Sacramento New Home Sales Headed For Eight-Year Low
From the Sacramento Bee:
New home sales lowest in eight yearsActually, Yolo County's sales price is down 11.1% according to the Bee's chart.
Builders keep cutting prices to lure reluctant buyers as the region's spring pickup eroded over summer
A spring surge of Sacramento-area home buying ended abruptly during the summer months, heightening a slowdown likely to pull new home sales to their lowest levels since 1998, figures released today show...
The Gregory Group reported sales of 1,956 new houses in July, August and September in six area counties, a 37.4 percent drop from the previous three months. Sales prices are 3 percent to 5 percent lower than last year.
In the first three quarters this year, home builders have sold 7,143 new houses in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties, according to the Gregory Group. That's down 43.1 percent from the same period last year and puts the region on track to sell fewer than 10,000 new houses for the first time in eight years.
"It's a sluggish market and that's the world we live in today," Paquin said. In 2004, area builders sold 17,155 homes and condominiums, he said.
Metropolitan Sacramento has had the state's steepest drop in the number of new permits for single-family homes, said Alan Nevin, chief economist for the California Building Industry Association. Permits reflect builders' intentions to build more houses...
On top of the slow sales, about 20 percent of new homebuyers backed out of contracts during the summer, according to Hanley Wood. That's compared with about 4.7 percent during the same three months in 2005.
6 comments:
Thanks to several readers who sent this in.
http://biz.yahoo.com/weekend/weakhome_2.html
Sacramento is listed as falling 9.9% and expected to bottom in Q408. I think it will fall that much by the end of this year!
exactamente!
If you live/bought in the burbs (stucco box in ED Bills or "Anatolia) you should figure a loss of 1/3 to 1/2 from the peak, whenever that was...to the bottom
If you live in Curtis Park, Old Land Park, or maybe parts of Midtown, you may be down only 10%, and if one lives in the fab 40s you may not be down anything at all...
work it backwards, how much can a poor working schmoo and his wife afford to pay for stucco dump in El Dorado Hills? At 1/3 of income, max, my guess would be something a little over or under 300gs...
Folks who live in Curtis Park, Old Land Park, yada, yada, yada are a completely different breed from the stucco burbs breeders...
Anonymous 12:53 p.m.,
Why wouldn't the fab 40's or Curtis Park go down as much as any other part of Sacramento? Those areas are way overpriced too and people took out the same toxic mortgages in those neighborhoods as everyplace else. $495,000 for a 1940's 2 bedroom bungalow in East Sac is a bubblicious price. There are For Sale signs all over East Sac and I don't see much moving.
Roseville Renter,
I believe the thinking is that more stable neighborhoods will see less overall turnover, benefit from longer-term owners with more equity, fewer toxic loans, etc. Also, the energy situation (until the recent pricing pullback) favors areas closer to the city center, where the jobs are located.
The nature of a bubble popping is a relatively short-term event in the overall progression of a real estate market cycle. The peak occurs (currently, June 2005) and you see the price reductions over the next 3 to 4 years. The older, more stable neighborhoods such as Old Land Park have much less turnover than the new areas like Elk Grove, Natomas, Lincoln or Folsom. Thus the pressure affecting prices is not so acute in the more stable areas.
This particular bubble deflation may be even more exacerbated in the new areas, because a “credit bubble” drives it. Too many unqualified people were allowed to borrow too much money to buy a home they ultimately will not be able to afford. This occurred in areas of new homes promoted by use of the builder's "preferred lenders". Fundamental lending was replaced by a "get the deal closed" fraud-based mentality.
A more typical housing bubble pops when there is an external (other than housing) downturn in the overall economy, a drop in regional employment, and/or out migration. This has not happened.....yet. That is the big question right now: Will this popping housing bubble lead to a steeper downturn causing an economic recession, more unemployment, and even lower housing values?
If the answer is yes, and it builds on its own decline, then no neighborhood is really immune anymore.
> Why wouldn't the fab 40's or Curtis Park go down as much as any other part of Sacramento?
We've debated this before on this blog and there are differing opinions. This article supports PBS's view:
Foreclosure activity skyrockets in East Bay/Building boom at Bay Area's perimeter drew unstable buyers
(http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2006/10/14/BUGBKLP6S51.DTL&type=business)
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