Tuesday, January 16, 2007

"The Market Still Feels Pretty Dead"

The Stockton Record reports on TrendGraphix data for December:

The sales price was down nearly 6 percent from $425,000 in December 2005 in a year long slow market...Sales continued to slow, from 416 in November to 406 last month. That compares with 636 in December 2005, when the housing market began slowing after several years of soaring prices.
Sales activity has been picking up a little recently, but the market still feels pretty dead, said Bob Riggs, president of Riggs & Associates, GMAC Real Estate, Stockton.

"We've seen the phone ringing a little bit more, had a few more showings in the last few weeks, but it's still slow," he said. "I don't really see much pickup until, one, it quits freezing outside, and two, the flowers start to bloom. That's pretty typical."
Median Price Change year-to-year (per chart):

SJ County: -5.9%
Stockton: -7.8%
Tracy: -3.5%
Manteca/Lathrop/Ripon/Escalon: -5%
Lodi: -2.6%

More San Joaquin County data available here. A sampling:

Homes for Sale (Dec. 2005 v. Dec. 2006)
  • 2,463 v. 3,867
  • Change: +57%
Sold Homes (Dec. 2005 v. Dec. 2006)
  • 636 v. 406
  • Change: -36%
Pending Sales (Dec. 2005 v. Dec. 2006)
  • 397 v. 348
  • Change: -12%
Average Days on Market (Dec. 2005 v. Dec. 2006)

  • 47 days v. 76 days
  • Change: +62%
Average Price per sq/ft (Dec. 2005 v. Dec. 2006)
  • 259 v. 238
  • Change: -8%


rocklin renter said...

Dude, I totally base the biggest financial decisions in my life on one, the cold weather, and; two, the flowers.

Totally. You'd be crazy to do otherwise.

anon1137 said...

I'd be curious to know how much of the SJ county housing stock has been built in the the last 5-6 years. Seems like it's nothing but a sea of 2-story stucco snout boxes down there.

Anonymous said...


I like your headline better than the
"Sales prices up In December" headline that the record used.

You've got to love headline writers! I also noticed that until the tidbit of good news came out (December up 3%) The Record did not print their typical median prices table. Maybe not on purpose.....

Anonymous said...

More good news from the Record:

Two national home-builders with projects in San Joaquin County on Tuesday announced the dumping of some land options because of a slumping housing market, but one -- KB Home -- said that won't affect the company's basically solid Central Valley division.

Los Angeles-based KB Home will post inventory impairments of $255 million for the quarter ended Nov. 30, the company said in a filing Tuesday with the Securities and Exchange Commission. Impairments cut book value and indicate the properties can't be sold profitably.

KB Home also will book a charge of $88 million for abandoning land-option contracts.

The company announcements don't impact any Central Valley developments or options because the market remains solid enough to proceed on current and planned projects, said Chris Apostolopoulos, KB Home president of the Central Valley division.

For more read our story in Wednesday’s Record.

Anonymous said...

Here's the link to that story

Anonymous said...

I must be doing something wrong. I have tried to apply and understand the following property valuation methods to the local market:
1) Discounted cash flow
2) Gross rent multiplier
3) Direct capitalization

When I apply these methods to market value rents, the value(s) that I come up with are no more than 60% of the asking price for the property. How do the “smart “investors make their value appraisals? Maybe it is different this time? Maybe these methods are no longer valid? Maybe I’m just book smart? Maybe this stuff is over my head? I will admit to being a slow learner, so any advice will be appreciated.

Anonymous said...

Anon 6:28

This time it is different. This area is special. They aren't making any more land. Real estate never goes down when the economy is good ...

Perfect Storm said...

The number of foreclosures that lenders are taking back in California has increased from an average of 32 a day in August 2006, to 300 a day in December 2006. In dollars that’s an increase from $13.3M per day to $45.9M in four months. So far, for the first week of 2007, the numbers are 161 homes and $63.8M–per day.

Well folks we have not seen nothing yet. See you at the bottom, be safe don't catch falling knifes.

anon1137 said...

The number of foreclosures that lenders are taking back in California has increased . . .

Foreclosures for Sacramento have been decreasing since last summer and are still below the historic average rate according to data from realtytrac.com.

By the way, how many times can we make statements about falling knives before the meaning is lost? And are you truly concerned about other people making poor real estate investments, or is your goal to scare away buyers so prices go down and houses become more affordable for you?

Perfect Storm said...

"to 300 a day in December 2006"

300 x 365 = 109,500 homes could be taken back in one year and this is just the beginning.

Be safe don't catch a falling knife.

Perfect Storm said...

According to realtytrac.com.
Sacramento County Foreclosure Search Results
Location: Home > CA > Sacramento County
Search Results: Foreclosures in Sacramento County, ca
5940 listings match your search criteria.

Bank Owned 2687

Wow 2687 bank owned properties in Sacramento County. Don't catch a falling knife if you get my meaning.

Perfect Storm said...

Latest count of US Mortgage lenders that have croaked since about Dec 2006:
lenders have now gone caput

Another subprime bites the dust.

Perfect Storm said...

And are you truly concerned about other people making poor real estate investments, or is your goal to scare away buyers so prices go down and houses become more affordable for you?

Who made you the blog boss? Come up with real blog name. Anon1137 sounds like something out of Staw Wars, you nerd.

Anonymous said...

Anon1137 or whatever

I agree about the falling knife comments. How about using a more different phrase. Here's some ideas and some are just packed with meaning.

Don't try to catch a falling machete.

Don't try to stop a lawn mower blade with your bare toe.

Don't try to stop the train with your skull.

Don't try to wipe with a razor.

Is that better?

Anonymous said...

Anon 7:02

Thanks for the explanation. That makes sense. I was about to start to think that a herd mentality had taken hold. Who needs that math stuff when you can just follow the herd? I know that the math stuff has served us well up until the past five years, but I a change may be good. Who needs spreadsheets when you can just ask your Taco Bell cashier turned realtor to tell you the value of a given property?

Anonymous said...
This comment has been removed by a blog administrator.
Bakersfield Bubble said...

Lots of trolling going on...

I think some out of work realtors are trying to pick some fights.

Perfect Storm said...

When DataQuick says "historically low levels," they also disclose that they’ve only been tracking foreclosures since 1992, a key fact that many folks who use DataQuick's data don't know is very important. The reason that the start date of comparable foreclosure data for the last cycle is so important is that about two years after the last housing cycle bottom, foreclosures were already declining. If housing were indeed in the process of "bottoming out" now, as many forecast, then foreclosures should be starting to decline now. Instead, they are rising rapidly. Note the DataQuick data also show that foreclosures peaked in Q1’96, which correlates reasonable well with the bottom for the housing market. Foreclosures do not appear to be peaking, so it is unlikely that the housing market is near a bottom, yet.

As such it appears that DataQuick’s data spans a period of time that began during a period of increased foreclosure levels in the last cycle. As a result, we don’t have a clear picture of comparable foreclosure rates for the housing cycle period we are in currently compared to the last cycle, so no one can say whether current levels are "historically low" or not. Even if they are, that may well be a sign of a market peak rather than a bottom, implying further market volatility rather than market stability as usually inferred from the data.

Perfect Storm said...

Other changes:

•Higher credit scores. Previously, borrowers with a FICO credit score as low as 570 (out of 850) could qualify for a single loan financing 100 percent of their home purchase, Mr. Carmona said.

"Now, across the board, it's jumped up to a 600 FICO score for an 80/20 loan," Mr. Carmona said, in which a second loan has to be taken out to finance the remaining 20 percent of the home value.

Less loans means less homes purchased. Oh I guess tightening the lendig requirements is no big deal and will not have a significant impact on the housing market, YEAH RIGHT.

Marc Brinitzer said...

Inventory levels on new homes are not falling as quickly as the numbers state for reasons I discussed in my post: New-Home Cancellations Distort Housing Market.

That combined with continued low demand and tightening lender requirements due to subprime fallout will constrain the market for awhile to come.

That said, the patient has a pulse. There has has been a noticeable up-tick in buyer interest in Sacramento. I believe that can be attributed in part to people's innate optimism, significantly lower prices, lower rates, 18 months of pent up demand, and the core value of housing as shelter.

It's like an after Christmas retail sale. Everybody knows prices have been slashed. But if you wait too long, someone else will get the last one in your size.

For the buyer who finds the home that works perfectly for their family, job, schools, church, shopping and so on, the risk of prices falling further may not outweigh the opportunity to acquire their dream home.

Anonymous said...

From BrokersOuspost:

I was told today that New Century Mortgage Corporation
decided to close down their Woodland Hills, CA branch along
with other branches thru out the U.S. They are just downsizing
and not yet going out in style.

Since New Century is one of the largest 3 subprime lenders,
this illustrates that the prospects for subprime loan
originations in 2007 would not warrant their keeping many offices
open due to falling volumes.

More trouble in subprime land.

Anonymous said...

Perception drove the market higher than it should have logically been. Perception will now drive the market to lower levels UNTIL there is some consensus that the bottom is at hand (in which case it will have already been in place for 3-6 months). Interesting to note that the new home builders dropped advertising the big sale discounts during the "slow" November and December sales period (to save costs) and look at the results.... more traffic to the sales offices and more sales than anticipated. Perception of value is just as important as crunching the numbers.

Anonymous said...

DataQuick reported 2006 sales of 42,300 new and existing homes and condominiums in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties - 23,300 fewer sales than 2005.

It was the lowest number of closed escrows for a year since 47,338 in 1998. The high was 70,179 at the peak of the region's housing boom in 2004.

New home sales are bull crap since they do not count the cancellations.

Lowest number since 1998, that is low.

Anonymous said...

Due to current market conditions in the mortgage industry, Funding America has decided to discontinue accepting any new business.

Effective immediately, all loans in our pipeline will be processed out of our Houston location and we will work to close those loans in as smooth a manner as possible. For questions concerning any loans that are currently in process, you should contact our processing team at (866) 782-0100 Ext.1931, 1928, 1924 or 1933 for further information and status.

From our start nearly two years ago, Funding America has provided countless opportunities for numerous team members, brokers, investors, and home owners to have a more successful life.

Thanks to all of you for your support.

Funding America

Another one eats dirt. What a bunch of losers.

2007: Great American Meltdown said...

Marc -- I'll beg to differ.

"It's like an after Christmas retail sale. Everybody knows prices have been slashed. But if you wait too long, someone else will get the last one in your size."

...boy, does this analogy NOT work. It's more like getting 'into the market' after the Cabbage Patch Kids Kraze. Yes, prices ARE indeed 'slashed' from their near-insane highs -- but buyers will feel the pain when this Krap is fetching a quarter at a garage sale. Maybe They aren't making Any More Land -- but They already made Too Many Houses, and they're Too Expensive.

"For the buyer who finds the home that works perfectly for their family, job, schools, church, shopping and so on, the risk of prices falling further may not outweigh the opportunity to acquire their dream home."

Well, it should!

We'll generously call the huge RE carrying costs vs. tax break a wash, okay? STILL, the numbers in the Central Valley make buying in-frigging-sane. I can rent a house that would cost me literally DOUBLE every month to buy. Thanks for the subsidy, Mr. (Possible FB?) Landlord!

And that's assuming no massive further depreciation -- a serious-Pollyanna-issues propisition if I evah hoid -- AND the down/income to afford a non-exploding loan! Don't get me started on the bogus RE affordability numbers...

Hey, we all want to own. But not if the price of admission is a brutal haircut.
Buying now = Greater Fool.

Avoid the (here it comes) Falling Knife, People, and feel comforted by the knowledge that cash is king right now. Your Future 'dream home' is dropping in value as we speak, to the tune of THOUSAND$ A MONTH.

*snark off

NORM said...

I think the phrase should be catching the lawnmower blade in your teeth cause you need to be falling down drunk to buy in this market.