Friday, September 08, 2006

Different in Davis?

This appeared in the Davis Enterprise. Read the full column at Gwyn's blog.

Davis is relatively well protected from large price drops due to its slow growth policies. Most likely, very few new homes will be built in Davis from 2006 to 2008 and prices will steady by 2008. While elsewhere, the housing bubble will slowly slide to find a bottom in 2008, Davis may well escape the worst of the slide. With a vibrant employer, UC Davis, we can expect a flow of new employees to Davis over the next several years.

UC Davis also can help cushion the fall of prices by canceling or delaying the construction of new private homes in the West Village neighborhood project on the west side of Highway 113. Without the construction of these 475 units, we may be able to avoid a sharp drop in Davis housing prices...

Over the past three years, there has been a debate about private housing to be built in UC Davis' West Village and Covell Village in North Davis. If both these projects are delayed for a few years until 2009, Davis residents may find they have escaped the housing price decline and be gratefully ready for new, slow-growth housing plans starting in 2009.


JR said...

Unreal. "No man is an island".

Davis suffered the same pricing downturns as everyone else in 1990-1994. In fact, the market's fall led to many foreclosures of homes and apartment projects (sellers, unable to sell, rented to groups of students, which caused apartment vacancies to rise).

This elitist "Davis is different" dribble is nothing more than what you hear everywhere else and it never holds water.

Davis' housing policies will probably lead values to fall harder, just as it has lead to the artificially higher costs in place now.

Think about it...if a home in Dixon sells for $250,000 and the same home in Davis sells for $500,000, which will you buy, to save $2,000/month in costs. The only thing the self serving, tree huggers in Davis do is cause more commuting, thereby ironically trashing the environment. No one can live in houses the town will not approve and no one can buy goods in shopping centers the town will not approve. So everyone drives, drives and drives some more. How pathetically inept.

Anonymous said...

As I grow older I've started to realize that people who live in college towns are stuck in some phase of arrested development.

Come on folks. I know some of you work at UCD, but the rest of you need to move on with your lives.

RMB said...

I like to think of the people who live in college towns as being permanently infantile. For the most part all the people know is school. The students have been in school most of their live and the largest employer a college is full of people who have been in school most of their lives. They have never had to grow up and face the world. This allows them to live in their fantasy land and gripe and moan about why can't the world be just like them? Well news to Davis, you're just like the rest of the world and the market will take care of you in the next few years. The university is not growing (about the same number of students as were there 15 yrs ago when I attended) so I doubt there will be a upswing in demand from university employees and the Bay area transplants and speculators are selling or will be selling soon. No city is an island and Woodland, Dixon, and West Sac are going to have a huge effect on the Davis real estate market whether the socialist who run the city like it or not.

Happy in SF said...

You have a dead link to Sac Bee Real Estate News.
I guess they didn't like your readers wandering over there and commenting on their stories.

Anonymous said...

I agree, this is crap. I live in Davis, and own several properties there. I owned twice as many properties up until middle of last year, and dumped two as my value had doubled over three years, but the rental income streams had not gone up one single dime. The price of the properties I sold last year for around $600k each has fallen by at least 5%-10%, if someone wer to try and sell them now.

There are over 250 homes on the market now, and the idiot seller pricing is just showing signs of cracking. Declines in pricing are being seen in some properties, but there are very few transactions. The shit will hit the fan over the Winter after mucch of this crap has sat on the market for 6 months and there are even fewer buyers out there looking to buy a $500k outhouse compared to what you can buy in Dixon, Woodland, and any number of surrounding communities.

The growth policies in the town are insane, and have let to homes that are ugly run down POS boxes being sold for $500k each. More than that, what this story does not tell you is that literally 5 minutes from Davis there are a ton of homes going up in Spring Lake Development/Woodland, where your money can travel much further. I think Davis housing is going to suffer a 25% real decline in prices from the peak last summer to the end, whicch will be several years on out. Some of that will come from nominal price drops, but the rest will be eaten away by inflation.

Davis couldd be a great place to buy in 2-3 years, once the dust settles, that is if you can handle the lunatic city politics, a whole other story...The restaurants are great, and if you plug your ears once and a while it can be a fine place to live...

fishtaco said...

While I disagree with the author of this column and was disgusted when he suggested that the powers that be stop growth to further prop-up property values, I also disagree. I can buy toothbrushes, deodorant and tp from my local Longs Drugs without driving out of town. If I need cheaply made crap and a twelve pack of Pringles I do have to venture out into the "real world". Stop generalizing about places and towns. Davis different than many surrounding towns and cities, get over it. It rejects the "norms" that it seems that every other city has accepted. As a city it is far from perfect, but name me a city that is? Every city in CA has experienced from the speculative run-up in prices and Davis will not be immune from the housing collapse that is underway. Folks that are looking for a “safe” city to park money in an income property won’t find it in Davis.

BTW - the Davis Enterpirse has run two front page stories about the "glutted" market and how things aren't selling. This piece is by one of the many weekly columnists.

Anonymous said...

"Anonymous" above makes a good point about real vs. nominal declines. This is the reason I don't think price drops will appear as dramatic as many housing bears think. Much of the drop will be masked by inflation.

If nominal prices drop, say, 15 percent over the next three years, then stay flat for the following three years, that would equate to about a one-third drop in real prices over 6 years, assuming an annual inflation rate of 3 percent over the 6-year period.

I don't think we'll see much more than a real decline of one-third, which, after all, would be quite substantial. Yet this could be accomplished with quite undramatic drops, relatively speaking, in nominal prices.

peterbob said...

My friend (an Economics professor at UC Davis) bought in 1991. Within a year he had serious negative equity in the house, and he said that it took 7-8 years before he was back at where he started.

This housing bubble is nationwide, because it's origins are national: low lending standards and low interest rates. Once those dissappear, even slightly, prices will fall. And prices will fall nationwide.

Nope, nothing special about Davis, or any other place. In fact, the faster the prices rose, the faster they will fall.

Lee said...

Reading some of the comments here, its amusing how much some people just HATE Davis for daring to be different, and in some ways, better, than Everytown USA.

The jealousy is palpable.