Friday, November 24, 2006

DataQuick Results for October 2006

DataQuick's dqnews.com has posted their October numbers for combined sales (resale single family residences and condos as well as new homes). This time around, Yolo County leads the state in year-over-year price declines.

  • El Dorado: 5.63%
  • Placer: -15.00%
  • Sacramento: -7.79%
  • Yolo: -15.74%
As suggested by Robert Coté back in August, the number of California counties with y-o-y price declines now outnumbers those with price gains, by almost 2-1.

38 comments:

Rob Dawg said...
This comment has been removed by a blog administrator.
Anonymous said...

Sac October median down 5.8% YOY. That's not much; that's not even sales tax.

JR said...

Anon 8:01,

You are right on the money. This correction is just getting started now. In this area, a $500,000 house and a 5.8% drop in value means a loss of only $30,000 over the last year. We can do much better. By 2008, we should see losses totaling 50%, or $250,000 over a 3 year period. That will amount to something! Stay tuned.

By the way, you don't have to pay sales tax on a home purchase...

Lander said...

City of Sacramento
YOY Median Price Change:

2005
Oct 18.8%
Nov: 12.1%
Dec: 10.82%

2006
Jan: 10.45%
Feb: 8.06%
Mar: 6.52%
Apr: 4.70%
May: 4.31%
Jun: 1.12%
Jul: -2.90%
Aug: -2.90%
Sep: -2.94%
Oct: -5.80%

Max said...

Me thinks I see a trend here!

Rob Dawg said...

Anon 8:01,
-If- the Sac Oct median were UP 5.8% it wouldn't cover the hit from closing costs.

-If- the Sac Oct median were UP 5.8% it wouldn't cover inflation.

5.8% y-o-y declines are monster.

----
Lander,
Thanks for the kind words and for remembering. I've been doing a lot of "remember last week/month/year when I said..." lately.

Anonymous said...

The yoy median price changes for the City of Sac since last fall paint a picture of a soft landing. Even though there have been pockets of trouble, most notably in neighborhoods with new development, the sky is not falling. The 10-20% yoy increases may be over, but the market is only dropping very gradually.

Every day I see properties in Sac go pending that seem very high priced. I think the economy is strong, almost everyone has jobs, interest rates are extremely low, and people are not waiting out the slump - they are buying houses, having children, and getting on with their lives. True, the pace of sales is way down, but deals are closing every day in good neighborhoods at prices not much lower than the peak of last fall. We can speculate forever about what lies ahead, but this is the state of the market today.

Rob Dawg said...

Anon 8:54 says;
The yoy median price changes for the City of Sac since last fall paint a picture of a soft landing.

Huh? What previous 5.8% y-o-y decline are you comparing to in order to make that call? I guess as you are falling out of a 20 story building the fall first few floors are going to feel soft. Seriously, there's absolutely no evidence whatsoever in any way shape or form, datum, survey or pojection that justifies a claim of soft landing. Just like there was no evidence of the old real estate line of permanently high plateau. You know that phrase, it was the one that replaced return to moderate high single digit rates of appreciation which in its time was the replacement for no end in sight of high appreciation going forward.

The fact that we are seeing 5.8% declines DESPITE fair to good employment, inflation and intestest rates is more evidence of prices being worse than priced to perfection.

jr said...

Anon 8:54,

If you want to donate $30,000 to your "cause", please feel free. The average housing bubble takes 5 years to hit bottom after the "pop". Sac popped in mid 2005. There will be no appreciation thru mid 2010. Any one buying RE now is a fool and is wasting a lot of money.

If you don't read your history, you will make the same mistakes again. We know prices are not going up next year, and more likely will drop significantly.

Anonymous said...

JR:

802 buyers in the city of sac disagreed with your assessment last month. That's 26 per day, all fools, each and every one of them.

Rob Dawg said...

Anon 11:37,
First can you choose an anonymous "handle" to avoid confusion?

Anyway, those 802 purchasers don't necessarily disagree. People don't just buy houses anticipating appreciation. There's also a sizable number of house shuffles that aren't buying so much as shifting. There were over 400 not buyers last month who's motives are equally complex but notice that they didn't buy this year at 5.8% down compared to last year when their peers were buying. If you want to use purchase rates and prices thern yoir position fails your own test.

Anonymous said...

Anon 11:37

Have you seen "flippers in trouble" there are tons of investors losing their ass in this housing market. Things are getting worse daily. Anybody who buys a home now especially a first time home buyer would be making a fools move.

I hear daily about people who have lost 20% in equity from last year. This down market has just begun. We are looking at a 50% decline by early 2009.

People are not only losing equity because of declining market they are creating their own loss in equity by have a negative amortizing mortgage.

This market is going from bad to worse with a bullet.

JR said...

To Anon 11:37,

I can not stop people from making foolish choices and buying into a down real estate market. Your same logic indicates 802 people thought is was a great time to sell. So are you now a seller? And if you look at the listing stats, you will see another 15,000 think it is a great time to sell....but guess what? There are not 15,000 fools looking to buy. So you must be a seller now.

There will always be some buyers and sellers in every market at every stage. Going into the depression, sellers found buyers for their stock…..all the way to the bottom, which dropped 75% in value.

I am sure there will be many completed transactions in this market all the way to the bottom. People buy for many reasons. I am just pointing out that if people don't want to lose a lot of money, they are fools to buy right now. And most likely, they will be fools to buy anytime in the next 12-24 months, until we can see some data that indicates when we will be reaching a bottom in this market. Right now, the data indicates another 30% drop in values to go with the 20% drop we have already experienced.

Anonymous said...

Right now, the data indicates another 30% drop in values to go with the 20% drop we have already experienced.

I'm not sure where you get the 20% figure. I thought we were talking about city of sac yoy median price, which peaked last year.

Rob Dawg said...

Real declines of 20% or more for people who bought new homes in Sac in Q3 '05 compared to existing same tract deals from the builders today.

karl marx brothers said...

I'd bet the sales were a combination of different factors, such as growing families who just can't wait any longer & need more space asap, new arrivals needing a house, or a few other situations not as urgent but making a house purchase anyway.

Definately agree that now is a falling market, so if possible delay or lowball your offer to buy.

Sometimes you know it's a falling knife but you need it to cut the strings that bind.

Anonymous said...

Just to clarify: the median price for all types of homes (new and existing, condos and single-family) in the city of sac, peaked last year in july and august at $345K. The median for october 2006 (city of sac, all types of homes, new and existing, condos and single-family) was $325K. That represents a 5.8% decline from the peak.

I'm not trying to spin these numbers. I'm not a home seller - I'm a renter and a potential buyer.

Gwynster said...

The whole median price statistic makes me nuts. YOY sale prices for Davis are only -.83% per DQ yet I can tell you that the price of a 3/2 SFR now is the price of a 2/1 halfplex last year in "prime" Davis.

A good example is a home down the street from me. The 2/2 SFR sold for 575K last spring. Comparable homes around the corner are now priced between 345K to 460K for 3/2 and 4/2 SFRs (5 to choose from all within blocks of each other). So if you go by price per sq ft. the prices have really dropped by 17%.

Anonymous said...
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JR said...

Anon 11:10 PM,

Here is what I wrote:

"....if people don't want to lose a lot of money, they are fools to buy right now."

If people don't mind losing a lot of money, then they are not fools to buy today. You are absolutely correct in that people buy a home for many different reasons. Economics is only one.

I will tell you my experience in this bubble market. Instead of paying $840,000 for a home in Dec. 2005, I decided to wait and rent a very nice home for $1800/month. The owner is a Flipper who paid $750,000 in April, 2006. His ownership cost is about $6,000/month. In the meantime, the house I was looking at has been reduced 23% ($190,000) and has not sold. It was recently taken off the market.

I will buy in 2008. So far, my total savings by waiting have totaled $190,000 plus $24,000 (six months at $4,000/mon net savings). I anticipate my savings, by 2008 will be over $350,000.

I can be very patient for those kinds of numbers. $350,000 is a lot of money. I can practically retire in a few years with those kinds of savings. You see, I do not want to be foolish.

paranoid renter said...

jr,

There's a lot more to the economics itself, though. The dollar could get devalued (reducing the value of your savings) and house prices could continue to go up as would wages. If that happens, then having debt (as in housing debt) would actually be a good thing, since the value of the debt will have gone down. To protect your savings in such a scenario, you'd need non-cash investments (stocks, currencies, foreign stock, gold, etc.) but that entails additonal risk since again things may not play out as expected. We are already starting to see signs of salaries going up.

Admittedly, this is one possible scenario. Instead things might play out as you expect them to, but there are no guarantees.

The people that are best off in this whole thing are those that bought before the bubble (around 2000) and haven't done anything to try and cash in on it, but are rather just going on with their lives oblivious of what the market is doing.

(BTW, I am renter too.)

JR said...

Paranoid Renter,

All your points are somewhat valid. All you can do at this point is look at the statistics and make a decision for yourself. I have done that and see the stats showing housing is seriously overvalued compared to historical norms. Overvalued by 100% or more in some cases, dictating a 50% reduction over the next few years. It does not matter what policies and events got us to this point, but we are here and you should be prepared to deal with it. Most people do not look at the real economics, only "can I afford the monthly payment". They will get stuck. Here is an example of two real estate professionals who got themselves stuck.... http://sacramento.craigslist.org/rfs/238233815.html
Today, they are willing to "give this house away for nothing". Yet, D.R. Horton has a much bigger house for sale around the corner for $355,000 and will provide you $10,000 cash to close the deal. The only problem with buying D.R. Horton's home is, if you buy today, you are going to be the new F'd Borrower tomorrow. Prices are dropping and nothing has changed this momentum

I own four houses, all with low LTV loans and rented for positive cash flows. I do not want to sell them, because selling costs are so high for real estate and I like the cash flow. I could by a $1 million today with 25% down. I rent today because it saves me $40,000 a year over buying in this overpriced market. And I will save another $200,000 to $300,000 when I buy or build a new house in 2008.

PR, my advice to you is to relax and choose a nice, comfortable place to live for the next year or two. I can all but guarantee that prices are not going up anytime soon. You can rent for much less, and it is likely prices are going to drop. You benefit tremendously. You will have more savings next year for a bigger down payment and you will buy a nicer house for less money.

This is not rocket science. It is logical and pragmatic thinking.

Anonymous said...

what can one say, that hasn't already been said to the Jim Jones Kool Aid Drinker who Hype Real Estate and Development?

1. Sacramento was popular, at least the burbs, because it was CHEAP relative to the rest of CA

2. Hypsters and Speculators drove prices out of whack in Sacramento proper, Midtown, Oak Park...yada yada yada about three years ago, YES that's THREE years ago...the RE Hype Artists were trading property among themselves and declaring themselves genius'

3. In Sacramento, downtown and midtown, larger development has beend driven by a flood of FREE cash from the various governmental agenicies directly to Developers, this includes, MOST if not ALL of the larger housing schemes

4. Now that the bubble has burst, the smart guys like Mark Fiedman have exited, except for projects that can be controlled, unit by unit

5. Saca and the other BS and Hype Artists are going NOWHERE, fast...in fact Saca is going to have to look to Daddy to sell more Refrigerators to at least save his hole in the ground...

but that's just "Living Urban in Sacramento"

anon1137 said...

The market is very heterogeneous right now. New developments vs. older neighborhoods, low end vs. high end, Sac vs. the Bay Area all give different views of the market. The only thing that matters is what's going on in the neighborhoods where you want to live.

Carol Lloyd wrote about this recently on sfgate.com: "What's it worth? Depends on where it is".

Anonymous said...

Young Saca in one project could wipe out the family fortune.

Ouch.

However, they did one better, I heard they bought the Howe About Arden shopping center last year as well. Great timing. They probably are getting a cap rate of 4.5%.

With debt service, they are probably breaking even or losing money.

Advice to the Saca's-

Build one tower instead of two.

Liquidate in early 2007 as much as you can.

Be in cash to buy commercial buildings from banks in early 2009.

Gwyn said...
This comment has been removed by the author.
Gwynster said...

Anyone notice the SacBee is dead quiet on these numbers?

I applied for a car loan on Friday. I'm finnally going to buy a new vehicle (a 2006 model) and trade my lovely, sporty, sexy eclipse in.

Not that I plan on using credit when I have cash available but the rate they gave me was almost the same as what I'm making on my CDs. Interesting.

I had planned on holding out for small hybrid SUV in a few years but they just haven't come up with a good efficiency plan for them yet.

I hate buying anything during the holidays being the little financial terrorist that I am. But I heard that the last 2 weeks of Dec were the best times to buy since everyone wants to get rid of the 2006s and they want the sale for year end numbers. Does this sound right?

JR said...

Gwynster,

I am surprised you are even considering buying a new car off the lot. You lose 20% or more of the value when the wheels leave the lot. Look at prices in the paper. I always buy low mileage cars 2-3 years old and save 1/2 the original sticker.

That being said, if you want the new car smell, it is a good time to buy. Car sale numbers are down in Sacramento and there are probably a few deals.

Gwynster said...

I can't believe I'm thinking about new either frankly but it's time to upgrade from a sportcar to a SUV; although only a small one that won't harm residential roads and gets the same mileage as my eclispe.

I also don't think I'll buy until after Xmas so I can keep my financial terrorist standing.

paranoid renter said...

Gwynster,

There was an article somewhere that said even if you get a good deal on a 2006 at the end of the year that discount is "priced in" because unless you plan to drive it till the wheels fall off, your car (according to Blue book) is worth no more than a 2006 model that was bought at the end of 2005. You will have lower miles, but for the same mileage, a 2007 will be priced higher than the 2006.

Happy Renter said...

Paranoid renter,
Please don't reference "articles found somewhere"

Karl Marx Brothers said...

Happy Renter

I disagree with your reply:
Why NOT reference articles found "somewhere"? So what if you can't remember the exact source ,,,
geez, we ain't supreme court lawyers here needing exact citations !!

I remember you complaining about people posting anon a few months ago. Now you're upset about a vague reference to an article?

Relax already.

(Lander may delete this but I stand by my statement.
A spirited but fact-based reply is welcome)

Happy Renter said...

KMB,
Your right!
Everything in print is fact including every word written online!
We should not even be given the opportunity to question the source or their data!
Somewhere, someone said something in an article, sometime is good enough for me. Atleast try to reference your source so I will have something to punch into google.

Scrolling back through replies to see who was replying to whom concerning what is not at all annoying even though replying with an alias is as easy as typing in an alias!
If someone pops in and drops a line as anon it’s no big deal.
If you keep coming back day after day as anon it causes confusion and waste time. It's not bad when there are 10 post and no two are by the same anon, but when there are 30 and 4 are by the same anon it gets difficult. That's why Ben made us all get user names a long time ago. With a name you are still anonymous!

Please don't reply with some line about my grammer or spelling making things as difficult!

Happy Renter said...

I'd like to add that I have both commented online as anonymous and have referenced "an article I read." I make the effort to not do this anymore even when replying to a political article in the sac bee as "happy renter" does not make sense or when a good argument is wasted because I can't come up with a source.

My irritation comes from hearing too many regurgitated pro RE statements.

You know, I've been doing this too long.

AgentBubble said...

HappyRenter
My irritation comes from hearing too many regurgitated pro RE statements.

You mean NOW isn't a good time to buy??? LOL

HappyinSF said...

Gwynster,
I've never bought a new car but.. isn't there a trend now after the new year of "employee discount" pricing? Just a thought, I've heard people get really good deals that way.

Gwynster said...

I have 30 days to make up my mind. I won't buy anything unless it pencils out financially. And while the payments are nice and low, there is also ins, gas, high registration, etc. when you get a new vehicle. And my car now is paid for.

Just like paying a house >; )

Anonymous said...

HR vs. KMB debate... here is my 2 cents, my opinion only.

I'll have to side with KMB on this one. These types of blogs are informal and freewheeling discussions. However, in more formal articles (ie: Wikipedia) you have to reference the sources, otherwise they are flagged as Weasel Words.

Sorry to post as ANON, I can't seem to think of a handle yet.