Wednesday, November 15, 2006

Sacramento Area Leads State in Price Declines

Sacbee.com has a preview of DataQuick's October numbers.

The Sacramento-area real estate market continued to show California's most significant year-over-year declines in sales prices during October, new statistics released Wednesday show.

Suburban Placer County posted the state's largest decline, with median sales prices of all homes and condominiums down 13.3 percent from October 2005, according to La Jolla-based researcher DataQuick Information Systems. Sales prices were down 8.1 percent in Sacramento County, the biggest sector of the region's housing market.
...
Yet in a sign that many sellers are giving up and taking pressure off a 2006 record resale inventory, the number of existing homes on the market in El Dorado, Placer, Sacramento and Yolo counties plunged by 1,004 during October to 13,897. A traditional occurrence as the market heads into the end-of-year holiday slowdown, the drop is the biggest since 1,800 homes came off the market in November 2005.
From the Sacramento Business Journal:
Home sales in the Sacramento area continued to fall in October according to a report from real estate tracking company Trendgraphix, which monitors the resale housing market. In Sacramento, El Dorado, Yolo and Placer counties, sales of pre-owned homes fell from a total of 1,705 in September to 1,549 in October, a drop of about 9.1 percent. The median sales price also continued on a downward slide in each county, most dramatically in Yolo County, where it fell from $450,000 in September to $416,000 in October.

12 comments:

sippn said...

Lyon suggested new home builders might be snaring buyers because of deep discounts and incentives owners of existing homes aren't offering.

Mike only tells you part of the story (MLS resale) but at least knows something else is going on. October 2006 new homes sales exceeded Oct 2005.

Anonymous said...

Is there a source for month to month declines? The year over year numbers are hard to interpret progressively since different sources give different numbers.

Max said...

Lander has done a good job posting the price findings from different sources: Sacramento Housing Market - Price Peaks

As for new vs resale, I think this is no longer debatable. The bigger questions are:

How long can the resellers hold out before they're forced to take losses/mail back the keys?

What kind of excess new house supply is there and how long can it last at the current rate of sale?

Are the builders making any profit, or are they just generating cash flow hoping for a price rally down the line? If so, how long can they keep going?

Right now, the builders show no sign of slowing, which means they will continue to price just under the resale market to generate sales. As their margins narrow, they'll eventually run out of credit and the market will tumble.

One thing to look for is suppliers and contractors not getting paid promptly after completion. Anybody in the construction biz experience this?

Anonymous said...

Sacramento is on track for a 50% decrease by the end of 2008. Anybody who buys a house now would be a fool.

smothers brothers said...

All the news media attn to troubled builders & subcontractors filing bankrupty (Aquarius Pools)
here in Sac area makes for an educated and wary consumer.
At my HOA meeting tonight I am going to make a homeowners statement to the board that we add some performance clauses in the bid contract for our common pool remodel.
Things such as: no more than half paid in advance, on-time & on-budget clauses, no forced mediation for disputes, etc.
In other words, change the standard business contract from favoring the contractor to a more level & fair agreement.
Maybe it's a pipe dream but since this job isn't urgent we can shop it around to a reputable & FAIR contractor who isnt out to gouge and will stand behind his work.

Anonymous said...

Anbody have any data on how many homes in Lincoln Crossing are in foreclosure?

JR said...

Anon 9:54

I am not sure how many homes are in foreclosure, but at foreclosurestogo.com, they list 84 homes in Lincoln where the lenders have filed NODs. If you look at the JTS Estates at Lincoln Crossing, 8 to 10 houses have had their utilities turned off and sit vacant, owned by Flippers in Trouble (aka FITs, although only 1 of the 8 FITs shows up on Max' web site). The builder has dropped his prices by nearly $200,000 trying to sell over 50 homes since August. They have sold about 10, but it appears they took about 10 more back in cancelled Flipper deals. So they may still have about 50 left today, after 6 months of “liquidation” sales. Some more may be under contract now. I have maintained since April 2007 that they may have to sell them at an auction in January. I predict there will be 40 homes available at auction, if they have one.

This is just one subdivision out of 20 or more at Lincoln Crossing, but I think it is in worse shape than all the others. The word I hear is that JTS sells overpriced homes to bay area investors. Evidently, they got caught in the downturn like no other builder, and all the investors walked on the contracts.

brother from another mother said...

" FITS " = FLIPPERS IN TROUBLE

LOVE IT !!

Anonymous said...

A few weeks ago, someone mentioned JTS was selling off its corporate headquarters. Does anyone know anything about this--if it's accurate, and if so, if it is due to the companys finances. Does anyone know where JTS stands these days, not just with Lincoln Crossings, but generally speaking as a builder? Thanks.

JR said...

I don't think JTS is a public company, so it is impossible to know how they are doing, unless you are their banker. They have probably made so much money over the last 5 years. I don't think a little downturn in the market these last 18 months would put a dent in their net worth. It may have changed their cash flow somewhat. I have heard they do own part of the Conway Ranch in Woodland, which Yolo county and the Indians were trying to condemn. That turned out to be an bit more expensive than they probably planned, defending the condemnation action, then paying the county the money the county spent suing them. That was irony at its best (or worst). So they lost some cash flow, but also gained substantial net worth in creating more marketable rights to the water. Now if they can just sell the water to LA, they will be making more money. And they are sitting on 40-50 homes in the Estates at Lincoln Crossing. That should generate $15,000,000 or so, when they get them sold at current market value.

Anonymous said...

RE: FITS = FLIPPERS IN TROUBLE, is there an acronym for clueless non-flippers trying to sell their house at twice its appraised value?? If not, there should be. The MLS is completely full of these things - it's hilarious. $400/ft2 in Sac??

Anonymous said...

JTS was started by Jack Swaggart, a former truck driver. The company is still privately owned.