"Costs rose 27 percent for gypsum boards, 20 percent for plastics, 11 percent for cement, and 6 percent for sheet metal siding. According to the Consumer Price Index, housing costs edged up 4 percent for borrowers from July 2005."

In contrast, in Davis, sales were the highest since early 2004, with 75 escrows closed.

An interesting and contentious issue in the history of real property law has been: Under what circumstances must a seller disclose the occurrence of a death in a home placed up for sale?  In a famous case read by every first-year law student, a court concluded that where a home's previous owner had been the victim of a violent murder, potential buyers must be advised of this fact.  In a similar vein, another court held that a seller was required to disclose that his home was widely believed to be "haunted."

At any rate, the NY Times has an interesting article on this general subject today.  Here is a link to it.

The end of interest rate increases would be good news for both the housing market and the stock market.  I have been concerned for several months that the Fed would (once again) overdo the rate increases, and push interest rate sensitive sectors of the economy, the housing market in particular, into a steep downturn.  If rates stabilize now, before housing prices have seen a serious downturn (only about 10% from the peak in Davis so far), the mythical "soft landing" in the housing market, followed by a period of slow but steady appreciation, could become reality.

Normally, we see a concomitant flood of Spring buyers.  But this year, the record rainfall has slowed buyer activity significantly.  However, I am cautiously optimistic based on the increased sales activity in March, and solid leading indicators such as website traffic and buyer contacts to my office.

The main practical issue this gives rise to among average Davis residents is:  "Which elementary school is going to be closed?"

On a more philosophical level, one is tempted to ask, "What type of community is Davis becoming?"  And it is hard to miss the irony of the situation:  The support-system for kids in Davis (schools and otherwise) has contributed to extremely high home prices, which in turn has priced-out the vast majority of people with school-aged kids.

The million dollar-plus range is another story.  There were no sales over one million in March, while several new listings in that category emerged.

Still, this median price increase is not to be blindly taken as a sign that the hot market is back.  For one thing, February 2006 sales volume was down almost 50% from February 2005, with only 24 sales of residential non-investment units.  For another, the time on market has increased from an average of 22 days in both February 2005 and July 2005 to 55 days now.  Generally, the time on market figures appear to have leveled off for the time being.  The next few months will tell us much about how 2006 will shape-up for the Davis real estate market.

In other news, loan defaults in the Sacramento region are on the rise.  This problem could get worse if home values continue to fall, as they have since about July, according to my analysis.  Aside from homeowners' pure inability to make payments, defaults also occur when people conclude that the amount of money they will save by defaulting on a mortgage exceeds the cost of the negative credit consequences associated with that action.  For example, if someone owes $100,000 more on their mortgage than their home is worth, and is living a poor lifestyle in order to make payments, they may quit the mortgage.  The bank takes the house, but the loan goes away.  If this set of economic incentives becomes prominent, we may see more foreclosure sales.

The net result of this vote is that Davis has removed itself from the planning process.  No developer will bother talking to the City of Davis, because there is no way any significant project can be approved by voters, even if all the Measure X opponents endorsed it.  Davis voters simply won't vote for development, period.  As a result, Yolo County is now the forum in which growth on Davis' border will be debated and planned.  The Bee has an interesting article about this issue here.

Hopefully, the local real estate market, which has been very slow as the election approached, will begin to pick-up now that the uncertainty of the election is removed.

The Biz Journal has an article surveying the national housing market.

Covell Village represents the most ambitious planning effort I've ever heard of anywhere.  It provides the City of Davis with a roadmap for slow (probably too slow) growth until at least 2018.  I offer my complements to the hundreds of the people who have worked so hard to bring to project to this point.

I'm very excited about this project.  I think it will usher in a boom-time for Davis, with thousands of local craftsmen, engineers, business persons, professionals, and artisans (among others) collaborating to build a collectively-conceived and constructed work of art.  The project will surely garner national and international attention once it's complete.  Here's looking forward to November.

This case demonstrates that lawsuits are going to be a major barrier to small, high density "infill" developments in Davis, as envisioned by some slow-growth advocates.  People simply don't like having their neighborhoods redeveloped with crammed-together town houses, and are likely to sue anyone who tries to undertake such a project.  And small projects cannot shoulder the astronomical legal and consulting fees associated with preparing a full environmental impact report, to say nothing of the costs of defending against a CEQA lawsuit.

Home prices in Yolo county were up, on average, 31% in the year-over-year period.  That is an increase of 2.58% per month.  Anyone thinking about buying a home in the near future would be well-advised to consider this number carefully, especially if they have a fixed budget ceiling. Put simply, a typical $500,000 home is quickly shrinking and its condition rapidly deteriorating.  If this trend continues, a $500,000 home today will be a $538,700 home this Spring, and a $655,000 home a year from now.

Meanwhile, the number of homes on the market in Davis is at the lowest level in recent memory.  Only 38 properties were on the MLS this morning.  This seasonal ebb should reverse course soon as the Spring season arrives.

You can read the story about the hot market here.

The irony surrounding this story is quite thick.  First, Mace Ranch is one of the few neighborhoods in town where lots of elementary-school-aged kids actually live.  Second, Mace Ranch residents pay more in property taxes than just about any neighborhood in town (having, on average, relatively recent tax assessment dates); i.e. they pay the most for schools but get the least, at least in terms of elementary schools (they do have the new Harper Junior High).

I wonder if this is the final word on this subject, and whether the Mace Ranch elementary school will ever actually open at all. Enrollment in elementary schools is declining because the Davis population is aging, and young families with school-aged children cannot afford to live in town. This trend is not going to change in the near future, absent accelerated phasing of Covell Village (very unlikely).  I wonder if anyone has considered simply moving the teachers and classes from one of the other elementary schools in an older facility to the new campus in Mace Ranch?  Why leave the best facility vacant?

You can read more about this story in the Sac Bee and in the Davis Enterprise.

This is not the first time we have heard such predictions, and they don't seem to have any unassailable logical underpinning. As I have said before, the matrix of factors that dictate housing prices in this region (interest rates, migration from the coast, supply restrictions imposed by government, income and job growth, etc.) is virtually impossible to forecast with any degree of reliability. In my humble opinion trying to predict housing prices is little more than a good opportunity to make yourself look dumb. As usual, only time will tell.

I personally think the nervousness is misplaced.  Spring Lake and the custom homes will be plenty nice enough to compete with smaller and older similarly-priced homes in Davis.  But only time will tell.

Whatever you think about the lion, its clear that the area along the Northern edge of Davis is now supporting a vibrant Central Valley ecosystem. For conservationists, this ability of people and nature to coexist seems very healthy for both the people and animals. Indeed, very few people ever have the opportunity to see a mountain lion in the wild.

But be careful. Lions have been known to attack children and even adults, as well as house pets (although they are normally very scared of dogs, at least medium and large ones). Everyone should take a few simple precautions, or stay out of the wooded areas.

First, don't go running in or near the overgrown areas at twilight or after dark, unless you have a good sized dog or person with you.

Second, people under 120 pounds should avoid venturing into secluded areas alone, particularly if they are jogging or running (running triggers the cat's killer instinct). Generally, don't let children go wandering around in the wooded areas, at least until we give the lion a few days to leave the area.

The bottom line is that if you take a few simple precautions, you should be safe. And if you see the lion, you can count yourself a member of a very small club.

Homeowners might, at first blush, be pleased about the astronomical rate of increase in the value of their homes.  However, history dictates that we are better off with more moderate price increases.  With increases like this, people arguing that Davis is experiencing a "housing price bubble" become more credible.

The hyperinflation in the housing market is the result of the market-oblivious, ideology centered planning process in Davis. In the late 2001, the General Plan was amended by anti-growth advocates. They literally removed all planned developments from the General Plan. To a lawyer like myself, the irony could scarcely be thicker: By removing everything from the General Plan, the anti-development advocates used the General Plan, which is legally required to PLAN for inevitable growth, to absolutely guarantee that there would be ZERO planning.

But fault for these price increases also rests with the current City Council.  To its credit, the Council appears to be supporting Covell Village project, which will do something to cool the market, and much to increase the variety and quality of housing inventory in Davis.  On the other hand, the Council has set a policy of permitting only 250 units per year, including new apartment units, and including the approximately 50 units per year to be built by UCD (these units will only be available to UCD-affiliated people). Thus, the City will only hand out 200 building permits per year.

The long term average in Davis is closer to 350 units per year, and even that number didn't come close stop housing price increases. Even in the late 1990s when Davis peaked at close 1000 homes one year, and almost 900 the next, prices stayed stable and even rose a bit. It was only in the early 1990s, in a high interest rate environment and a recession that we saw a period of price softness in Davis.

The City's current allocation comes out to about 13 single family homes per month. With the current housing inventory shortage in Davis (we only have about 1.4 month's supply), that is like a proverbial drop in the ocean. It would take about 300 units flooding the market in a single DAY to bring inventories to a healthy (but still increasing price) environment with a 6-month inventory.

One has to feel sorry for new professors or teachers moving to town and unable to find even a cottage that they can afford. And this is to say nothing of the waitresses, gas station attendants, construction workers, or other people who keep this community afloat.