Davis CA Real Estate Blog

The first question local friends and neighbors ask when the subject of real estate comes up is "how much are prices down"?, which is a simple question that can lead to complicated answers.

The answer could be different depending on the type of home you are talking about.

Conventional wisdom says that the high end homes have taken a bigger hit because the volume of buyers at that level has fallen off.  Conventional wisdom also says that lower priced homes have held up better because there is still demand at the low end (more so now with first time buyer tax incentives).

There was a headline in the New York Times recently saying that Phoenix is the first major real estate market to make a 50% drop from the market high prices of 2005 to current market values.

With that in mind, I thought I would review how prices have behaved in the Davis, California real estate market over a similar period to see how we compare.

I took the average sale price per square foot for home in the third quarter of 2005, which seems to be about the top of the market here.

The figures then are broken out according to the size of the home, from small 950 square feet up to home in the 3,000 square feet and above category. The data includes only single family homes, no condos.

Then we look at the same information for homes sold Year to Date through April 20th, 2009, to see how far home prices have fallen, when expressed in price per square foot.

The results show two interesting facts;

1) Davis has been spared the steep price declines that other markets have suffered. The biggest drop in home prices from 2005 to 2009 is just 21% for the smallest homes, while homes of most other sizes dropped in price in the 14% to 19% range.  This is not bad for a a 3 1/2 year price change.  There are many factors that contribute to the resilience of real estate prices in Davis, the lack of new home inventory being one of them, as Davis is a "slow growth" town without the sprawl development of other areas (... like Phoenix). I have written previous blog posts about the factors that make Davis a unique real estate market.

2) There is not a huge disparity between the price drop of large homes vs. the price drop of smaller homes. The common wisdom that higher end home prices were suffering more are not born out by these numbers.

There is one anomaly in the numbers. At the 2,200 to 2,500 square foot range the data shows that prices have dropped just 6%. But only one home  showed up in the 2009 data, so that price per square foot number is not necessarily an accurate representation.

Having seen this information, I feel relieved, as I am a Davis homeowner. It also makes me feel for those folks in Phoenix, Las Vegas, and Florida whose markets have not held up as well.

Davis is a vibrant community and a great place to live. As proof, I offer my previous blog about Davis being one of the Five Friendliest Cities in the US and also my Top Ten Reasons to Live in Davis.  And now we have reason #11...Davis has a relatively strong real estate market, when compared to other California cities and many markets nationwide.

The peak selling season has come to an end in Davis. Spring and Summer are the most active months for home sales in Davis for two primary reasons:

1. As a University town, most things in Davis tend to revolve around the school year calendar.  Many times new Professors, employees and staff relocate to town over the Summer. This brings an influx of buyers in the Spring looking to buy homes and close the sale over the Summer so they can move in and get settled before the school year starts.
2. As Students vacate rental housing in June, landlords find it a good time to sell rental homes over the summer while they are empty.

So sales of homes in October hit the lowest point since February, in regards to the number of units sold. Surely the recent problems with the financial "meltdown" also contributed to the slowdown in sales.

Here's the details on October home sales in Davis vs. the same month in 2007:

 Sales were flat in October vs. a year ago, but the rest of the figures a not so good.  The median price dropped 8% from a year ago. The price per square foot is down from $323 a year ago to just $304 today. The lowering of prices is the only reason the units sold were the same as a year ago. And sellers are getting 96% of their asking price vs. 97.5% of asking price last year.  Sellers have had to be more flexible in negotiating, ask lower prices, and still it is taking longer to sell a house now than a year ago.

This is the classic buyers market. One caveat though, with just 19 homes sold, the median price number may be skewed with such a small sampling. It could be that a few more low end homes were sold in October than normal, thus bringing down the median price. Look for more data over time that includes a higher sample to get a more accurate feel for the market.

In Woodland, on the other hand, you see a much more dynamic market. Prices have fallen much more than in Davis, and Woodland has a large number of Bank-Owned and pre-foreclosure homes. Take a look at the data for Woodland in October:

The number of homes sold in Woodland is up 138% from a year ago. While this may look good on the surface, the rest of the numbers tell the whole story.

The median home price has fallen from $355,000 to just $205,000, a whopping 42% in one year. As the number of homes on the market ballooned earlier in the year due to mortgage issues, sellers were cutting prices to get the home sold.

While it took nearly 6 months to sell a home a year ago, the time has been cut to just over 2 months. With prices falling, some sellers wanted to get their homes sold before the market slid any more and were more aggressive with their asking price. The good news is that aggressive pricing has brought in the buyers and they are paying 98% of the asking price vs. 94% a year ago.

The dynamics of the real estate markets in Davis and Woodland have many more reasons for their fluctuations than I have listed here. I'm just providing some basic highlights for those of you that follow the real estate trends in the area.

If you have any thoughts about other information you would like to see on a regular basis, just let me know and I will include it in my next post.

Let's see what November brings........

A recent blog post by Paul Shigley of the California Planning & Development Report lists Davis as #1 among true college towns in California. "Davis is the prototypical college town. Downtown Davis, located an easy bike ride from campus, is a lively place..." says the report.

DOWNTOWN DAVIS

"The open and inviting campus offers plenty for non-students, including recreation, and cultural and sporting events. Plus, practically everyone gets around via bicycle or foot."

Other towns mentioned in the report include Chico, San Luis Obispo, and Berkeley.

I have to agree with Mr. Shigley that Davis is a special place to live, a small town feel with many big city amenities.

For more details on what makes Davis unique, check out The Top 10 Reasons to Live in Davis.

People that buy homes in Davis, do so for a variety of reasons. The most frequent buyers include:

1. People relocating to Davis to work at the University or in area Bio, Ag, or Hi Tech businesses.
2. Parents of students buying homes/condos as housing for their child and/or investment.
   
3. Investors buying rental homes for students, grad students, or University staff.
4. People from throughout the region that are attracted to Davis for it's small town feel, environmental awareness, and exciting opportunites for culture and education. 

For more details on the housing market, you'll find Davis Real Estate to be a great information source.

It's Fall now. The leaves are turning colors and the students have returned to the University of California, Davis. The streets are now full of bikes after the usual summer lull.

Davis's love of bicycles goes back to the early days of the town, and the City of Davis logo includes a prominent, old fashioned "high-wheeler" bicycle.    

A large high-wheeler bike sculpture sits prominently in front of Davis City Hall.

Davis has always been a town with more bikes than cars. With over 100 miles of bike lanes and bike paths integrated into the towns transportation infrastructure, automobile drivers have to remain on the lookout for new students trying to negotiate the bike-ways as they learn their way around town.

What's the difference between a "bike path" and a "bike lane"?

You can find the answer on the Bicycle Friendly Davis page of my main website. You'll also find pictures of bike paths and lanes around town, and a map of the Davis Bike Loop, a popular 12 mile loop that connects many of the neighborhoods in town. The Bike Loop also allows you to see many of the points of interest and access shopping, libraries, and parks without riding on city street or sharing the road with cars.

With the price of gas at all time highs this year, more and more people are commuting to work on bikes also.

If you like to ride your bike, for pleasure, exercise, or to school or work, Davis is the place for you.

Bicycle Riders of the World Unite!!

...and move to Davis.

In many of my past blog posts, I have mentioned that the Davis market is unique and not always subject to the same market forces as other towns in Yolo County or the greater Sacramento region.

Below are some statistics that prove my point. Below is a study of Average Sale Prices. Two snapshots were taken and compared.  Figures were pulled from the Summer of 2005 (almost the top of the market?) and the Summer of 2008 (June, July, and August in both years).  The average home sales price for these periods was broken out by Zip Code to see how the decline is home prices effected different areas.

You will notice that Davis fared better than any other area of Yolo County and any other area of the Sacramento Region. If you look back through my previouos posts you will find detailed information about this market that explainis why Davis is not subject to the same downward pressures of other local real estate markets.

This is one of the reasons that Davis, is one the best places to invest your real estate dollar in Northern California.

2008 has been a year where each month more homes were sold in Davis than the previous month. Then we seemed to top-out in June with 65 single family home sales.

After dropping to just 36 homes sold in July, with the Average price per square foot falling below $300, sales of single family homes in Davis, California rebounded slightly in August.

The accompanying chart tells the story:

As you can see, the number of homes sold steadily increased each month to a peak of 65 in June, then fell off to 36 in July. It has now rebounded to 46 in August.  Meanwhile, the average price per square foot has remained in the $300 to $335 range all year.

Compared to other markets around the country, Davis has not seen the drastic decline in home values as other markets (see my previous post below). There is a certain seasonal nature to home sales in the Davis market, due to the University summer break. It presents a natural time for owners of homes used as student rentals to sell while the home is not occupied.

There are currently 112 single family homes and 20 condos listed in the MLS for Davis.

Average days on the market remains at 57, just about where it was a year ago

- Vicki Walker

The PMI Mortgage Insurance Co. recently released its Summer 2008 U.S. Market Risk Index. It ranks 50 cities around the country according to how likely they are to continue to see a decline in the price of housing over the next two years. You can read a summary of the report and the complete list by clicking above.

Real estate investors may find the list helpful by avoiding the markets with the highest risk of price declines and focusing on the bottom of the list, which shows the cities least likely to see home prices fall further.

As you might expect, the areas at the top of the list, with the highest risk, are all in California, Florida, Arizona, and Nevada. These are markets which experienced explosive growth during the last 10 years, with home prices showing huge appreciation, and thus have the farthest to fall.

Here are the top 12 markets and their corresponding risk percentage. NOTE - the percentage number indicates the likelihood of price declines, it has nothing to do with the amount of the decline.

Notice that our very own Sacramento ranks as #10 most risky markets. In regards to the Davis real estate market, as I have talked about in many previous posts, Davis may be just 10 miles from Sacramento but as a real estate market it is worlds away. The dynamics of the Davis real estate market are unique and largely unaffected by Sacramento home prices.

Looking at the other side of the coin, the "safest" markets, with the least likelihood of price declines over the next two years, would be those at the bottom of the list. If you are an investor interested in getting a good rental home with little chance it will go down in value, you might find it among these cities. As you might expect, most of these cities are in the Midwest and Texas.

Everyone is trying to do the impossible, that is, "time" the weakness in home prices so as to buy at the exact bottom of the market. It's a difficult if not impossible task. Perhaps the real estate investor should focus on opportunities in the less risky markets until things become more steady.

Are you a real estate investor? What markets are looking like good buys to you right now?

Last week there was a good article posted at TheStreet.com entitlted "How To Pick the Best Real Estate Agent for You".  This article brings  up some good points and is well worth the read, so I wanted to share it with my readers.

In addition to the main points of the article, most of which I agree with, I would like to add a few more things to look for when picking a Davis real estate agent.

• First, you want a Realtor that is successful, and has enough experience to know what they are doing, but not so successful that you become just another one of dozens of clients they are working with. You want your home to be the Realtors top priority, after all this is your home you are buying (or selling). This is a big deal, maybe the biggest. "Top Producer" should not mean "Too Busy To Give You My Full Attention".

• Make sure the Realtor you choose has an internet presence; 80% of home buyers use the internet as part of the home search. So, if you are a buyer, a web savvy agent will be able to use all the latest technologies to help you find the right house for you. They will also have a website that includes an easy to use home search function that lets you and the Realtor keep up to date with new home listings.

If you are selling your home, a Realtor with an internet presence is even more important. A Realtors job is to expose your home to as many potential buyers as possible. They should feature your home on their website so that visitors can quicly get the details and find pictures of your home.

In the 21st Century, a Realtor without a web presence just can't do that job. So before deciding on a Realtor to list your house, check out their website. Can you find it on Google and Yahoo easily? If you can't, how is a buyer going to?

• Ask Realtors you interview how their site ranks in the search engines and how many visitors their site gets each month. If they don't know the answers to these questions, how effective will they be marketing your home to people using the internet in their home search?

• Check with the Realtor, or their Broker, to get references from past clients. My Broker has customers fill out a "Satisfaction Survey" when each home is sold. Ask to see these.

• Communication between the Realtor and the client is the key to a smooth transaction. Ask your prospective Realtor how they would normally communicate with a client. How often? In what way? The answers you get will tell you if you and the Realtor have the same expectation.

Choosing a Realtor can be a challenge. But don't leave the purchase or sale of your home in the hands of someone you recently met at a cocktail party. Take the time to talk to, and find, the right Agent for you.

Do you have anything to add to the article linked to above? Any thoughts on what makes a good Realtor?

I'd love to hear your thoughts, just click on the comments section below and add your own.

-Vicki

According to the June real estate reports from the Sacramento Bee , Home prices in Sacramento and Yolo County have dropped by 27% to 30% from a year ago, and this price drop has spurred a buying frenzy which has shot homes sales volume up 30% to 60% over the June 2007 activity.

But the little town of Davis, just 12 miles west of Sacramento and sitting in the heart of Yolo County, is bucking this trend. For Davis, the median price has dropped just 6% from a year ago, and maybe because of that, the volume increase seen in other areas has not hit Davis, with sales for 2008 YTD actually down 33% from the same period in 2007.

There are some circumstances that might contribute to this anomaly, so let's take a moment to talk about them;

The rest of Yolo County (Woodland and West Sacramento) and Sacramento County have been hit harder by the foreclosure mess, while Davis has not had the volume of REO's as a percentage of total home sales.

West Sacramento and Sacramento County were prime areas for real estate speculation in the earlier part of this decade. Davis escaped much of this, largely due to the fact that the Davis real estate market has always had higher prices than surrounding areas.  The majority of the "Flippers", and "no-money-down" crowd concentrated their efforts in the less expensive suburbs and high growth areas.

Now, those markets are experiencing a higher volume of home sales because many of the sales are forced sales by people caught in the mortgage mess.  The need to sell now fuels the drop in prices these markets are seeing.  With less speculation in Davis, it resulted in less REO's and so Davis does not have the added volume of homes being sold people that have to "dump this house now". There is also a lower amount of REO homes in Davis compared to surrounding communities.

That is not to say that there was not any speculation in Davis real estate or questionable loans made. There were. It was just a much smaller percentage of the overall market.

So the volume of sales for the first half of 2008 has dropped by a third in Davis, while the rest of the area has had a burst of activity. The other areas have seen the bottom drop out of the home prices (Sacramento County median home price is at a 5 year low) while Davis home prices have held up better.

There seems to be a correlation, if you drop prices by 30%, it results in an increase in sales volume. Sounds like Econ 101, eh?

Check with me next month for more insights into the unique nature of the Davis real estate market.

I'd love to hear your thoughts on the Davis Real Estate market. Feel free to add your comment below.

- Vicki   

On Tomorrows "Today" show on NBC (Wednesday, May 28th), Davis, California will be featured as one of the five friendliest cities in the United Sates.  It was so named in a recent book by NBC contributor Barbara Cook entitled "Nextville: Amazing Places to Live the Rest of Your Life".

Davis has been known as a bicycle friendly town and has received national, and international attention for it's progressive housing developments. In the late 1970's and early 80's, First Lady Rosalynn Carter, Prince Charles and French President François Mitterrand visited the Village Homes development in west Davis. President Carter later mentioned the environmental strides of Davis in an Oval Office speech.

I review the other unique qualities about Davis in my list The Top Ten Reasons to Live in Davis. It looks like I might have to add #11 to my list....... "One of the Friendliest Cities in the US".