Thursday, March 16, 2006

"Calm" After the "Frenzy" or Calm Before the Storm?

The Sacramento Bee had this article on their front page today:

Housing frenzy replaced by calm
Prices aren't soaring, buyers have choices: It's business as usual.

From West Sacramento's new suburbs to the association-governed neighborhoods of El Dorado Hills, would-be homebuyers appear to be encountering a long and almost forgotten phenomenon. It's the return of "normal."

In the cooling wake of Sacramento's five-year hot streak, a legendary era when prices skyrocketed and speculators abounded in the furious chase for a place called home, real estate is tilting amid mixed signals back toward the routine, say builders, analysts and agents in Sacramento and across the nation.

Back in vogue for the traditional spring shopping season: old-fashioned wheeling and dealing on prices, an abundance of choices, and even enticements such as plasma TVs, washers and dryers for signing on the dotted line. Gone are waiting lists and buying what's left when builders of new homes call your name on a Saturday morning. Out is the speculative "flipping" and jumping prices that terminated so many home-owning dreams and made first-time buying a panic. Also out is watching neighbors get their asking price the first day, a sensation that eventually placed metropolitan Sacramento among the West's more expensive areas for single-family homes.
On inventory:
Buyers in February could pick from 9,870 single-family homes for sale in Sacramento, Yolo, Placer and El Dorado counties, according to the Sacramento-based data firm, TrendGraphix. That's up from 3,554 a year ago. A year ago, the average home spent 37 days on the market. Last month it was 58 days, TrendGraphix reported.
On price:
According to the Sacramento Association of Realtors, home values in Sacramento County and West Sacramento stopped sliding in February. The association reported a 1.4 percent increase in median prices - where half the homes cost more and half cost less - from January.
On Centex cancellations:
Doug Pautsch, financial officer of the Sacramento division for Dallas-based Centex Homes, said the departure of speculators who backed out when the boom was ending accounts for the change. "It's about half of what it was in the fourth quarter," he said.


fishtaco said...

The data shows that there are still many, many homes for sale that are not selling. Here in Davis some stuff is just sitting and has been since the fall. You can see that inventory is up ~200, but there are more homes pending. I personally know of someone who 4% below asking on a place here in Davis. The phycollogy of "I have to buy" is still out there and I think good homes will still sell. Overpriced crap will not. Bottom line, it took 4 years to go up, it will take some time come down.

fishtaco said...

Sorry, I meant "Psychology" in the previous post.

Happy Renter said...

"The psychology of "I have to buy" is still out there and I think good homes will still sell."

I disagree. Everyone is in "wait and see" mode with a leaning towards price declines. Their will always be an ignorant 50-75% of our population who are still into the hype and will buy at the top. This however will not sustain the market. The inventory is way to high.