Monday, June 12, 2006

May Day, May Day!

The real estate industry speaks.

An agent gives some May results at Realty Times:

The Median Price is the Same as April of this year and May of Last year...The number of Re-sales during the May was dramatically lower (40%) in comparison with the May of 2005 and 2004....
Another agent at Realty Times had this to say about the Sacramento housing market:

The market is down because there are so many houses for sale.. and there are a lot of investors who bought houses to remodel and now need to get them out of inventory. The market was HOT for the last 5 or so years with the price of homes going up 112% for an average of aproximately 23% a year. When the interest rates started going up in July 2005 and the newspapers started talking about a price bubble, a lot of people put their house on the market to take advantage of the high prices before the bubble burst. This created a glut of homes for sale at a time when the number of buyers was going down because of the higher interest rates. As a result, to sell their homes, sellers are being forced to be more competative. Thus, lower prices and a buyers market.
Riva in West Sacramento says it's a great time to buy during the 'price and incentive war:'
"There's no better time to buy a new home than when there's a price and incentive war going on," said Scott Bolli, director of sales for development company Pacific West Cos. "While most people buy when everyone else is lined up to buy, the best deals can be found in a buyer's market. The people that buy at Riva today will stand a much better chance at a bigger return on investment, especially with our prices being so low and huge credits for closing."
An agent in Modesto sees 'panic pricing' and tells sellers to calm down:
In addition to price reductions, today's buyers are also seeing a lot of new inventory, according to Larry McDonald, a Realtor with Keller Williams Realty in Modesto. "After the massive rainy season, a lot of houses are just coming on the market," he says. "There are all of these homes that have flooded the market."

McDonald won't speculate on whether the market has turned. But he has seen some "panic pricing," sellers getting nervous and pricing their homes too low. To calm his clients' fears, McDonald reminds them that current mortgage rates are still quite attractive by historical standards and won't keep buyers away. "I can remember when rates were at 13 to 18 percent," he says. "We have been blessed with a good market."
A Redding agent thought a $70,000 discount was a mistake:
Has the north state real estate market tipped in the buyers' favor? Two new homes in the Land Park subdivision in northwest Redding were discounted $70,000 this week, slashing the list price to $409,900. The reduction so surprised real estate agent Brad Garbutt that he initially thought it was a mistake.

"They have scaled back prices to what they could have gotten nine months ago," said Garbutt, a member of the Shasta Association Realtors board. "There are probably going to be some starving real estate agents around."
Finally, this agent in Visalia was 'shocked' when he looked at the numbers:
Two reports detailing the health of the local real estate market are painting a picture of a rising inventory of both new and existing homes in Visalia and in the Tulare/Visalia MLS. The Tulare County Association of Realtors reports as of June 1 the inventory of existing homes for sale reached 1690, up from 1541 in early May of 2006. These numbers compare to just under 400 homes for sale this time last year.

A second more detailed report done by Icenhower Real Estate of Visalia focuses on both new home builders in the Visalia area as well as the market conditions for existing homes. "We needed to get a handle on what was going on," says Brian Icenhower who worked on the report along with Cyril Thompson and others in the firm. "We found there is an excess of 70 subdivisions being marketed in the Visalia area alone," says Icenhower and the competition in new homes and volume of product "has driven down prices for both new houses and existing homes."

The pace of building has not let up in Visalia, the city reports, with an expected 1400 to 1550 new homes likely to built this year. The Icenhower report details that of the 845 existing homes for sale in Visalia, 283 or one third of them are vacant. Icenhower says that's due largely to the fact so many homes in recent years were purchased by investors...

A key measure of how sales of existing homes are doing is the average number of days on the market. In May of 2005 the average market time was 31 days for homes to sell, a trend that continued until about February of this year when the MLS reports the market time jumped to 58 days. MLS figures for June show pending sales are about 50% of what they were last June signaling slower sales even as the home selection grows for both new and existing homes. Last year the supply of existing homes on the market amounted to enough for just one month. As of June 2006 we have a six month supply, says the report.

The report shows new home subdivisions by price around Visalia with the busiest part of town in the city being the rapidly growing northeast where there are over 20 active subdivisions. Icenhower says the "the numbers kind of shocked me" especially when you add in the amount of residential land and lots already available in the city detailed in a new city report.


Happy Renter said...

"McDonald won't speculate on whether the market has turned. But he has seen some "panic pricing," sellers getting nervous and pricing their homes too low."

Panicked selling right on schedule.

Gwynster said...

A Davis area report:

In the Bidwell area, 16 condos have on the market since Jan 2006 with a median price of 284k. Only one has sold, the offer accepted was 239k.

May and June are normally hot markets in Davis when parents buy their students a condo to live in while in school. Apparently that gravy train has left the station.

Happy Renter said...

"The Median Price is the Same as April of this year and May of Last year..."

So if you bought in the last year your house has lost atleast 4% of its value due to inflation. Thats what $16000, on the average Sac home, or $4000 more than I rent for.

Lander said...

Hat tip to Ben Jones for the Redding & Visalia articles.

Happy Renter said...

Lockwood updated his site with the
Rose ville numbers.

"The expired to sold ratio topped 75% for the first time."

Max said...

It's interesting that Realtors themselves are often unaware of the trends that make their market. When I talk about Sac Area stats with some Realtors I know, they always seem suprised.

Realtors in Sac use software called "Prospector" that gives them access to daily stats such as price reductions and pending sales, yet for some reason they can't that together with overall market condition.

"Starving real estate agents around" indeed.


Anonymous said...

I received a post card in the mail today from D.R. Horton. The front of the card reads, "Announcing, The Biggest Sale in the History of D.R. Horton". The back states that the homes have been significantly discounted in addition to the recently reduced base prices. It's getting ugly.

James said...

happy renter >>So if you bought in the last year your house has lost atleast 4% of its value due to inflation.<<

Well... usually inflation is the debtor's best friend. You get to pay your debt off with cheaper dollars.

Actually the one thing that help create a soft landing would be a good bout of wage and price inflation -- along with some regulatory controls to reign in the loose lenders.

Happy Renter said...

"Well... usually inflation is the debtor's best friend. You get to pay your debt off with cheaper dollars."

Absolutely, providing wages increase accordingly. California wages have failed to keep up for awhile. 4% a year!

Anonymous said...

I have been following and reading for awhile now. Today I saw on UPN31 Sac a report of the most overpriced housing...They did mention Sac, Modesto etc. but they also mentioned Yuba City with a med. price of 269,000 as overpriced LOL, I moved up here from Placer to find more afordable prices, the Plumas Lake & Yuba city housing are the most affordable area in the North, ALL the people are coming out of the over-inflated area to here hmmmm wonder why they didnt mention Lincoln, rocklin, roseville as one of the over priced areas hhmmmmmm guess they were trying to slant people from NOT buying in these cheaper areas....I NOW see a media bias of the truth and had to scrath my head ....Who gathers info for these reports , anyone.

rocklin renter said...

$410,000 to live in Redding.


For 410k, it had better be one amazing spread.

James & HR - not only has wage inflation failed to keep pace, but population growth as well, if you exclude the "immigrant" population and their recent offspring.