Roseville’s market continued to show good demand for homes in June, but like everywhere else, the upsurge in demand has not yet caused prices to rise.  178 homes sold in Roseville in June, up 29.9% from last June’s 137 homes.  With an average absorption rate of 136 homes per month over the last six months, Roseville’s inventory is down to some 5.3 months, so the strong recent sales are all to the good.

In terms of prices, the average home sold for $333,925 in June, down 22.3% from last year’s average of $429,647.  Unit volume is down about the same amount, 22.2%, from $213.08 per square foot in June of 2007 to $165.81 per square foot in June of 2008.

44.9% of the homes that sold in Roseville in June were bank owned, and 11.2% were short sales.  At 56.1% total, distressed sales are slightly more common in Roseville than in Placer County as a whole.

The tables below give more detailed information about the market in Roseville in June.

Unit Volume Data

Price Data

Inventory (Based on 12 months of prior sales)

Inventory (Based on 6 months of prior sales)

Everybody wants to save money and get the best bargain they can on a home.  At the same time, everybody with a newspaper or a broadband connection knows that we’re in something called a buyer’s market. 

Many buyers feel on some level that they’re not going to get a good buy unless they actively create one by serious, hard-fought negotiations.  Unlike Realtors®, who have the luxury (or the curse) of looking at MLS data day in and day out, buyers don’t always understand that at any given time, the homes offered for sale in the MLS for any given set of criteria the buyer may have will cover a whole range of prices. 

Find an Inexpensive Home and Buy It

The easiest and most sure fire method we’ve found for getting a good deal on a home is to simply find a good deal and buy it. 

This sounds obvious, but in fact, most of the buyers we work with have an idea that they need to negotiate or they’re not going to get a good deal. 

Sometimes, though, depending on the market, the opposite may be true!

Let’s take three categories of homes. In all the numbers that follow, we’ll use homes that sold in Placer County in June, 2008:

• Category 1:  Buyers negotiated an average of 4.3% off of the list price.
• Category 2:  Buyers negotiated an average of 3.6% off of the list price.
• Category 3:  Buyers negotiated an average of only 0.5% off of list price (1/2 of one percent).

OK, so who got the best deal?  Did you say the buyer who negotiated 4.3% off of list?

Let’s look at these same categories again, now with some different information:

• Category 1:  Buyers paid (selling price) an average of $178.20 per square foot for their home.
• Category 2:  Buyers paid (selling price) an average of $197.91 per square foot for their home.
• Category 3:  Buyers paid (selling price) an average of $150.78 per square foot for their home.

That’s a different story, isn’t it?

Why is it that the people who got the best selling price were the ones who "negotiated" the least?  It’s simple:  because the discount was already built in to the listing price.  The buyer needed to step up and offer something close to (or often, over) full price to get the home, because it was priced well enough that other people were competing on it.

Category 3 properties are bank owned foreclosures.  Category 2 properties are non-distressed sales.  Category 1 properties are short sales.

What Matters?

What’s the definition of a real estate bargain?  To me, a bargain is a home that has all the features you want, and the best price compared to other homes that sold at around the same time.  Indeed using "homes that sold at around the same time" is exactly the comparative market method that appraisers use to determine value as well.

One thing appraisers don’t look at is the listing price of your home, or anyone else’s for that matter.  List price is doesn’t matter.  How much or whether you negotiated doesn’t matter.  What matters is the sale price compared to the sale price of other, similar homes.

Which Of The Following Is the Best Bargain?

The following homes are in the same neighborhood, sold around the same time, and have similar features.  Which one is the bargain?

A) Home listed for $400,000.  Buyer wrote lowball offer for $325,000.  Seller came down to $350,000.  Sold for $360,000.

B) Home listed for $350,000.  Buyer offered $340,000.  Sold for $340,000.

C) Home listed for $280,000.  With fierce competition, winning buyer offered $320,000.  Sold for $320,000.

"I’m Not Going To Get In a Bidding War, and I’m Not Going To Pay Full Price"

Buyers tell me all the time that they don’t want to get in bidding wars, and they’re not going to pay full price.  I understand the psychology of both these claims.  But to my way of thinking, bidding wars don’t matter.  Full price doesn’t matter.  What matters is the sale price compared to the sale price of other, similar homes.

Let’s review.  Buyer A is a shrewd negotiator.  Price Line’s William Shatner would be proud.   He paid too much.  Buyer B is a fair negotiator, who knocked ten thousand off the price.  He paid the market price.  Buyer C found a bargain, recognized it as such, and bought it.  He got the best bargain, and he was the "worst" negotiator.

Do you have comps in the neighborhood you’re shopping in?  You should.  Your Realtor® should get them for you.  Are you looking at enough homes to recognize a bargain when you see one?  You should.  Your Realtor® should be showing them to you.

In June of 2008, the combined total sales for short sales and bank owned foreclosures (REOs) in Placer County accounted for 51% of the sold homes, while non-distressed sales made up 49% of sales.  Thus, Placer County fared better than Sacramento County, where distressed sales made up 75% of all sales in June, but not as good as El Dorado County, where distressed sales accounted for 43% of all sales.

This June the average home sold in Placer County for $178.44 per square foot, down 22.9% from last June’s average of $231.37.  The average selling price for Placer County residential real estate was $385,850, down 21.9% from last June’s average selling price of $493,937.

There are currently 8.1 months of inventory in Placer County, which is slightly higher than Sacramento County’s numbers but still much better than the 12.7 months of inventory in El Dorado County.

Overall, the average home that sold in Placer County sold for 97.25% of the list price.  Bank owned properties sold closest to their asking price, with the average bank owned property selling for $310,571 in June, which is 99.49% of the average list price of $312,161.

Unlike other areas in Placer County and Sacramento County, Auburn’s real estate market has not showed a recent "bump" in sales numbers, despite the fact that prices have fallen fairly substantially in Auburn over the last year. 

In May of 2008, thirty-three homes sold in Auburn, down 5.7% from last May’s volume of thirty-five units.  Seventeen of these thirty-three units (just over half) were non-distressed sales, while 39.4% were foreclosures and 9.1% were short sales.  The average sale price in May was $422,464, down 18.7% from last May’s average of $519,611.  Sold price per square foot was down 29.1% during the same period, from $267.46 in May of 2007 to $189.75 in May of 2008.

Auburn can be characterized as a sluggish buyer’s market, with 12.3 months of inventory overall.

The real estate market in Rocklin is fairly typical of Placer County as a whole.  Foreclosure sales are up more than 300% over 2007.  Last May, only 15.1% of all sales were either short sales or foreclosures, while this year that number has climbed to 48%.  Short sales are still doing poorly at only 5.5% of sales, with bank owned properties making up the other 42.5%. 

This May, Rocklin’s average home fetched $389,545, down 16.8% from last year’s average of $468,507.  Sold price per square foot fell 22.4%, from $216.66 in May of 2007 to $168.17 in May of 2008.

Sales were strong in May at 73 units, beating the twelve month average of 54 units per month.  There are 6.6 months of unsold inventory in Rocklin.

Pasted below is the real estate sales data for Rocklin May, 2008.

Unit Volume Data

Price Data

Inventory

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Recently I published market data for the three Roseville zip codes separately.  This report covers Roseville as a whole.

The drop in prices in Roseville from May to May was about characteristic of Placer County as a whole.  The average home sold for $179.23 in May, down 24.5% from last May’s average of $228.05.    Average selling price declined 17.9%, from $418,710 in May of 2007 to $355,908 in May of 2008.

Though prices fell at about the same rate of Placer County as a whole, some other indicators fare better in Roseville than in the rest of the county.  Inventory is 6.1 months in Roseville versus 8.3 months in the county as a whole.  Likewise, unit volume increased more in May in Roseville.  Unit sales in Roseville are up 33.6%, from 128 units in May of 2007 to 171 units in May of 2008.

John’s Law is a scientific law — a hypothesis about the way the world works.

It has a comfortably mathematical looking formulation:

G = 1 / R²

Let’s break it down. G is the global importance of a given issue to consumers, the general public, the world at large.

R is the number of real estate bloggers writing about it during a given week.

Stated in words, the overall importance of an issue is inversely proportional to the square of the number of real estate bloggers talking about it in a given week.

Some hubbub over ePerks has gotten everyone up in arms this week. I estimate that there are 20 real estate bloggers talking about it, at least. So I judge the importance of this issue to be 1 / 20 squared, or .0025. We probably had a hundred bloggers talking about Greg Swann bagging on some guy’s video, so the importance of that issue was about .0001.

Counting the actual bloggers is left as an exercise to the reader.

To date I’m the only one writing about John’s law, so its importance is 1 / (1 squared), which of course is one.

I hope no one will write about this law except me.

I would hate to see it trivialized.

Here is a market report for East Roseville. Real Estate prices are higher in East Roseville than in Central and West Roseville. Moreover, prices have fallen less dramatically. Inventory is higher than in Central and West Roseville, at 7.4 months.

Unit Volume Data

Price Data

Inventory

It’s a kitten!

Photo courtesy of FreePhoto.com.

Following up on our report for West Roseville, here is our report for Central Roseville. Prices have dropped slightly more than in West Roseville, and (as you might expect), unit volume has increased slightly more as a result. On the other hand, Central Roseville has slightly more inventory to work through, but overall the differences between the two markets are quite small.

Unit Volume Data

Price Data

Inventory