Sunday, May 07, 2006

Sacramento Shatters Inventory Record, Investors Scramble to Cash Out

Yesterday, the Bubble Markets Inventory blog announced that inventory in the Sacramento housing market passed its 1992 record. According to the blog, inventory in Sacramento, Placer, Yolo, and El Dorado Counties totals 13,521, exceeding the 1992 record of 13,507. Of course, the Sacramento area has grown in population since 1992. According to the blog, the population-adjusted figure is 17,913. However, at the current rate, the market is well on its way to crossing that mark in the near future.

This news dovetails nicely with a story that was published in the Sacramento Bee today. The inventory numbers are a little stale, but the message is clear: sellers are flooding the market, scrambling to cash out before it's too late.

Signs of the times
When seven homes on one street are up for sale, you get the idea a lot of area sellers want to collect on their investment.


On a half-mile stretch of Aubergine Way near Mather Field, two investors are selling their rental houses, and another is selling to move to Santa Cruz. Dianne Slutsky, too, is selling a house she bought years ago with a San Ramon couple...So on the market it's gone, making a total of seven single-story houses with big back yards for sale on a half-mile stretch of Aubergine Way. On another street nearby in this neighborhood called "Independence at Mather" are three more homes for sale. After 50 days Slutsky's three-bedroom house awaits the right offer in a market where buyers have gained power to deal amid one of the largest inventories of existing homes for sale in the four-county Sacramento region in a decade.

If there's an epicenter for the pileup of houses for sale, it could be this half-mile of "For Sale" signs on Aubergine Way. Anchoring a pleasant suburban neighborhood of 1,272 homes that opened in 1999 and gave hundreds of people their first shot at homeownership, Aubergine reflects an astonishing 600 percent growth in homes for sale this past year inside its ZIP code, 95655.

This street, with its views of broad swaths of empty grasslands and air freight carriers landing at Mather Field, also clearly reveals the region's utterly changed post-boom real estate market: 10,316 existing homes in El Dorado, Placer, Sacramento and Yolo counties were for sale in March compared with 3,799 a year ago, according to real estate analyst TrendGraphix. The highest on record is 13,507 in April 1992. "It's a completely different story than it was one year ago," said Michael Lyon, head of Sacramento-based Lyon Real Estate, owner of TrendGraphix...

What's happening around Mather is a microcosm of every reason that people sell and move on, especially if they can move up. But mostly what stands out is a desire to tap all that house-generated cash from four boom years - before, some fear, more of it goes away...

In all three Mather-area ZIP codes, sidewalk conversations and calls to agents listed on For Sale signs reveal countless stories of investors trying to cash out and residents hoping to plow equity gains into a new phase of their lives...

More first-time buyers have come to begin the cycle anew. On Aubergine Way is Stephanie Lewis, who arrived last fall with her husband and two children. The family paid $375,000 at the top of the market and is now hoping it rebounds...

So far, the "For Sale" signs are increasing at a greater rate than the "Sold" signs in a capital region where only a year ago sellers thought "waiting a week was forever," as Lunnie on Aubergine Way recalled.

6 comments:

Lander said...

Thanks to OCRenter for keeping us informed.

tom stone said...

a lot more to come.anybody ever tell these speculators that there comes a time to take the money and run? i would drop my price as far as it took to sell fast and get out,better to lose a finger than a hand.

Gwynster said...

I'm watching a house go to the courthouse tomorrow here in Davis. They started at 595K asking, reduced to 549k and now the bank wants 516k min.

I'm looking forward to more of the same here >; )

Happy Renter said...

A rough estimate of the average number of homes sold per year to owners who live in them would be about 10,000.

ARM usage 25-40%
Affordability is extremely low.
We could have 10's of thousands of people in sacramento who can't afford the home they live in.

Happy Renter said...

and how do the builders respond to the record high inventory?

By adding more condos of course.

http://www.bizjournals.com/sacramento/stories/2006/05/08/story1.html

ocrenter said...

you're very welcome lander.

read about the rest of the story on my blog.