Tuesday, June 13, 2006

Prices Drop, Sacramento a Little Less "Extremely Overvalued"

Sacramento is now 54% overvalued according to the latest National City Corp./Global Insight report (pdf). At last check in March, the Sacramento market was considered 64% overvalued. Why the decrease? Well, it may be because "price corrections" or "price drops" are no longer theoretical for Sacramento.

CNN Money:

The most overvalued housing markets in the United States recorded much higher price increases during the first quarter of 2006 than the least overvalued markets, according to the latest analysis by National City Corp, a financial holding company, and Global Insight, a financial information provider.

In the 50 most overvalued markets, prices increased 2.5 percent from the fourth quarter to the first, an annualized rate of 10.1 percent. In the 50 least overvalued markets, prices increased just 0.7 percent, an annualized rate of 2.7 percent...

Some places, of course, bucked this national trend. Salinas, Santa Barbara and Sacramento, all in California, are all among the top 50 overvalued cities where prices dropped.

Markets with valuation premiums above 34 percent were judged to be severely overpriced and at risk for price corrections. DeKaser did find some evidence that prices may be ripe for a correction. A year ago prices in overvalued markets were going up even quicker than they are today, indicating they are pointing to a change of direction. That doesn't mean that a normal, balanced market is right at hand. "We've got a long way to go before we're out of this market," says DeKaser.
When prices do fall from overvalued levels, they typically fall by about half the overvaluation, DeKaser said. The correction usually takes three and a half years.


Happy Renter said...

These National city reports have been extremely negative for years but knowone was listening. Everyones paying attention to them now.

rocklin renter said...

HR, why would anyone want to listen?

Taking a walk down memory lane....

"Pop the champagne Maria, the NASDAQ is going to top 5,000!!!"

Where are we now?

Happy Renter said...

A realtor at realty times is reporting a Sacramento median price of $353,750. Thats a 10.5% decrease since August, or $41,250.

Max said...

A realtor at realty times is reporting a Sacramento median price of $353,750.

Contrast that with a $385,000 median asking price, and then look at the number reduced. The sellers have become disconnected from reality.


Anonymous said...

max,these are faith based investors,and will be rewarded in heaven.and hey, a 27% "normalization" over 2-3 years,no sweat.greenspan says it won't have any significant effect on the economy,and i trust him nearly as much as i do the president...and he says everything is fine,just fine,have a bud.

Happy Renter said...

If the realtor is correct we are back to March 2005 prices.

How's that for emperical data supporting the bubble theory, ay Lockwood.

Anonymous said...

Speaking of crash and burn, anybody been paying attention to gold lately? Next stop $500, then watch it fall like a set of car keys out the window from the 87th floor.

Clearly gold had become disconnected from fundamentals and is in the process of reverting to the mean, as all asset classes must. What goes up must come down. Don't catch a falling knife or fall for a dead cat bounce.

Gold should hit resistance and come in for a nice soft landing at about $400. Maybe less.

Anonymous said...
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Happy Renter said...

Gold was used as protection against the housing bubble.
True market value is around $450 an ounce. Thats if the chip stocks don't plummet.

Happy Renter said...

Lockwood, is holding some kind of blogathon. It's sounds like a food for the hungry program. Don't let our differences keep us from donating to a good cause.

I do encourage you to check out where the money is going though. I'd hate to see 95% going to admin. fees, that ultimatetly go in a crooked realtors pocket.

I'm not saying Lockwood is crooked, but I'd bet he encouraged a few people to take on more debt than than they could handle, and for that I don't trust him, nor respect him. They are being exposed, and realtors in general should not be trusted.Admin fees for charitys often hit 95%, and we simply can't trust realtors anymore.

I do encourage everyone to donate something, no matter how small, to a cause they can believe in, as soon as they can.

Key words. -Believe in-

Happy Renter said...

I'll make this clear. Lockwood has never, to my knowledge done anything illegal.
My opinion of him is based strictly on the facts; that he has encouraged people to purchase homes that are overpriced, and that I believe he has ruined lives because of that.
Lockwood, is not to my knowledge trying to capitolize on a charity, as some realtors have capitolized on the housing bubble. I am not impying anything.
I don't trust charitys, and I don't trust realtors.

Happy Renter said...

"My opinion of him is based strictly on the facts; that he has encouraged people to purchase homes that are overpriced."

Excuse me, It is simple my opinion.

Happy Renter said...

Condo buyer finds she purchased in an apartment building.