2010 Market

Analysis
Sacramento, Placer, El Dorado
and Yolo Counties
What will it be like in 2010
• Year of great Ambiguity

• 2.5 million new jobs expected this year,

but we have lost 7 million net jobs in the
last two years. If true it will do more to
turn around the Residential and
Commercial markets than any thing else

• Americans are saturated in debt and

nervous about job prospects

• Few economists expect a double-dip

recession
What Buyers value most

• Reputable and Fair agents

• Agents must be immediate and
responsive to buyer needs
• Guides to educate them to process
• Reports that demonstrate market
knowledge (TrendSend)
• Information to help buyer negotiate
(TrendSend and local knowledge)
• Simple and clear communication
 4 county 5 year
Supply and Demand
• 2.9 months
Aug ’05 supply
Peak Inventory
• bifurcated
Market

• Inventory
Pended Sales
stabilization
is over

Closed Sales
 4 county 5 year
Price per Square foot
• 131/sq ft

• 7%
131/sq ft increase
258/sq ft
Aug ‘05
• On the rise
123/sq ft since
February
total gain
51% decrease in values below
since August of 2005 300,000
 4 county 5 year
Avg. list vs. Avg. Sold
606,000 • 384,000
avg. List

384,000 • Avg. Sold

242,000
466,000
Aug ‘05 • 27,000
242,000 increase
215,000
in avg.
Sold in
last year
Option A.R.M.s
• Government
has
manipulated
market

• We still
need to deal
with it

• next two
years?
 4 county 4 county
Bank Owned Short sales
REO
Inventory
Growing Short Sales
Started
Aug ‘06 Aug ‘07

5 years

• 4 county REO 4 county short sales

inventory = 1,149 inventory = 1,778
19% of total inventory 29% of total inventory
 4 county Bank Owned
$0 to 300,000 $300k to 600k

Not enough ?
Inventory
For demand

84% of Foreclosures 15 % of Foreclosures

sold are under sold are between
$ 300,0000 300,000 to 600,000
 4 county Bank Owned
$600,000 and up

1% of Foreclosures sold are over

$600,000 this may double or triple
 Sacramento County
Defaults Bank Owned

• 6253 defaults, Sacramento 3342 REOs

500 shown 500 shown
 Placer County
Defaults Bank Owned

• 1507 defaults, Placer 682 REOs

500 shown 500 shown
 El Dorado County
Defaults Bank Owned
Cameron Park Cameron Park
El Dorado Hills El Dorado Hills

• 715 defaults, El Dorado 415 REOs

•500 shown
 Yolo County
Defaults Bank Owned
Woodland Woodland

West Sac. Davis West Sac.

Davis

• 412 defaults, Yolo 278 REOs

 Bottom Line
• It will be much easier and faster to do short
sales in lower price ranges

• Expect a lot more foreclosures above $300,000

to avoid deficiency judgments

• Once incentive programs end expect interest

rates to rise from late spring to end of year by
at least one percentage point. Now 5.5 %
likely to rise to 6.6% by Late April. This has to
happen if we are to attract Bond funds to
invest in mortgage backed securities.
• Commercial Markets hard hit by lack of
financing, two years of bad news.
 Bottom Line
• For the Bank short sales are cheaper by at least
10% but not for the consumer who has other
assets. They will face deficiency judgments.

• Short sale volumes will increase in the

$300,000 to $600,000 range and will not peak
till 2014. Since there are fewer investors in this
price range prices are likely to fall in 2010.
 Bottom Line

• I feel positive about the market

continuing to appreciate for homes priced
under $300,000.

• Expect to see 3% in outlying areas and

up to 5% near jobs. Investors will make
up 30% of the buyers . Insuring the
inventory is absorbed.
 Bottom Line
• Cottage industry created to manage and repair
and enhance bank assets to mitigate further
loss and or gain some of that lost equity.

• We will see a lot more REO’s in the above

$600,000 range and there will be a lot of
pressure to reduce prices the further away from
the job markets you are. Short sales in the
upper end are only for those with out any other
assets. The upper end is in for a bumpy 4 years.
 Bottom Line

• There will be lots of business for us, but our

agents need to aggressively pursue short sales.
Volume of transactions is the key to success.

• As to the Economy;
Job creation is the only way to end this
mess.

• Questions ?
 The End
Michael Lyon
CEO
Lyon Real Estate
Some edits by Jeff Werolin, not the CEO
of Lyon Real Estate
 Auburn
Defaults Bank Owned

Auburn Auburn
145 defaults 79 REOs