properties went back to the bank. Although that represents 12 takebacks a day, last year there was a 21 percent decrease from 2008.

I think at some point the government needs to allow the market to right itself.

If it wants to work to keep homeowners in their homes, that's fine, but let the investment properties get back into the market place.

Realtors have an overabundance of first-time home buyers whom want to purchase. Between Merced, Atwater and Winton there are more 1,000 vacant homes. Get them into the market to meet the demand.

In May 2009, the median price hit a low of $99,000 in Merced.

With the pentup demand and lack of inventory forced by federal and state leaders, the median price of a home has rebounded to $115,000.

New properties today are shown within two hours of hitting the market, and typically have a purchase offer within 48 hours.

On average, most properties are selling above asking price, many times not appraising. In short, it's a feeding frenzy, frustrating both Realtors, and buyers.

Although Fannie Mae and Freddie Mac are beginning to favor first-time homebuyers, other institutional lenders are simply looking for anyone looking to pay cash. As you will see below because of the lack of inventory, days on market are at historical lows -- 29 days.

Andy Krotik is a Realtor with 21 years experience. He currently serves as sales manager of Coldwell Banker Gonella Realty in Atwater. You can follow him on Twitter for real-time property updates, sales data and market updates at twitter.com/AndyKrotik

How numbers shake out

Merced County Facts, Figures

Total Number of Closed Sales 2008 : 5,384

Total Number of Closed Sales 2009 : 7,221

Total Number of foreclosures 2008: 5,151

Total Number of foreclosures 2009: 4,239

Average Number of Days to sell a home in January 2009: 76

Average Number of Days to sell a home in January 2010: 29

Merced Average List Price January 2009: $126,898

Merced Average List Price January 2010: $105,668

Merced Average Sales Price January 2009: $122,074

Merced Average Sales Price January 2010: $105,880