Nevada County, Real Estate
Market Observations
August 2020
Lack of inventory in Nevada County continues to be a feature of the current real estate market.
621 houses for sale July 2019 vs 297 houses for sale July 2020, a significant 52.6% decline. That’s a reduction from 4.3 months of inventory to 1.3 months of inventory, a very strong SELLER’S MARKET.
THE average SOLD price per square foot is up 6.7% year to year ($255 vs $239). Average price sold is up 13.4%, from $493,000 to $559,000. Higher list prices are prevailing.
Units PENDING are up 86.3%. While Nevada County has long been a magnet for buyers from the SF Bay Area, and to a lesser extent, the Los Angeles region, we believe the relative safety of our area continues to drive interest and sales. The pending numbers support that.
If you are contemplating selling a property, we have rarely seen a better time!
Don’t hesitate to call us for evaluations of your home’s value or to tour homes on the market you have interest in. We are here for you, and Alisa always answers her cell phone, 530-559-4871.
Fed ‘Not Even Thinking’ About Raising Rates, Real Estate on the Rebound
By Liz Dominguez
The Federal Open Market Committee (FOMC) met this week, leaving interest rates near zero to help buoy an economy heavily hit by the current health crisis.
“The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in keeping the virus in check,” Fed Chair Jerome H. Powell said in a statement, adding that the “pace of recovery looks like it has slowed,” as more states continue to battle a second wave of increasing coronavirus cases.
The Fed will continue to monitor the markets but, as of now, is not “even thinking about” raising rates and will keep rates low “until it is confident that the economy has weathered recent events.”
Recent data shows just how much the coronavirus pandemic has impacted the economy. According to the Commerce Department, the U.S. GDP (gross domestic product) fell 9.5 percent in the second quarter of the year—on an annualized basis, GDP fell at a rate of 32.9 percent.
“As expected, economic activity collapsed in the second quarter due to the total virus-lockdown in April and only partial re-openings in May. The GDP contraction of 33 percent on an annualized basis is the steepest ever experienced in the U.S.,” said Dr. Lawrence Yun, chief economist, National Association of REALTORS® (NAR). “Even with the stimulus and enhanced unemployment benefits, consumer spending collapsed by a massive 35 percent. Business spending also collapsed by 27 percent. Even residential investments—comprising of home sales, home building and remodeling activity—dropped by nearly 40 percent.
“This morning’s advance report on second quarter GDP showed that the economy contracted 32.9 percent—the largest single quarter drop on record—as COVID-19-driven business closures and restrictions on in-person activity sharply reduced consumer spending and business investment,” said Joel Kan, AVP of Economic and Industry Forecasting, Mortgage Bankers Association (MBA). “In recent weeks, housing demand has rebounded sharply, and we expect the rest of the economy to recover in the second half of the year.
Third quarter data should be more optimistic as states began reopening amid a decline in COVID cases.
“The good news is that this data is backward-looking. Third quarter data will show a massive increase. Personal savings rates are the highest ever, with massive deposits at banks,” said Yun. “There will be an unleashing of spending in the upcoming months as economies open further. Home sales have already been rising strongly and will continue to do so. GDP growth in the third quarter could be as high as 30 percent. Note: This data will come out three days before the November election.”
However, with the last few weeks showing deterioration across various states, the economic rebound could slow. Unemployment filings totaled 1.43 million last week, according to the Labor Department—the second weekly increase.
“The adverse impacts to the job market and hardships for many households may persist—especially if virus cases continue to rise in several parts of the country,” said Kan. “There are still many workers who have not returned to work, households in need of mortgage or rent forbearance, and an overall sense of uncertainty ahead. We expect the Federal Reserve to keep rates low, and monetary policy supportive, until there are clearer signs of an economic recovery.”
An upside to the Fed’s near-zero lock-in? Fed rates can indirectly influence mortgage interest rates, which just decreased slightly according to Freddie Mac’s Primary Mortgage Market Survey® (PMMS®).
“It’s Groundhog Day in the mortgage market as rates continue to remain near historic lows, driving purchase demand over 20 percent above a year ago,” said Sam Khater, Freddie Mac’s chief economist. “Real estate is one of the bright spots in the economy, with strong demand and modest slowdown in home prices heading into the late summer. Home sales should remain strong the next few months into the early fall.”
Here’s the breakdown:
– 30-Year Fixed-Rate Mortgage: Averaged 2.99 percent with an average 0.8 point for the week ending July 30, 2020, down slightly from 3.01 percent. A year ago at this time, the 30-year FRM averaged 3.75 percent.
– 15-Year Fixed-Rate Mortgage: Averaged 2.51 percent with an average 0.7 point, down from last week when it averaged 2.54 percent. A year ago at this time, the 15-year FRM averaged 3.20 percent.
– 5-Year Treasury-Indexed Hybrid Adjustable-Rate Mortgage (ARM): Averaged 2.94 percent with an average 0.4 point, down from last week when it averaged 3.09 percent. A year ago at this time, the 5-year ARM averaged 3.46 percent.
“We expect that the Fed may strengthen their forward guidance on the future path of interest rates at their September meeting, providing more explicit signals as to which factors could lead them to eventually raise short-term rates,” said Mike Fratantoni, SVP and chief economist of MBA. “In the meantime, we expect mortgage rates will stay near all-time lows. These record-low mortgage rates will continue to provide stimulus to homeowners who refinance and lower their monthly payments, while also boosting homebuyer demand and their purchasing power.”
Liz Dominguez is RISMedia’s senior online editor.
Real Estate
Mortgage demand spikes 33% as rates set another record low
PUBLISHED WED, JUL 8 2020
Diana Olick@IN/DIANAOLICK@DIANAOLICKCNBC@DIANAOLICK
KEY POINTS
- Mortgage applications to purchase a home rose 5% for the week and were a remarkable 33% higher than a year ago.
- Home prices gains continue to accelerate, so low mortgage rates are giving buyers much-needed help.
Homebuyers rush back into the market as mortgage rates hit new low
After a brief pullback at the end of June, homebuyers rushed back into the mortgage market last week, taking advantage of record-low mortgage rates.
Mortgage applications to purchase a home rose 5% for the week and were a remarkable 33% higher than a year ago, according to the Mortgage Bankers Association’s index, which was seasonally adjusted, including for the Fourth of July holiday.
Buyer demand has been incredibly strong since mid-May, after the coronavirus shut down most housing activity in April. The only thing standing in the way of more sales is the record low supply of homes for sale.
Home prices gains continue to accelerate, so low mortgage rates are giving buyers much-needed help. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of up to $510,400 dropped to 3.26% from 3.29%. Points, including the origination fee, for loans with a 20% down payment decreased to 0.35 from 0.36.
“Mortgage rates declined to another record low as renewed fears of a coronavirus resurgence offset the impacts from a week of mostly positive economic data, such as June factory orders and payroll employment,” said Joel Kan, an MBA economist. “The average purchase loan size increased to $365,700 — also another high — as borrowers contend with limited supply and higher home prices.”
Applications to refinance a home loan, which are generally more sensitive to weekly interest rate moves, rose just 0.4% from the previous week but were 111% higher than one year ago. Because interest rates have been low and refinance demand has been strong for so long, only a limited number of borrowers can still benefit significantly from even the new record low rate.
The refinance share of mortgage activity decreased to 60.1% of total applications from 61.2% the previous week.
Mortgage rates continued to drop at the start of this week, especially after the stock market sell-off Tuesday. Mortgage rates loosely follow the yield on the 10-year Treasury.
“Prediction is tough, but what I can say is that a lot of us who watch the market very closely are on high alert for signs that the low rate environment is under imminent threat,” said Matthew Graham, chief operating officer at Mortgage News Daily. “While that could change with even one major coronavirus headline, we’re not seeing that threat as of today.”
Credit: CNBC
After plunging to nearly the lowest level in its history in April, an index measuring consumer sentiment in the housing market bounced back significantly in June. Renters were especially optimistic about homebuying.
The share of consumers who think it’s a good time to buy a home increased from 52% to 61% month to month, according to the Fannie Mae survey, while fewer Americans said it was a bad time to buy. Renters drove much of that improvement.
“The share of renters who say it’s a good time to buy a home is now at its highest level in five years, suggesting favorable conditions for first-time homebuying, consistent with the recent rebound in home purchase activity,” said Doug Duncan, Fannie Mae senior vice president and chief economist.
Current homeowners are also getting slightly more optimistic about the sales market, especially given the lack of housing supply. The percentage of respondents saying now is a good time to sell a home increased from 32% to 41%, although nearly half still think it’s a bad time to sell.
Home sales jumped dramatically in May, after grinding to a halt in March and April. While new listings are coming on the market, the total inventory of homes for sale at the end of May was 19% lower than May 2019, according to the National Association of Realtors. Pending sales in May, which represent signed contracts on existing homes, jumped a record 44% compared with April.
“However, this activity may cool again in the coming months, depending on the extent to which it can be attributed to consumers having chosen to delay or to accelerate homebuying plans due to the pandemic,” said Duncan. “We believe the continuing uncertainty regarding the coronavirus’ containment suggests an uneven and potentially volatile course toward economic recovery.”
Consumers are still very concerned about their job security, even as the employment picture improves slightly. Renters and homeowners with a mortgage are particularly worried, according to the survey, given the sudden record-high unemployment brought on by the pandemic.
More Americans now think home prices will strengthen, which is a double-edged sword in the market. Home prices were already elevated going into the pandemic, and affordability was weakening despite record-low mortgage rates.
On that front, more respondents said they expect mortgage rates to rise over the next year.
What does this mean to us? First, it may a good time to re-finance. Second, Real Estate will continue to be one of the best investments available for years to come.
Real Estate
Nevada County Market Observations
July 2020
What is striking is lack of inventory in Nevada County
607 houses for sale June 2019 vs 343 houses for sale June 2020, a significant 43.5% decline. That’s a reduction from 4.3 months of inventory to 2.1 months of inventory and presages a SELLER’S MARKET.
The average SOLD price per square foot is stable year to year ($251 vs $248). Units sold were 140 in June 2019 and 160 in June 2020, an increase of 14.3%.
Units PENDING are up 100.8%. While Nevada County has long been a magnet for buyers from the SF Bay Area, and to a lesser extent, the Los Angeles region, we believe the relative safety of our area is significantly driving interest and sales. The pending numbers belie that.
If you are contemplating selling a property, we have rarely seen a better time!
Don’t hesitate to call us for evaluations of your home’s value or to tour homes on the market you have interest in. We are here for you, and Alisa always answers her cell phone, 530-559-4871.
A MARKET MINUTE perspective from CA Association of Realtors
July 9, 2020
The California and national economies and housing markets continue to show improvement across a broad spectrum of indicators
However, we continue to face both ongoing and new challenges that we, as real estate professionals, need to be aware of to best serve our clients. Business has been improving, consumers are feeling better, and we are still enjoying all-time low interest rates. However, uncertainty has also increased in recent weeks, so we need to continue to hustle and avoid the temptation to celebrate the recent improvements because we still have a long row to hoe in California.
California home sales exceed pre-COVID levels:
Despite the short holiday week, home sales in California home sales ticked up last week. On average, 801 homes closed on the MLS each day last week—up from 795 the previous week. In addition, closed sales have now been above the pre-COVID levels of early march for the past 4 weeks consecutively. This largely owes to the rebound in pending sales that began in mid-April.
Labor market recovery continued in June:
Last week, the Bureau of Labor Statistics reported a larger than expected drop in unemployment. Although there remain some issues with the classification of temporarily unemployed workers, the decline to 11.1% in June from 13.3% in May represents the second consecutive monthly decline. The payroll survey of employers also showed a second monthly gain with the U.S. economy adding back another 4.8 million of the 20.8 million jobs lost in April.
Buyer demand remains strong:
New purchase mortgage applications actually declined last week by 5.3% from the previous week. However, that was solely due to the short holiday week. In fact, last year the 4th of July decline in mortgage applications was much larger such that the year to year increase in new purchase applications surged by 33%—the largest increase since before shelter in place orders were issued. In addition, the growth in buyers requesting showings through ShowingTime.com remains ahead of last years pace by more than 11% as rates remain at all-time low levels.
California REALTORS® saw business improve during short holiday week:
33% of California REALTORS® surveyed over the weekend reported holding a listing appointment last week despite the short holiday week. That was steady from the week before and continues the consistent improvement from 27% in late May. 26% of members listed a property last week—up from 23% the previous week and at its second highest level since May. 32% entered escrow on a transaction last week—a 4th consecutive weekly increase. Finally, 26% of respondents closed a transaction last week—the highest percentage since we began asking this question in mid-May.
Discounted home sales decline for second consecutive week:
Last week, 54.2% of closed sales were below their original listing price on the MLS. That is down from 55.1% the previous week and marks the second consecutive decline showing that low rates, strong buyer demand, and a lack of available inventory has prevented significant discounting or price impacts to California’s housing market in the wake of the pandemic.
Many remain on unemployment despite recent improvement:
Although labor markets continue to make progress nationwide and in California, many workers continue to face difficulties. Between May and June, the economy added back 7.5 million of the 20.8 million jobs lost in April, but that still leaves U.S. payrolls roughly 13 million jobs shy of the pre-recession peak. Thus, even as things continue to improve, there is still a lot of healing left to be done.
Lack of supply limits momentum of recovery:
In addition to ongoing economic fallout associated with job loss, California’s housing market also has to contend with tighter inventory—particularly as demand and sales have grown in recent weeks. The number of new listings being added to the MLS each week has been declining for the past month, which will limit the momentum of the current rebound. Buyers who are still employed are attracted to the market by historically low rates, but a lack of available supply will mean fewer get into homes than would like to.
Buying season appears to be winding down “on time”:
One question about the effects of COVID-19 was whether it would extend the buying season due to pent-up demand accumulating as families and individuals sat home under shelter-in-place orders. However, data on both mortgage applications and requests for home showings, while remaining elevated compared with last year, does appear to be showing the typical slowing that is observed in July. Many of the homes that will close between now and the theoretical beginning of the school year are the result of transactions that have gone pending already or will go pending very shortly, and that seems to be consistent in 202 as well.
Recent rise in COVID cases threatens recent progress:
The big wild card for the economy and the housing market is the recent surge in new COVID cases. Like many other states, the number of new infections has increased as the economy has reopened gradually over the past month. This increases the uncertainty about how much momentum the nascent recovery will be able to maintain and whether businesses will be able to remain open and the recovery will be able to continue, or whether we see economic activity drop off under another round of more stringent restrictions.
There continues to be many positive signs in the economic data, whether it pertains to the labor markets, consumer confidence and spending, REALTOR® sentiments in California, signs of buyer demand, of the housing market data itself. However, the economy still had a lot of healing left to do even before this recent rise in new infections. For the past few months, we have said that a second wave of the virus would likely result in a slower recovery period and greater impacts to the economy and housing market so we will be monitoring this closely and making any necessary adjustments to our forecast so that we can share them with you. We’ve made tremendous progress so far, but we’ve still got a long road ahead.
Lifestyle, Nevada County Schools, Real Estate
Nevada County Schools Rank High
The high quality of schools in Nevada County, and diversity of selection especially in Elementary Education, of is well known. Below we detail key grades given to our local schools in Nevada City, Grass Valley, Penn Valley, and surrounding communities as ranked by www.niche.com.
Elementary Schools in Nevada City, Grass Valley & Penn Valley.
Clear Creek Elementary School, Public, Grass Valley – K-8 Overall Grade A, 149 students, 19:1 Student/Teacher ratio.
Nevada City Charter School, Public Charter, Nevada City – K-8 Overall Grade B+, 55 students, 21:1 Student/Teacher ratio.
Alta Sierra Elementary School, Public, Grass Valley – K-5 Overall Grade B+, 289 students, 21:1 StudentTeacher ratio.
Cottage Hill Elementary School, Public, Grass Valley – K-5 Overall Grade B+, 474 students, 22:1 Student/Teacher ratio.
Deer Creek Elementary School, Public, Nevada City – K-4 Overall Grade B, 410 students, 21:1 Student/Teacher ratio.
Yuba River Charter School, Public Charter, Nevada City – K-8 Overall Grade B, 292 schools, 24:1 Student/Teacher ratio.
Ready Springs Elementary School, Public, Penn Valley – K-8 Overall Grade B, 212 students, 24:1 Student/Teacher ratio.
Grass Valley Charter School, Grass Valley, Public – K-8 Overall Grade B, 511 Students, 23:1 Student/Teacher ratio.
Nevada City School Of the Arts, Public, Nevada City – K-8 Overall Grade B, 390 students, 23:1 Student/Teacher ratio.
Bell Hill Academy, Public, Grass Valley – K-4 Overall Grade B, 201 students, 22:1 Student/Teacher ratio.
Sierra Montessori Academy, Public, Grass Valley, K-8 Overall Grade B, 100 students, 16:1 Student/Teacher ratio.
Chicago Park Elementary School, Public, Grass Valley, K-8, Overall Grade B, 121 students, 22:1 Student/Teacher ratio.
Twin Ridges Home Study Charter School, Public Charter, K-8,Nevada City, Overall Grade B, 118 students, 26:1 Student/Teacher ratio.
Forest Charter School, Public Charter, Nevada City, K-12, Overall Grade B-, 720 students, 19:1 students, 19:1 Student/Teacher ratio.
Margaret G. Scotten Elementary School, Grass VAlley, Public, K-4, Overall Grade C+, 500 students, 22:1 Student/Teacher ratio.
Union Hill Elementary School, Grass Valley, Public, K-6, Overall Grade C+, 486 students, 26:1 Studnent/Teacher ratio.
Chicago Park Elementary School, Public, Grass Valley, K-8, Overall Grade C, 52 students, 22:1 Student/Teacher ratio.
Grizzly Hill, Nevada City, Public, K-8 Overall Grade C, 91 students, 22:1 Student/Teacher ratio.
Union Hill Home Charter School, Grass Valley, K-8 Overall Grade B, 16 students, 7:1 Student/Teacher ratio.
Williams Ranch Elementary School, Public, Penn Valley, K-3 Overall Grade B, 218 students, 22:1 Student Teacher ratio.
High Schools
Nevada Union High School, Public, Grass Valley, 9-12 Overall Grade B-.
William & Marian Ghiddotti High School, Grass Valley, Public Alternative, Overall Grade A+. Ghiddotti High is a college prep high school component of Nevada Union High, considered by many to be one of the best High Schools in the state of California.
Bear River High School, Public, Grass Valley Overall Grade B.
Niche.com has a wealth of information. Visit the site to view expanded grading categories and methodology the site uses to evaluate schools and assign grades. What is cool about this site is that it connects with Realtor.com to allow you to view houses in each vicinity and to gather neighborhood data.
Johnson & Geare’s Sierra Lifestyle team has personal experience with many of the local schools here and is happy to share experience and impressions with you. Please contact us with any questions.
Important News and Info, Real Estate
Low Inventory Plagues The Market
Inventory levels of existing homes continue to act as brakes on the Real Estate Market. If you are a buyer looking for a home, you are likely abundantly aware of that reality. You are not alone. Shortages of existing homes are common in most markets in the United States. In fact, in 4 of the past 5 months, sales of existing homes dropped. August saw increases in the Northeast and Midwest, offset by decreases in the south and West.
Existing home sales fell in August 1.7% to 5.35 million nationwide, the lowest levels in nearly a year. Demand among buyers remains high, fueled by employment gains, rising incomes and low mortgage rates…great news for those selling their house! Low inventories put upward pressure on prices. Hurricane Harvey in Houston, and Irma in Florida will contribute to lower levels of deals closed in those area this year and likely into 2018.
Key Stats
Total housing inventory at the end of August dropped 2.1% to 1.88 million existing homes available for sale nationwide, 6.5% lower than a year ago. All-cash transactions were 20% of the market with 15% of those individual investors.
What’s Up In Nevada County Real Estate?
Third quarter Nevada County Real Estate sales are up 11.4%. Number of homes for sale average 420 per month. Number of homes sold average 135 per month. Average price per square foot in Nevada County is about $220 per square foot. Average days on market has been running at about 40 days. Average sales prices are in the mid $400,000s. Average prices FOR SALE are in the mid $600,000s.
Nevada County Real Estate And You
What does this mean for Sellers and Buyers in Nevada City, Grass Valley, Penn Valley, Alta Sierra and South County? If you are a seller with a well-priced home in good condition, you are likely to be doing a happy dance within two months of listing your property. If you are a buyer, do your due diligence and be ready to pull the trigger on an offer when that just-right house hits the market. Have a professional, well educated real-estate agent on your side to negotiate and advocate for your interests. And… welcome to the best places in the world to live…in Nevada City, Grass Valley, Alta Sierra, Penn Valley and surrounding communities.
Source: Realtor Magazine & Nevada County Association Of Realtors Statistics
Real Estate
Nevada County real estate sales are still hot, even in the “off” season!
Autumn in Nevada County is pretty spectacular. From the gorgeous fall colors, to the many fun events, we have an awful lot to offer! Buyers know this, and are still looking to purchase homes during this time of year.
There are some things you can do to spice up your home for Fall showings. Who doesn’t like a warm and inviting home on a chilly day? Set your thermostat to a comfortable temperature. Coming into a warm home on a blustery day feels SO good. Your potential buyers will equate this to your home being comforting and welcoming. A nice and inviting food scent such as fresh cookies or apple pie can create a nice homey environment too. You don’t need to bake, there are plenty of “warmer” products on the market to help out with this.
Curb appeal is so important during Fall because the trees are shedding their leaves. Those glorious colors end up on our lawns and can make an exterior appear messy and unkempt. Be sure to bag up those leaves and tidy them away. Buyers don’t want a lot of maintenance and piles of leaves on the front lawn reminds them of having to rake them up each year.
Make sure that all windows and doors have weather stripping or are tightly fit. Cold breezes blowing through the home during a showing can be a deal killer! Drafty homes mean high heating and cooling bills. Make sure everything is nice and sealed up so this doesn’t happen to you.
With the Fall season, we see shorter days, and less light. Make sure all of your lights are turned on and at their highest setting. This includes side table lamps. Most buyers want a light and bright home. Make sure you show them that even in the darker seasons, your home is light, bright and inviting!
Early frost or snow? Be sure to have the driveway and front stoop cleared for easy access. The last thing you want to happen is to have someone slip and fall while viewing your home! Also be sure to have a nice mat for people to wipe their feet on. You want to keep those carpets and floors to stay sparkling so make it as easy as possible and offer a nice space for cleaning off shoes.
Try to look around your home with an eye for clutter. Holiday ornaments, personal photos and items, and any additional clutter should be tidied away. You want potential buyers to focus on how their possessions can fit in your home, and not be distracted by yours. This is very, very important. Give them an “open canvas” so they can see themselves and their friends and family in the space.
All of this will go a long way towards helping you sell your home in the Fall and Winter months. If you are looking to list your homes in Alta Sierra, or the surrounding communities, please contact us. We would love to help you achieve your real estate goals!
