Monday, October 02, 2006

Think Happy Thoughts

From the Sacramento Bee:

Dreary home market has bright spots
Solid location and good pricing can still lead to quick sales


By the end of the fall sales season that began in October of last year, the conclusion was all but inescapable. The housing boom that had minted so much paper wealth and created so many mini-fortunes throughout the capital region was finished.

The downturn proved a stunning counterpoint to five years of unparalleled increases in home prices, when "for sale" signs would barely have time to go up before offers on the home would start coming in.

The dramatic decline that began in 2005 is now glaringly obvious in the numbers: 20,000 fewer homes sold in eight area counties in the past 12 months compared with the previous year. Median sales prices 12 percent lower in Placer County than a year ago, 8 percent lower in Yolo and 6 percent lower in Sacramento. Inventory at levels unseen since the early 1990s.

But a year into the downturn, there's an equally compelling counterpoint: Some homes are still selling in hours or days. Just as during the booming days, stories are being told in store checkout lines and at weekend gatherings of sales with a surprising "Wow" factor...

A round of recent interviews reveals it is possible, too, to sell houses or condominiums in just days under the right circumstances in Natomas, south Sacramento and Elk Grove.

More happy thoughts.

12 comments:

Anonymous said...

The Sac Bee usually has about 5 to 10 sections Real Estate supplements...

The Sac Bee also almost never reports any real news on the collapse of downtown/midtown real estate...

The Sac Bee almost always hypes downtown/midtown projects, and never comments on the subsidy by the government...

Velingua (sp) is really bad at the hype, and one can discount any truth to her reporting...she's usually just a hype master...

norcal ray said...

Renters looking to buy can think happy thoughts as the prices drop over the next few years. Some will finally be able to afford it without getting a bad loan product.

drwende said...

Hey, all the reporter said is that if you have a really nice house in a highly desirable neighborhood (one of the older ones, so the house has rare character), and you price it low enough, someone will buy it.

Those aren't the houses that investors bought to flip, nor the ones they bought as rentals. Those are the homes of people who've lived there for years.

It wasn't long-term owner-occupants using conventional financing who inflated the bubble, and they won't be the people who pop it.

The explosive growth was driven by Bay Area investors and people using exotic financing, out amidst the ticky-tacky houses in Natomas, Elk Grove, and West Sacramento. They're the ones faced with a choice of selling at a loss now or holding their houses all the way through the crash and into the next upturn, so that they can eventually sell for a few thousand dollars more than they paid. No doubt there'll be lots of investors bragging about the savvy behind their $5,000 "profit" in 2019.

Anonymous said...

Does that mean that Natomas, Elk Grove, and West Sacramento are going to drop the most? I would think so.

No tenants other than boat people growing pot in the ticky tacky houses.

drwende said...

Oops -- I missed the last paragraph, where the writer swears it's possible to sell subdivision houses quickly.

Judging from the MLS, the technique is to undercut all the competition by a lot. The same houses that were listing low $400s in early August hit the $380s by mid-September and are headed for $365k, as everyone tries not to be the last fool.

Lander said...

Looking past the front yard "Sold" sign to neat neighboring yards, trees and well-kept houses, she says, "They've always been recession-proof."

Somehow I don't think even homes in the much-vaunted East Sac area were "recession-proof" last time around, although I don't really have the data to say for sure.

Do SL readers think there are any areas in Sacramento that will be "recession-proof" this time around?

chuck said...

More or less exactly as Wasserman said, older, better neighborhoods, Curtis Park, Old Land Park, Midtown, will lose less value than the crummy stucco box burbs such as Natomas, Elk Grove, El Dorado Hills, Granite Bay...

"they're all made out of ticky tack, and they all look just the same"....

Not rocket science, the intrinisic value of property in Marin will always be worth more than some crummy dump in Placer County...

Anonymous said...

>Do SL readers think there are any areas in Sacramento that will be "recession-proof" this time around?

I agree with Chuck. The older, established neighborhoods like ESac, Land Park, and Midtown will hold their value more than the newer neighborhoods in Natomas, Elk Grove, and WSac.

If nothing else, it's a supply/demand issue. There's essentially an infinite supply of 2-story stucco boxes. In 50 years, the entire central valley will be full of them.

drwende said...

What Chuck said. Desirable older neighborhoods will see a drop in sale prices as the whole market declines, but it won't be nearly as steep as somewhere like West Sacramento.

W Sac is doomed: it only got out of slum drive-through status due to all that home construction vastly increasing its property tax base. Between neighborhoods going entirely rental, tenants drawn from the pool of people so wacky they couldn't get a mortage in the loose 2005 lending environment, strapped owners stinting on maintenance, and owners petitioning their property taxes down to match drastically decreased values (thus impoverishing city government), that place is going to become the blight on Sacramento's eastern shore.

Anonymous said...

Yea, what Chuck said except that solid area of no price decreases will extend over the river through the south ends of 95825, 95864 and 95608 zips. (for all of you in the east sac flat Earth society - that's Arden, Sierra Oaks, Carmichael)

There is a phenomena of move backs from the distant suburbs into these zips...still...

Lander said...

"will lose less value"
"hold their value more"
"drop in sale prices...but it won't be nearly as steep as"

Agreed. It makes sense that "nicer" areas would be less suspectible to massive price declines. However, I don't think they are immune from price declines, which looks like the postion of anon 5:22 and the Realtors in the last two paragraphs of the article.

drwende said...

Realtors are hoping that if they say it enough times, it'll turn out to be true.

That tactic worked so well in convincing people that they needed to pay any price to "get into the market"... for a while.