All signs point to a rebound in Nevada County's housing market

Paul Sieving is the author of By the Numbers, a feature of the Nevada City Advocate.

In the first three months of 2010, prices have risen consistently from $256,000 in January to $280,000 in March, an increase of 9.4 percent.

With the first three months of 2010 behind us, we look again to the three trends that define the current market cycle. The recovery, or at least the end of the beating, will be marked by sustained upturns in price and volume and a corresponding downtrend in distressed sales, or REO and short sale properties.

Median price

After settling around $300,000 for the first half of 2009, local pricing for single-family homes went through a typical seasonal decline in the fourth quarter. In the first three months of 2010, prices have risen consistently from $256,000 in January to $280,000 in March, an increase of 9.4 percent.

 From February to March 2010, the increase was 4.7 percent.  The year-over-year change from March 2009 was a decline of 3.8 percent, indicating at the very least, fairly stable pricing over the longer term.

There is a short-term uptrend in median price. If this proves sustainable over the longer term, the recovery may get some traction.

Unit volume

The recent trend in volume is similar to the price trend, with an increase in units sold in both of the last two months. March volume was 69 units, compared to 62 in February, an increase of 11.3 percent. Compared to March 2009, when 38 units sold, we see an annual increase of 81.6 percent, indicating that the absorption rate has increased dramatically in the last year.

There has been a significant increase in unit volume over the last year and the last quarter, more than at any other time since 2004. 

Distressed sales

In a normal or rising market, the percentage of distressed sales (short sales and REO) is quite low, usually 5 percent or less. During 2008, as the number of homeowners facing challenges increased dramatically, this percentage rose into the double digits. While distressed property inventory has been relatively constant at around 20 percent of total, unit volume has been well above that for the last 15 months, reaching as high as 60 percent of total units in August 2009.

 In January and February 2010, it has been around 55 percent, declining to 42 percent in March. This is a decrease of 30 percent from the August high.  In March 2009, 31.6 percent of sales were distressed. 

There have been recent reports in the regional media about a significant increase in median prices over the past several months, and it has been attributed to a shift in sales activity from the lower-priced valley markets to the more expensive coastal and mountain resort markets. This writer believes that any increase in prices is more likely correlated with a decrease in distressed sales, regardless of specific location. 

Locally, we are seeing less dramatic price increases than California as a whole, although the trend is there.  The unfolding of the summer market will reveal whether the apparent turn in the market is real or simply a seasonal effect.

 Paul Sieving is the author of By the Numbers and is a Realtor® with CENTURY 21 Gold Dust Realty, a former director and MLS chair of NCAOR and current treasurer of the Grass Valley Chamber of Commerce. If you have questions or comments, e-mail Paul@PaulSieving.com or call 530-274-0906.