Tuesday, July 18, 2006

Ding Dong - YOY Price Declines Arrive in Sacramento


It's official. For the first time since 1997, median sales prices for homes in Sacramento County declined on a yearly basis, according to the Sacramento Bee.

After five years of fast-rising home prices in the capital region, an increasingly entrenched slowdown in sales and a pileup of resale inventory is taking its toll. For the first time since the late 1990s, median sales prices for homes in Sacramento and Placer counties have slid into negative territory compared with the previous year...The milestone development in three of the region's counties marks the capital area and San Diego County as California's first major metropolitan markets with year-to-year price declines.

Sacramento County, as the region's biggest real estate market, saw collective median sales prices of new homes, condominiums and existing homes dip to $368,000 in June -- down 1.3 percent from $373,000 in June 2005. That was the first year-to-year decline since October 1997, according to DataQuick. Placer County registered a June median sales price of $452,000, down 6.2 percent from $482,000 in June 2005. The county's last year-to-year price decline was in January 1998...

Analysts said the new figures represent the latest fallout from months of rising interest rates, prices that surpassed area income levels and a fleeing of the market by speculators. It clearly marks the end of a sizzling market in which Sacramento County alone saw 66 straight months of double-digit price increases over the previous year.
Expect a more detailed article to appear in tomorrow's newspaper.

23 comments:

Lander said...

Thank you Gwynster for spotting this milestone.

Garth Farkley said...

Duh.

Agent Bubble said...

In the article on the Bee's site (http://www.sacbee.com/content/homes/re_news/story/14279509p-15088089c.html) it states "the number of existing homes for sale at June's end rose to a record 14,611 in El Dorado, Placer, Sacramento and Yolo counties."

I just ran an MLS search for those 4 counties and came up with 16,834 residential (non-income producing) and 349 mobile homes. I did not include land, commercial, or business opp properties. I'm curious how they arrived at 14,611.

Lander said...

Updated article here.

This line deserves a prize:

"To compare this year to last year or the last two years, they're just kind of two different markets," he said.

tom stone said...

maybe david lereah could do some book signings at the local barnes and noble stores,turn this market around.

Happy Renter said...

Price/ sq.ft plummeted 20% in Natomas. Thats a crash.

http://ziprealty.typepad.com/marketconditions/sacramento_real_estate/index.html

Gwynster said...

My pick of the day:

916 PENNSYLVANIA PL, Davis, CA 95616
MLS 60077388
Originally listed at $539,000 April 10th 2006 and back on market at $499,000 now. It's located 2 doors down from the rail line and right across the street from some student apartments. To make this owner even less happy, I've counted 11 properties within a mile all under his price. Some are even in much better shape with better amenties and 2 are under $400,000.

Agent Bubble said...

Happy Renter--I'm not so sure about that $83 price/sq foot in Natomas. Unless I'm misunderstanding what that implies, it means a 4,000 sq ft house is going for roughly $320K? Something isn't right about those stats...

Happy Renter said...

divotmaker,
Your right. The June price/sqft was $230. Wouldn't be great if it did crash that hard.:)

Agent Bubble said...

Oh would it ever...I'd settle for $150 a square though.

patient renter said...

This continues where an earlier post, "California Canary Showdown: It's a Tie" left off. The median home price momentum is clearly in a downward direction. How far will things go? Any predictions?

Agent Bubble said...

I could be way off (although secretly I hope I'm not) but I'll go with a 30% reduction in 3 years.

Anonymous said...

what are you talking about divotmaker! there's no precedent for that. you'd need mass unemployment and runaway inflation if you want that ... in which case we won't be celebrating the pullback in prices.

Agent Bubble said...

What do you think then? 30% really isn't that much when you think about it. A $300,000 home in today's prices (Oak Park maybe?) would be $210,000. Unreasonable you say? I think not.

Anonymous said...

$150 sq/ft is not that far off.

we've been looking to purchase in whitney ranch and the larger homes are between $160 - $175 sq/ft. this is after the incentives are included.

thanks for the great info on this blog. we've been looking in the area for a while and saw the prices drop dramatically.

so we decided to rent to see if it cools down further.

patient renter said...

I don't think 30% is an out of line assessment. True, I personally wouldn't mind seeing it, but when we've seen well over 200% growth overall in this area throughout the last 5 years, what makes you think a 30% drop is out of line?

It's pretty easy to know that a whole lot of people are in for a whole lot of hurt as ARMs continue to adjust. Aside from that though, the economic side of things could indeed feel an impact since these personal wealth losses will likely result in a large drop in consumer spending. As far as jobs go, don't forget that ~50% of new jobs in CA over the last few years have been tied to the housing/lending/RE industries. These areas are all in for some hits.

So yeah, I think 30% is a reasonable guess.

Happy Renter said...

The housing inventory shot up 269 points in the past 2 days. Haaaa haaa hawawawa!!
Man this herd is spooked.
Like buffulo, I tell you buffulo

Happy Renter said...

That is not how you spell Buffalo.
Still laughing hysterically.

Anonymous said...

I think you mean the overall inventory went up by 269 units, but yes, it did.

Overall, in the past 2 months, inventory has risen about 50%. That's amazing.

Gwynster said...

Couple the Bee article from yesterday with this piece from today's front page:

http://tinyurl.com/g5ue4

"It is absolutely no mystery why people are feeling pinched," said Jared Bernstein, senior economist with the Economic Policy Institute, a Washington, D.C., think tank. "This is not just a price problem. It's a wage and income problem."

Other financial forces are contributing to the squeeze.

Interest rates have been steadily rising for home loans, credit cards and home equity lines of credit. In addition, high housing prices, particularly in California in recent years, have eaten up a greater portion of many people's incomes than the Consumer Price Index reflects, economists said.

"You need a lot more money to be able to buy the same property you would have bought 10 years ago," said Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C. The nation's housing boom also has caused higher property taxes and insurance costs in many places, McBride said.

Now, as housing prices begin to settle down, it is creating yet another bind for consumers: Many have borrowed against the equity in their homes, equity that is shrinking in some cases.


And then there is UCD's continuing issues regarding talent retention, recruitment, retiring boomers, and wage issues but those are issues that mostly affect people like me who work in research.

Anonymous said...

We are moving from Atlanta and wondering ... buy or rent a year?

Anonymous said...

The record high inventory to population for Sac was in 1992. Wasn't this 3 years after the peak and about 4 years before prices started rising again. It seems to me we have a lot more inventory left to increase and much much further for prices to fall.

Gwynster said...

Actually OC Renter came up with a new record high figure that is adjusted for increased population - it's somewhere around 17900. We were at 17100 in the counties area on Weds.

I'd check his blog if you'd like to see how he came up with his figure. No one I know seems to be disputing it.

As to renting vs. buying? I'd rent (which I am) and keep packing away money for a sizable down. Housing costs here currently do not come close to the area's fundamentals such as median income.