Tuesday, January 30, 2007

Dwindling Supply of Price "Winners"

UPDATE: Sac Real Stat's Agent Bubble takes a closer look at the Journal article here [pdf].

The Sacramento Business Journal looks at sales and inventory by zip code.

Life isn't fair and, apparently, neither is a housing slump. Sacramento's trendy midtown has a scant three-month supply of homes on the market and seems to be weathering the downturn much better than nearby North Sacramento or Del Paso Heights. In those communities there's about a year's supply of homes based on prevailing sales trends.

With help from Sacramento-based Trendgraphix Inc., the Business Journal analyzed sales of existing single-family homes by ZIP code for the entire Sacramento region over the 15 months ending Dec. 31.

In this analysis, an area's sales rate was determined by examining the number of homes on the market -- the inventory -- compared with the number of sales for a particular month. That comparison provides a new figure: the months of inventory within a given ZIP code.

The result is a map scattershot with winners and losers as sales slowdowns and price drops wallop some areas and skirt others.

Read more...
Unfortunately, the article does not have much to say about how home prices have fared. Just how many zip codes are price "winners," those lucky zips that have managed to evade price drops? As mentioned previously on this blog, 90% of Sacramento County zip codes posted year-over-year price declines in December, with almost half experiencing double-digit drops. Was this just a one-month fluke, or is it part of a larger trend? To find out, the last 12 months of DataQuick zip code data were examined to see how many areas suffered price declines (and double-digit price declines) in a given month. This graph is the result.



A similar graph measuring California communities is available here.

17 comments:

Sippn said...

Actually, don't you think they were surprised that there were some positive areas in light of all the negitive?

Anonymous said...

The real estate industry is always positive. In today's Stockton Record the even the negative was given a positive spin with such mind numbing quotes as:

"Year-over-year sales de-clined in most regions last month, albeit at a lesser pace then what we experienced earlier this year," CAR Vice President and Chief Economist Leslie Appleton-Young said.

AND

"Dolly Cruz, a Bay Area investor who a year ago bought a single-family home in Lathrop's Mossdale Landing development for $625,000, figures if she had to sell now, she would lose $100,000.

The house is rented out at $1,500 per month - not even enough to cover the mortgage payment, she said, but she is still confident in the long-term real estate market and isn't upset about the slowdown.

"Even though the price is down, you're not losing anything if you're not selling it, is the way I look at it," Cruz said."

Good way to look at it Dolly. You are bleeding maybe 1500 per month but that's not really losing money because everyone knows that real estate always goes up!

Here is the story link:
http://www.recordnet.com/apps/
pbcs.dll/article?AID=/20070131/
A_BIZ/701310301

AgentBubble said...

I'm still trying to find the positives...I ran an analysis in MLS on all of the markets mentioned in the article and compared stats from Nov. 1, 2005 through Jan. 30, 2006 to Nov. 1, 2006 through Jan. 30, 2007. I compared # of homes sold, average price/sq foot, average sq feet, average sales price, median price/sq foot, median sq feet, and median sales price, which is a very useful statistic when comparing specific areas (not entire counties).

There are some large differences in median vs. average on most of these numbers. The main highlights are that in every market I looked at, price per square foot dropped.

You can download the stats here:

http://agentbubble.googlepages.com/Report.pdf

Anonymous said...

"MarketWatch Slams David 'Paid Shill' Lereah"

http://www.marketwatch.com/news/story/commentary-realtors-economist-stayed-sunny/story.aspx?guid=%7BEBC34E29-49EE-4925-A69A-52807DBE0C1E%7D

norcal ray said...

"Dolly Cruz, a Bay Area investor who a year ago bought a single-family home in Lathrop's Mossdale Landing development for $625,000, figures if she had to sell now, she would lose $100,000.

The house is rented out at $1,500 per month - not even enough to cover the mortgage payment, she said, but she is still confident in the long-term real estate market and isn't upset about the slowdown.

"Even though the price is down, you're not losing anything if you're not selling it, is the way I look at it," Cruz said."

Good way to look at it Dolly. You are bleeding maybe 1500 per month but that's not really losing money because everyone knows that real estate always goes up!

These investors will lose patience and money as prices decline further and stagnate for a number of years after the bottom. It will be 8 to 10 years before she breaks even and that is on the sale price only.

patient renter said...

AgentBubble:

The report is very very nice. Good work. Is there any way to capture price/sq. foot without looking at MLS data?

You brought up what I think is the most important finding from your data, that the median price/sq. foot is down in ALL areas. Just as important to note is that it's down by very similar consistent amounts in every area. This, I believe, tells the true story of what's going on now.

AgentBubble said...

patient renter,

Thanks for the kind words. As for getting the data outside of MLS, I honestly don't know. I know Max over at Sac Real Estate Stats gets all sorts of data that doesn't come from MLS, so you may want to drop him a line and see if he can point you in the right direction.

Is there a different area you'd like data for? As long as it's in one of our participating counties, I'd be happy to help out.

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

Agent, I love the breakdown pdf and how these articles hide the ongoing damage to the market by not disclosing the price per sqft.

I also challenge the inventory numbers for Davis. There were 136 properties listed last night on MLS. New listings in this city are about 1 a day since the holidays. A few are repeats but I’m seeing lots of new stuff before the Superbowl.

Another point on the Davis market, anyone associated with the campus who buys now is in for some disappointment. UCD is breaking ground on 1000+ new units for staff and faculty this spring and 3000 student units. This is making our local would-be sellers very nervous. Davis property owners tried to fight it like they have all development in the area and they lost. I'm hoping we see the Cannery proposal come up soon as well. That would be another 610 housing units. For a town as small as Davis, that’s a whole lot to absorb without taking a helluvha price hit.

patient renter said...

AgentBubble:

There's no particular area I'm interested in right now, I'm just interested in general with size adjusted median data since we can't get this from the monthly DataQuick zipcode prices or the SacBee stats. I definately might ask you to run a check or two for me in the future though if you could.

Sippn said...

Good truthful analysis, but Lander, you are looking at a different time period, however slightly, than the article did.

Lander said...

Sippn-

Are you referring to the graph or to Agent Bubble's research?

anon1137 said...

Thanks for the analysis, AB. Some of those figures are real eye-openers. ESac median up 5% YOY, including data from Jan 2007, and most of the areas where there was a drop in the median, it was less than 10%. And I was surprised that the rate of sales weren't even that low: Folsom, -8%; Davis, -13%; Roseville, -14%; Arden-Arcade, + 5%. No wonder the RE agents aren't selling their Caddys yet.

All the trouble in the new developments seems to grab the headlines, but things are reasonably stable in the 'hoods, at least in the better 'hoods.

AgentBubble said...

sippin--My data compares the most recent three months to the same three months one year ago. The Biz Journal's data covers a 15 month period ending Dec. 31 2006. Based on that, I'd guess it started at the end of Sepember 2005.

anon1137--I think the drop depends on who is impacted by it. If it's someone that bought for $500K back in November 05 and now can't afford the house, even a 5% drop translates into a short sale. But if you bought and can weather through, then no worries. But, short sales, REO's, and pre-foreclosures are on the rise, so I think it's safe to say there's a good deal of folks in the former.

Either way, in my humble opinion, I think we're looking at an affordability issue and not much else. Some may feel that's oversimplifying the market, and that's okay. We'll know a lot more in the spring....

anon1137 said...

Yes, this spring will be very interesting. My impression from watching the MLS is that January got off to a strong start, but I see a long, slow decline going forward. Agreed that affordability will be the big issue affecting the market - I think builders will respond with lower priced homes. High-rise luxury condos will be white elephants.

AgentBubble said...

anon1137,

Yep, you're right on the money. So much of the market's outlook depends on the new home builders and how they price. All indications are that they're gonna undercut resale homes to clear out inventory. Here's a very extreme example:

11887 Delavan Cir
Rancho Cordova, CA 95742
Paid $933,500 on 6/26/06
Bought directly from JTS
Currently listed for $699,000

4367 Malana Way
Rancho Cordova, CA 95742
Pending at $755,990 on 1/14/07
Brand new home by JTS

Homes appear to be identical. You almost gotta feel sorry for the guy that paid $933,500 when JTS is currently $180K cheaper just 6 months later.

Sippn said...

I would feel sorry for them except this home was never lived in. Just like the one next door, etc (see MLS).

Pure specualtion by somebody who may not have ever seen teh place or looked at it with a homebuyers eye.