January 2008

As I look towards 2008 I see a real shake out year in real estate in Roseville. The new homebuilders, both national and local, are really going to struggle. The smaller builders will bear the biggest brunt as they can not sell their homes below cost and survive. The national builders on the other hand have and will continue to sell below their actual costs in order to keep cash flow moving. Look for consolidation amongst builders and expect to see further bankruptcies and foreclosures of buildable lots before land prices fall far enough to make it profitable to build in Roseville and Rocklin.

This will put additional stress on an already stressed resale market. For years I have been warning city leaders that too much land set aside for development could wreak havoc when the market turned and that is how it is playing out. Far too much housing supply available is driving prices down in Roseville and Rocklin. This is further exacerbated by distress sales in the resale market. Roseville has had it’s share but Lincoln followed by Rocklin are getting hit the worst. As more and more homes come on the market the demand/supply curve is way out of balance, favoring buyers decidedly

The flip side of this is that interest rates are still very low by historic standards and this presents one of the best opportunities to move up in over a decade. For those homeowners with equity or those who wish to make their existing home a rental the opportunity to purchase the home of their dreams at a great price is there. Over this next year I would highly recommend those homeowners looking to get a larger home to start planning now to take advantage of this opportunity.