Spotlight on Nevada County Real Estate - Year End 2008

January 20, 2009 – In this edition, we'll look at market statistics for Q4-2008 and compare them to year-ago figures for Q4-2007 and to last quarter. We have defined the Western Nevada County market as single family homes west of the Sierra crest, and excluding properties with addresses in Truckee and Auburn.

In our Western Nevada County market, the median sales price for an existing single family home in Q4 2008 was $317,500, a 20% decline over the Q4 2007 figure of $399,000 and a 6.6% decline over the Q3 2008 figure of $340,000. The unit sales figures for the most recent quarter are 137 versus 161 units sold in the year ago period, and 181 units sold last quarter. The shift in sales activity from the upper price ranges to the lower that we saw in Q1-2008 has accelerated rapidly through Q4-2008, with 21% of all transactions below $250K and 87% below $500K, a level not seen since Q1-2004.

This dramatic shift in sales activity from the mid/upper to the lower price range is largely responsible for the decrease in calculated median prices, rather than a uniform drop in prices across all sectors. As is often the case when a market nears a bottom and buyers recognize opportunity and begin to act, the activity begins in the lower price ranges and moves up from there. We are seeing an increase in distressed sales by homeowners (Short Sales) and by Banks (REO Sales), which also contributes to the shift to lower prices.

The average rate on a 30-year fixed-rate mortgage fell from 6.29% on October 20 2008 to 5.17% today, according to BankRate.com, while the 15-year fixed rate is at 4.91%, down from 5.98% on October 20. A year ago the 30-year rate was 6.25%. The current rates, which are all-time lows, should have a stimulative effect on home purchases in the near term. With the ongoing stabilization of the mortgage market due to aggressive actions by global financial regulators, the supply of funds for new mortgages is expected to increase going forward.

Nevada County does not have the issues of excess inventory of new homes that challenges many local markets in the US, and our total inventory has dropped from over 1000 units a year ago to approximately 692 today, a figure that is up slightly from 3 months ago when it was at 685. Approximately 12% of the current active listings are Short Sales and another 10% are REO properties that have recently been foreclosed upon. Although up from approximately 6.3% and 4.4% respectively in Q3 2008, these are low figures relative to some areas of California, where foreclosure rates are 30% or more. During Q4 2008, 8 Short Sale and 43 REO transactions closed escrow, reflecting the relative difficulty of negotiating shorts sales with the banks. These figures correlate well with the observed shift in sales activity to the lowest price ranges.

With historically low interest rates, reasonable inventory, and prices that appear to be stabilizing, our local prospects are for a continued buyers market in Q4 2008 and some unusually good bargains for qualified home buyers.  

Paul Sieving is a Realtor® with CENTURY 21 Gold Dust Realty in Grass Valley, a Director and member of the Finance Committee of NCAOR and a former Board President (2004) of the Grass Valley Chamber of Commerce. Comments, questions and thoughts are welcome at Paul@PaulSieving.com or (530)274-0906