State of the Chico, Ca Real Estate Market

What a wild couple of weeks. The last couple of storms have shown us how powerful Mother Nature can be. Hopefully, you and your family were safe and warm.

In preparing for the State of Chico’s Real Estate Market 2008 Newsletter, I continually found one article after another from major news sources declaring gloom and doom for the real estate market as a whole. However, the Chico Real Estate numbers did not reflex what I was researching. Real Estate transactions were on par with last year’s numbers. The time on the market had increased to around 81 days but the houses were still selling. Why is there a disconnect from Chico’s market and the rest of the United States? The most concise answer is Chico did not have the same level of build out as the rest of the United States. Therefore Chico’s real estate is not falling like other areas, such as Sacramento.

I was going present statistics and graphs to prove my point. Instead, the Chico News and Review did an excellent job of summarizing exactly what I have been saying and thinking. Chico has its own Real Estate Economy exclusive the rest of the nation. Below are some excepts from their January 24th addition ( For the full text see http://www.newsreview.com/chico/Content?oid=615984)

To John Mitchell and other speakers at the Tri-Counties Economic Forecast Conference, held Jan. 17 at Chico State University, the housing market in California is going to hell in a handbasket, the victim of thousands of foreclosures, crazy loans and too many homes on the market.

What they didn’t say, however, is that Chico is an oasis in this sea of doom and gloom. Yes, housing values have gone down here, but not greatly. Fewer houses were sold in 2007 than in 2005, but not by many. Fewer building permits were pulled in 2007 than in 2006, but not a whole lot fewer. And the number of houses currently on the market, around 300, is about right for sellers and buyers alike.
As Debbie Brodie, president of the Chico Association of Realtors, put it during a phone interview, “Chico is not Sacramento. We’re not Glenn County. We’re not even Oroville.”

… Brodie’s point was that, when it comes to housing, California has multiple microclimates, and what’s happening in one may not be happening in another.

The author backs up these statements with some statistics about Chico’s house market.

Take a look at the figures. According to data provided by the Chico Association of Realtors, 996 homes were sold in Chico in 2005, 904 in 2006, and 873 in 2007. That’s a decline of just 12 percent in two years. Statewide, the figure is 50 percent.

In addition, the median sale price actually went up slightly between 2005 and 2006, from $335,000 to $336,000. It came down in 2007, to $325,000, a drop of just 3 percent. The decrease statewide: 11.9 percent in just 12 months.
The biggest change in Chico is in how long it took the average house to sell. In 2005, it stayed on the market 52 days; in 2006, 63 days; and in 2007, 81 days.
“We’ve kept an incredibly strong market,” Brodie said. “If a house is priced right, it will sell.”

And the construction industry has stayed relatively strong, as well. According to city of Chico figures, residential construction levels have declined somewhat in the past two years, from 605 units worth $83 million in 2005 to 468 units worth $59 million in 2007. At the same time, commercial and other non-residential construction has increased, from $27 million in 2005 to $41 million last year.

Jason Bougie, director of the local chapter of the Building Industry Association, said that one of the strengths of Chico’s building industry is that it’s “99 percent owned locally,” which means it has greater flexibility when it comes to responding to changes in the housing market. Builders are waiting for conditions to improve, he said, and are pulling fewer permits as a result.

Recently interest rates have floated around 5.0%, a historically low rate. Combine this with housing prices that are reflecting a more reasonable value and you have a unique time to buy. Several noted Finacial Professional (Jim Crammer and Susie Orman) have gone on the record to say that 2008 will be one of the best years to buy real estate in the last 5 year.

Have any questions or comments? Send me an email and tell me what you think. As always, I am here to help. Please do not hesitate to call. If you know of anyone who is buying or selling a house, forward this email on to them. It would be my pleasure to provide them with excellent service.

Warmest Regards,

Matt

-=-=-=-=-=-=-=-=-=-
Matthew Herman
Keller Williams Realty
530-518-0974 (Office)
530-230-2708 (Fax)
530-518-0974 (Cell)

matt@MatthewHerman.com

Don’t forget to check out all of my listings at www.matthewherman.com or for neighborhood information go to www.chiconeighborhoods.com.