Stockton Headed for the "Dumpster" of Home Prices?
More local reaction to Moody's Econony.com's forecast:
- Central Valley Business Times: The Merced metropolitan area will have the steepest price decline in California, Moody’s predicts. It says home prices in Merced will crash by 16.1 percent from their peak in the fourth quarter of last year to the low point, which Moody’s says will be in the second quarter of 2009. Stockton will follow Merced into the Dumpster of home prices, says Moody’s. Prices in the Central Valley’s port city will decline 15.7 percent by the fourth quarter of 2008.
- KCRA: In Stockton, developers continue to build homes, but the National Association of Home Builders expects the number to decline almost 12 percent this year and 12 percent next year due to an over supply. "There are more than triple the number of houses, existing homes on the market as were on the market two years ago," said Dr. John Knight of the University of the Pacific School of Business...Realtor Sheri Midgley said she has already seen the change as investors have left the market. "We were having investors buying two or three a year, or even more than that, and then flipping, but the flippers aren't in the market right now," Midgley said.
- Stockton Record: "That (15.7 percent prediction) might be overly aggressively, but I wouldn't be surprised to see a 10 or 12 percent decline," said John Cecchini, sales manager for Century 21 Collins in Stockton. "We're seeing a slowdown already. It will take it another two years to get an additional decline of 5 percent..."
Until recently, Marcia Ourganjian and her husband, Walter, were in the Stockton housing market, dropping out after six months of, well, much of nothing. They'd had enough would-be homebuyers come to look over their three-bedroom, two-bath Estate Drive home in north Stockton and tell the couple how beautiful the place was, with its granite fireplace, tile floors, crown molding and ceiling fans. And the lookers would walk without ever making an offer.
They did get one offer: After the couple had cut their sales prices $10,000, to $435,000, someone offered $390,000 but wanted all the furnishings in the house as well. "I thought, 'Are you kidding?'" Marcia Ourganjian said. The couple, who wanted to sell so they could retire in their native country of Nicaragua, declined. Marcia Ourganjian quoted her husband's philosophy of: "I'm not going to give my house away."
The Ourganjians don't know what to think about the sales market, but at this point, they are out of it for a while until they sense a better sales environment. "We're going to wait three years," Marcia Ourganjian said. "Maybe the market is going to go up. Something has got to happen."
10 comments:
Sean Snaith, director of University of Central Florida's Institute for Economic Competitiveness and consultant to University of the Pacific's Business Forecasting Center, said the Economy.com forecast is overly aggressive in its prediction for a 15.7 percent price decline for the Stockton area.
Snaith thinks prices may decline over the next several years as excess inventory clears, but it's not bubble-bursting, just a market slowly adjusting to an excess inventory.
"A soft market is what you're going to be seeing for several years," he said. "That's reasonable, and that's consistent with a nonbubble view of the Stockton housing market."
"Snaith thinks prices may decline" Is that a first for Mr. Snaith?
What are these people talking about? Decline from current or decline from peak?
I can point to places that have lost 15-20% from peak right now.
From the Stockton Record:
Stockton No. 1 in violent crime rate
"Stockton was the most violent big city in California in 2005 for a second straight year."
"Violent crime, a category that includes homicide, aggravated assault, robbery and rape, rose 11 percent in 2005, according to a Record analysis of recently released FBI statistics. The analysis looked at cities with more than 100,000 people."
To get back to the trend line like has occurred in the last to downturns, Stockton will have to lose 40 to 50% from the Peak. It has already dropped 10%, so there is a long way to go. I heard in 2005, 50% of the homes were purchased by specuvestors and these are now back on the market or flooding the rental scene. This is not going to be over quick and shallow like Snaith thinks. There must be a reason he bailed and went to Florida. I'm thinking the old "Keep moving and they can never pin anything to you" is a good enough reason.
Tallyho look out below....
this moody's report is funny,in a sick way,they predict a less than 10% decline for sonoma county in the next two years,and we are already there.these predicted declines are all from the peak,and are supposed to be as bad as it will get by 08....did anyone tell these guys about the mortgage resets,or explain to them that markets are driven by expectations...emotion,in other words?
Snaith said "decline"?
Cue Armageddon. Just 9 months ago, he was telling reporters that Stockton's huge price increases were based on fundamentals and couldn't possibly fall.
If Snaith thinks prices are going to decline gently, they're going to drop like the proverbial rock. I wonder if his house in Stockton ever sold.
Declines will be much steeper as people who have to sell...will. I imagine 30% off their highs as a minimum....more like 50% in some areas. Oh and for the lady who wouldn't take the offer of $390k...she'll get less if they want out.
I don't agree with you folks on everything but at least we agree that Moody's forecast has holes in it.
They've predicted with some preciseness a xx.x% price reduction, the intercection of future supply and demand but without actually needing the supply numbers....amazing. I guess you buy computers now days and they already have those numbers in them!
Signed,
The Lions guy
The OH MY GOD guy
Anonymous
Can't figure out a name I like
Moody's S C....
Your point is on target. The number pushers can prognosticate all they want, but the accurate story for real estate is always "localized". It is the true nature on the beast. And it takes "boots on the ground" to really get the best local picture.
That being said, my personal take on the Sacramento market, after carefully looking to buy during the last year, leads me to believe Moodys report is very optimistic!
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