The Mountain Messenger | Nevada County real estate: headed up or into trouble again?
Published on Feb 22, 2013 - 7:28:49 AM
NEVADA CITY, Calif. February 22, 2013 - Talk to any real estate agent down here and they'll tell you things are booming. Home prices in Nevada County have left their downward spiral behind and increased by nearly 25 percent last year. Interest rates are low and the combination is generating home sales.
And, new home construction in Nevada County is starting to stretch and yawn and come awake. That's a reflection of what's happening nationally.
Starting in March, builders will finally launch a long-awaited national multimillion-dollar ad campaign aimed at persuading would-be buyers that brand-new homes are a better choice than lived-in houses. The company behind the "Start Fresh, Buy New" ad campaign is Builders Homesite Inc., an Austin, Texas, based high-tech marketing company owned by a consortium of 32 of the nation's largest builders.
Construction workers have been noticeably absent from the Nevada City scene for some time. Used to be the four o'clock lineup in McGee's bar was all young guys, dirty from work, getting a cold one to end the day. Next morning they'd be seen in convenience stores buying sugar snacks and a six pack for lunch. Lately, not so much.
Nationwide, the recession hit construction harder than most other sectors. During the first half of the 2007-2009 economic downturn, a little more than half of the job losses occurred in construction and manufacturing, according to an analysis from the U.S. Bureau of Labor Statistics. The losses in construction were the steepest since World War II, the bureau found.
California accounts for the largest number of new home construction jobs, despite losing nearly 400,000 from the 2006 peak. But the state of Nevada saw the deepest decline by percentage, at 66 percent. That state's reliance on gambling and tourism and a boom in construction of casinos and hotels before the recession faded away leaving the Silver State's economy with a losing hand from which it is still trying to recover.
Many who were burned by home ownership in Nevada County are going the alternative route and have become renters, sapping the rental market of offerings and driving rent prices up.
During the downturn many, many agents left real estate for other lines of work. A lot of them are still working at other careers and the ones that hung on are finding interested buyers. Here's one reason why the exodus from real estate occurred. Local home prices entered a steady decline starting with their peak in 2005, according to Nevada County Realtors Mimi Simmons and Phil Ruble. But in 2012 the average sale price jumped by nearly 2.5 percent,
An east coast economist recently told his clients, "With inventory of both new and existing homes still very low, prices will likely continue to rise." Ian Shepherdson added, "Each successive price increase adds more weight to the idea that the housing market is recovering, and nothing pulls people into the market faster than the thought that prices will rise further."
Other national real estate news seems to say "The boom is on!"
"The gap between the listing price and closing price of an average home in the United States continues to narrow, with a growing number of sellers able to achieve more than 98% of their home's listing price," according to Lanny Baker, CEO of Zip Realty, a nationwide realty firm that "uses the efficiencies of the Internet" to sell homes. In addition, Baker added, the median days a home spent on the market dropped to 44 nationwide in 2012, a 23% decline from 2011's 57 days.
Others are looking back and urging caution. Diana Olick, writing on CNBC.com, said, "When housing began to simmer back in 2002, prices were rising around 7 percent a year, then 8 percent in 2004 and a stunning 12 percent in 2005. Historically, prices nationally rise about 3 to 4 percent a year. The market was clearly too hot, and by 2007 it had reversed dramatically, with prices falling nationally for the first time in history.
"Fast forward to today and the housing recovery. Barely a year in, home prices rose over 8 percent annually in December. That is the tenth consecutive month that home prices have risen on a year-over-year basis and it is the biggest gain in more than six years." Her piece carries the title, "Housing Market already shows signs of a new bubble."
Editor's note: The Mountain Messenger, California's oldest weekly newspaper since 1853, is published on Thursdays from Downieville, California.
The Mountain Messenger can be purchased for half a buck at the National Hotel (sidewalk), Nevada City Post Office (sidewalk), Nevada City SPD (outside) and Nevada City Express Mart (outside.)
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