From Lyon to Bear: As Sales Plummet 45%, Lyon Says Values May Drop Another 10%
When it rains, it pours. From the Sacramento Business Journal:
Declining demand and buyer hesitancy pushed existing-home sales down 45 percent in Sacramento, Placer and El Dorado counties in July, compared to the same month last year. Sales have also dropped 34 percent through July of this year with 11,648 transactions in 2006, compared to 17,804 last year, according to a market report byLooks like Mike Lyon, CEO of Lyon Real Estate, is changing his tune. Back in October 2005, he predicted 12% appreciation for Sacramento County in 2006. Here's what he has to say now:Lyon Real Estate.
Generally, resales are priced $50,000 to $100,000 above what the market will bear and that is turning sellers away, said Mike Lyon, the company's chief executive officer.He predicted the decline in house value that has gone on through this year will likely continue for another 12 months, until the current oversized inventory is sold off. But the homes might not sell, he added, unless sellers realize buyers are no longer paying the boomtime prices of the past few years. He said values have been falling and may drop another 10 percent by this time next year.
"Sellers are still in denial," he said. "But if you're not serious about selling, if you're just fishing, this is the dumbest time to gamble on the market. If you have to sell, sell. If you don't have to sell, don't." He added it could be two more years until homes start to rise in value again.
12 comments:
Wow! Talk about suddenly singing a different tune!
Hat tip goes to commenter John in Rocklin.
Lyon says, "10% drop...turn up in a couple of years"??? What history lesson has he been reading. The average correction has been a 23% drop and the typical downturn lasts 3.7 years. This current market has a much higher manic upside than others before it. The downturn will be longer and deeper. I say 5 years to hit a 50% reduction in prices(yes, that $600,000 home will be worth $300,000). Things will hang at the bottom a year or two, then SLOWLY recover. Just like 1990-1997.
Lander, Thank you for the hat tip. I must take my hat off to you and get down on one knee. You see, late last year, I wrote up an offer to buy a 2200 sf home, with some extra land for $860,000. I did this after searching for the best opportunity for 6 months and patiently waiting for the December "buying season". Finding this property was a great deal of work and I had many, many hours invested in the search. Yet, something just did not seem right to me about the market. It was a tiny nagging thought in the back of my mind.
I did a Google search on the Sacramento housing market. Poof, up popped Sacramento Land(ing). Wow, what a lucky day that was. Your site led me to all the other sites, the hard data, the historical graphs, and the raw numbers that showed how out of balance this market really was. I was just days from getting caught up in the buying hysteria myself, even though I purchased a house in 1990 and watched it drop in value 25% thru 1994 (and rise 260% thru 2005).
The day I saw your site I became a certified Bubblehead and tore up the contract I had prepared. I hate to think that I could have been stuck with that deal today. The property is still for sale and the asking price has been reduced nearly 22%.
So now, I am not only a Bubblehead, but a dreaded Bubblesitter. I tip my hat to you, for saving me years of misery and, perhaps, flushing $400,000 down the bubble drain. Today's news on this web site confirms to the masses that the market has dramatically turned. Now the only question is how far will it drop.
I am moving this month and leasing a bigger home to meet my families needs. We will wait for the market to correct. We own three smaller homes which we are keeping and renting with strong positive cash flow. What a difference you and all the bubble bloggers will have made in our lives. Thank you so much.
Listening to a realtor make predictions is like asking Mr.Rogers what kind of day he was having. There's no credibility when there's an agenda at stake. He's right about one thing...the seller doesn't get it yet and by the time he does, he'll flush another 10-15% down the drain. Gotta believe the ARM armies are marching into the valley and are about to bushwhacked from above. When this reality checks in, todays inventory numbers could explode upward from here.
I noticed today that the Bakersfield, MLS site is messed up.
I can search for propertys on any specific street and pull-up listings for the past 10 years.
Current, expired and withdrawn listings are shown.
What I thought was funny about their glitch, is there are many homes that are Withdrawn, relisted and Withdrawn, with price reductions.
I've found some that have been withdrawn 3 to 4 time in 2 months. The price was reduced in most of these cases.
Shows the tactics these agents are useing to sell these days, withdraw, relist...
It brought me back to the day, when houses sold for for a decent price. It's nice for checking comps to.
http://bakersfield.rapmls.com/scripts/mgrqispi.dll?APPNAME=Bakersfield&PRGNAME=MLSLogin&ARGUMENT=jXHBhF9EsKI%3D
Sold houses are also viewable.
This is a general search I did by zip code. Look at the price criteria I entered and how many homes returned. These homes in this area go for at least 200K plus to start.
Criteria: Property Type Residential Zip Code 93312 Price 50,000 to 110,000
1341 listing(s) found.
The number of listings found exceeds the limit for this search. In order to optimize system performance, the maximum number of listings allowed is 50.
Click the Revise Criteria button to return to the previous page.
smoggie-
I follow the Bakersfield market daily. The MLS is in bad shape today. I thought they were trying to confuse me this morning when I pulled it up. LOL
crispy,
Do you have any links for tracking the Bakersfield market. I haven't found much data on the market here.
I have someone people send me the information on building permits and sales. I post these on Ben's blog. I will post the numbers here whenever I receive them!
BTW- I have no affiliation with Crisp & Cole
"crispy&cole said...
I have someone people send me the information on building permits and sales. I post these on Ben's blog. I will post the numbers here whenever I receive them!
BTW- I have no affiliation with Crisp & Cole "
If I had thought you were affiliated Crisp & Cole,I would not have bothered to ask if you had any internet links to the Bakersfield market!
Post a Comment