Friday, December 15, 2006

Double-Digit Price Declines for Placer & Yolo; Sacramento Down 8%

The Sacramento Bee reports on DataQuick's November numbers:

As the year ends, much of the region -- Placer, Sacramento, Sutter, Yolo and Yuba counties -- again posted California's steepest year-to-year declines in median sales prices for all homes and condos, a phenomenon that began in June. Yolo County's November declines led the state: 13.5 percent lower than a year earlier. Prices were down 11.2 percent in Placer County from last year; in Sacramento County, 8 percent.
...
Placer County's $442,500 median sales price for an existing detached home remains 12.2 percent lower than its peak of $504,000 in Aug. 2005.
...
Since June, when San Diego, Sacramento and Placer counties led California into negative year-over-year territory, more than half of the state's urban counties have followed. It means thousands who bought homes a year ago have made no gains in equity.
...
"There's no sign that the prices are in a nosedive here, nor is there a sign that it's going to turn around anytime soon," DataQuick analyst Andrew LePage said Thursday. "We still think it's likely (that prices) will wobble around here until the spring, and then we'll find out if there's been enough correction to trigger an upswing in demand."
...
But as the year ends, there are some encouraging signs for the market, analysts said, especially for sellers concerned about a glut in inventory. Sacramento-based TrendGraphix reported this week that the number of homes on the market in El Dorado, Placer, Sacramento and Yolo counties fell for a fourth straight month to 12,652. That's 1,245 fewer than October and well below the record 15,474 homes on the market last July.
It should be noted that last November, there were 9,468 homes on the market, according to TrendGraphix. So on a year-over-year basis inventory is up 34%. It seems likely that we'll start 2007 with more inventory than what we had at the beginning of 2006.

36 comments:

Max said...

It seems likely that we'll start 2007 with more inventory than what we had at the beginning of 2006.

That whole line of reasoning is completely false. Inventory always drops off in the Fall months.

They're just looking for any excuse to spin positive. When Spring hits with no buyers and record inventory, they'll have to find a whole new set of excuses.

Sam Tehrani said...

No buyers in Spring! This report is straight up whack! Get out in California while you still can!!

Go Midwest young man!

patient renter said...

This is good news.

Lander: What's the total cumulative median price decline since the peak? These month to month YOY stats are hard to judge altogether.

RayW said...

They say it will get better in the spring.....the spring has already sprung. The spring bounce is going to be a spring thud as prices and sales continue to decline.

The top of the market was found in July of 2005....where the bottom is, is the only remaining question.

Lander said...

Max-
Not sure why you object to that particular statement. Perhaps it wasn't clear that I was comparing January 2006 to January 2007, not month-to-month. Unless inventory drops another 3,500 in December, we'll start the next year with more inventory than we had last year.

And yes, inventory normally drops in the Fall, at least according to last year's Bee: "Inventory normally declines in the fall..."

RayW said...

They say it will get better in the spring.....the spring has already sprung. The spring bounce is going to be a spring thud as prices and sales continue to decline.

The top of the market was found in July of 2005....where the bottom is, is the only remaining question.

Anonymous said...

So much houisng inventory will be dumped on the market in the Spring its going to make all of Sacramento look likes its for sale.

Spring 2007 means housing doom. All the fraud will come out and Congressional hearings.

I have seen more places for rent than ever.

Perfect Storm

Lander said...

Patient Renter: See Here

For Sacramento County resale single-family homes only--

YOY: Down 4.2% or $15,000
From Peak: Down 7.3% or $27,000

For combined sales--
YOY: Down 8% or ???
From Peak: ???

The Bee only started to publish the combined sales price in June of this year, so I don't have peak price info.

You'll notice that the Bee did not publish the combined price for this month. Also, for the last two months, the Bee did not publish a chart of county prices & sales data as is their long-running practice. (The Stockton Record also has stopped publishing their data chart.) It appears that the Bee reports on the existing sales price every other month.

The bottom line is without the data chart, we are at the whim of what Mr. Wasserman decides to publish in the body of the article. Of course, because the data Mr. Wasserman decides to include is erratic, it is extremely difficult to track the data (and maybe that's the point).

Anonymous said...

I'm going to reserve my comments on the Nov sales data until the DQ zip code charts come out, but I will say that I just can't get worked up over 5-10% yoy price declines, especially after years of 15%, 20%, and 25% yoy price increases. Yes, we might eventually get a 30% decline from the peak, but how long did it take for the 90s market to correct, and that was a pimple compared to this. Am I going to wait 5-10 years for prices to fall off? Probably not.

I'd also like to put in a word for flippers, since they get berated regularly on this blog. Thank god for flippers who are remodelers. So much of the older housing stock in Sac is in dire need of remodeling. These people who put their home on the market with a 2005 price tag after living in it for 20 years and doing all the maintenance and remodeling themselves, apparently with stuff they found in dumpsters - they crack me up. It's no wonder there's such a demand for new homes with all this older junk on the market. If a seller is going to put a 2005 price on their home, at the minimum, it has to look like a 2005 house - real wood floors, granite counters, real wood cabinets (no white paint), modern appliances and bathroom fixtures, stone surfaces in the bathroom, and a perfect paint job. Otherwise it's just a fixer and should be discounted 50%. Sorry for the rant - just wanted to point out that some flippers are improving the housing stock and aren't in it just for a fast buck.

Anonymous said...

From Craigslist:

$182 PER SQFT**EL DORADO HILLS CUSTOM BUILT ***3500+SF***
Date: 2006-12-15, 7:57AM PST

NOW THAT I HAVE YOUR ATTENTION LOOKING AT THE PER SQUARE FOOT PRICE.....SUBTRACT OUT THE 3% IF YOU DON'T USE A REALTOR AND THAT NUMBER DROPS TO A LITTLE OVER $176 PER SQUARE FOOT....

It would appear at least one person is catching on. Now if the rest would only wake up.

paranoid renter said...

I went to cepr.net and used their rent vs buy calculator. They think the "real" decline in prices (which I assume accounts for inflation) over the next 5 years is going to be ~50%!
Try out the calculator and see if it sounds realistic (i.e. am I _really_ that badly off owning?).

Lander said...

I'm going to reserve my comments on the Nov sales data until the DQ zip code charts come out....

The DQ zip code chart for November is already out. You can find it here.

Anonymous said...

Thanks for the link to the zip code charts, Lander. The central Sac zip codes I watch didn't show much change. The $/ft2 has been slowly trending down and fell another 1% last month. The median bounces around alot. Sales in 95819 have been up yoy for the past couple months. Seems like sales of >$1M homes in this area are surprisingly strong - I noticed the other day that more than 25% of these listings are pending.

Max said...

Not sure why you object to that particular statement.

Sorry, I wasn't objecting. I quoted the wrong text. :)

patient renter said...

Lander: Thanks for the info. How does The Bee come up with its resale and combined statistics? Does it do a cumulative calculation of the dataquick numbers by zipcode? I'd be intersted to see how median prices of new home sales compare with existing home sales, since this is something that Max has found some interesting info on.

AnalysisGuy said...

CNN/Fortune article just posted a new article and it projects Sacramento to be one of the worst market over the next two years!

Projected declines are 3.4% for 2007 and 0.4% in 2008. No mention of how much in 2009 - 2016.

Yeehaw!

thebubblebuster.com
 

patient renter said...

AnalysisGuy:

That's nice that we're mentioned, but 3.4% is a ridiculous joke. I wonder if that's considering the 8% we've already lost in just the last several months since the losses got started.

Marin Family Guy said...

If one were to truly calculate the reduction of sales prices, it would be a whole lot more than they are publishing. Taking raw data and averaging it out makes a dump that sold for $400K equal to a home someone paid $450 for a year ago and is selling for $400K. The worst thing is the pimping the media is doing to pretend the sky isn't falling.

Anonymous said...

WOW! 3.4% in 2007, that's incredible!!!! That's almost 1/4% each month!

AnalysisGuy said...

People forget that those are nominal price falls of median resale homes. We all know that the true impact (feel) is much greater. Although a 3.4% yearly decline doesn't seem like much it does NOT include inflation. Additionally, it is not a peak-to-trough number. Long story short the impact will be much greater than the number make it seem.

I'm actually not releasing the Sacramento Q3:2006 report until next week, but I'll shoot up right now people can see how a nominal 2.9% annual decline in Sacramento can lead to real median losses of over $200K.

Additionally, I just shot-up the Q3:2006 reports for Orange County, Inland Empire, Ventura, DC & New York

thebubblebuster.com

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sippn said...

paranoid renter, analysis guy.

Don't forget all our investments are judged in nominal vs real dollars. CD's pay below inflation.

Real estate, stocks, bonds, commodities - all ways to beat inflation if done right.

Do you invest in the stock market after such a large run up?

Your personal residence, 20% down, typically is an inflation beating investment with only 15% total appreciation over 10 years - why? Due to leverage and tax deductions. Beats renting and investing elsewhere.

Now I challenge you all doom sayers, take the lowest price for 5 properties 2006-2007 (after the "perfect storm"), and then look at the highest price they were acquired for 1990-1999, and tell me if you find anything under 50-75% appreciation.

Bakersfield Bubble said...

sippin-

If you are so confident, buy up every property you can right now! In fact, how many have you purchased this year?

sam tehrani said...

to lander or any real estate expert:

can someone please comment on this report out today about new home buyers (new home suckers) are expected to increase for 2007.


http://biz.yahoo.com/weekend/firsttimehome_1.html

sippn said...

Since you mentioned it, Bakersfield Bubble, yes I did purchase a personal residence this year. Bought it at a discount while the market was a little slow, before the spring flowers came out. Outbid an investor/ fixer/ flipper (easy because I have to live there and pay "rent" anyway).

Looking at the data quick zip code chart, I may have already made back most of my down payment in appreciation, as this area is still positive (location, location, location), but that might be too optimistic.

I don't know Bakersfield, so I wouldn't venture there.

Am also looking at business property this Spring, tired of paying rent and making my landlord rich, etc. but it really depends on whats out there.

Sam, read the report on the first time buyers returning to the market, its supply and demand...the supply has been restored (through price reductions) at the prices these people can pay. You can't stop them all. Why people buy new cars instead of 1-2 year old, explain that and we'll all know more.

Anonymous said...

Homes cost big bucks to maintain. Comparing homes that need repairs, new improvements, and constant maintenance cannot even be compared to a stock, which does not require any maintenace. The stock market has and always will out perform real estate.

People who think homes are good investment must forget on how much they sink into repairs and maintenace. That money is sunk costs. Now if you took the amount you bought a home for and all the money you put into repairs and maintenace, plus the interest payments on the debt, plus the property taxes, plus the insurance and dumped that into the stock market on an annual basis your stock would be worth way more than real estate.

People who think real estate is a better investment than stocks are fools.

Perfect Storm

sippn said...

Perfect Storm, ultimately a landlord will pass all those costs along to you or kick your freeloadn a.. out of there.

Tell you what though, take your down payment, put it in the stock market, rent a place, see you in 10 years and we'll count it up! Just remember mine comes out with $500K tax exclusion.

Of course, if you don't need that exclusion, hookers are cheaper, but I digress...

Gwynster said...

New homes down by 14.6% in one year per an article in the SF Chron. This is great news. Now I'm just waiting for the owner occupiers to get the proverbial clue.

Sippin,

I'm finding that rents are trending down while my investments (funds, stocks, & treasuries) are doing fabulous. I may not make as much as someone who bought at the bottom and sold at the top did but I'm a patient woman - unless we're talking about Mr. Gwynster getting the dishes done >; )

Am I going to get rich? Nope but then slow and steady works for me. I liken my approach to the eighty bagillion rapid jello shots type of drunk to sipping a 1/4 of bottle of single malt scotch drunk. I'll take the latter anyday.

JR said...

Sippin,

There are many properties purchased in 1990 that had no increase in value thru 1999. I outlined two on this very blog a few months back. In fact, one sold for $205,000 in 1990 and sold for $195,000 in 1999. Your point is well taken though, this one just sold for $418,000 last month (reduced from $495,000 asking by the way).

Timing is the critical factor in all this. Homes are overpriced today, just like they were in 1990. Use any measure you want: Rent multiples, inflation indexes, affordability indexes, etc. There is no absolute certainty here, but it is likely you will see no appreciation in housing in Sacramento thru 2015. Zero.

It is possible, I suppose to find a fixer in a good area and "create" value. It is even easier though, to rent an $800,000 house for $2,000/mon and save the $3,500 a month difference in ownership costs for 2 years.

Then you will have $100,000 more in the bank in 2008 and you can by the same house for $500,000 with a bigger down payment, less risk and not be mortgage broke. You save $400,000. Why would you not try to accomplish this?

Housing appreication is 100% dead in Sacramento next year. This also means no one will buy any rentals with negative cash flow. The smart money will wait until Dec 2007 and look at the market again, to see if it has improved or become worse. At some point, it will be a wise time to buy real estate as a valuable, appreciating, tax advantaged asset.

It is not today.

Anonymous said...

I bought a house in 1990 for $190K and sold it in 2004 for $490K and I'm sure I still lost money compared to renting/investing, and not just because the stock market went gangbusters during those years. When you add up mortgage interest, property taxes, improvements, maintenance, insurance, etc., the cost of owning a home is huge. But for some reason, we still want to own.

I don't think anyone knows what Sacramento real estate is going to do during the next few years. So much depends on the local economy. Prices could be flat for a long time. Long term interest rates might drop even more, increasing affordablity. Demographic trends (divorces, births, deaths, immigration) might favor greater demand for housing.

Anonymous said...

Sippin,

If I could buy an East Sac 2 bedroom one bath home in 1950 or the equivalent in Coca Cola Stock and reinvest all the money that I would have spent on that East Sac 2 bedroom home in repairs and maintenance into Coke Stock.

I bet the Coke stock would be worth 10 times the East Sac 2 bedroom termite invested, paint peeling, crap box. If not more.

Perfect Storm

Anonymous said...

When you add up mortgage interest, property taxes, improvements, maintenance, insurance, etc., the cost of owning a home is huge.

I left off one of the other MAJOR costs of homeownership: sales commission (3% of sales price - ouch!).

Anonymous said...

Sippin,

If I was renting one of your crap boxes I slide a fresh fish with dry ice into the wall on the last day I was there.

sippn said...

Another reason to be a landlord, dead fish - obviously renters have too many rights - wondered how long it would be until hate mail.

That 1950 crap box in east sac was likely less than $15k n 1950, today $600-800K maybe?

What if you didn't pick CocaCola? what if it was Enron/worldcom/?

Gwynster, if you keep talking like that, my wife won't let me play anymore.

Anonymous said...

No two bedroom one bath crap box in East Sac is worth 600K.

Anonymous said...

What if you didn't pick CocaCola? what if it was Enron/worldcom/?

What if I bought a house in New Orleans? I guess insurance would cover that, but I hear a lot of bad stories about insurance companies not paying for homes destroyed in the Northridge Earthquake.

Perfect Storm