Sacramento Land(ing)

Monday, January 01, 2007

Sacramento Housing Market Water Cooler - January 2007

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63 comments:

Anonymous said...: In 2007: Average homes will lose $4,000/mon in value (10% drop, annually) to $300,000. Average salary will grow $200/mon to $56,000/year (4% rise). The affordability gap will close a bit: ($56,000 X's 4 = $225,000), with more to come in 2008.

The home builders will lead the charge downward in prices and the re-sale market will suffer greatly, with 1000's of foreclosures

Home price appreciation will not resume until 2010, if we hit a bottom in 2008.; Monday, January 01, 2007 7:59:00 AM
mefrancis said...: I thought today was Jan 1.; Monday, January 01, 2007 8:51:00 AM
Perfect Storm said...: Housing market will get much worse in 2007.; Monday, January 01, 2007 9:04:00 AM
Anonymous said...: >>>>>>
Maureen said...
I thought today was Jan 1.
>>>>>>>>

I think it says Jan 31 so that it appears at the top of the page all month long.; Monday, January 01, 2007 9:10:00 AM
drwende said...: In 2007: Average salary in Sacramento metro will be flat in real dollars, due to job losses in the housing industry pulling the economy downward.

Average homes will lose 20% of their value over the course of the year.

Entire neighborhoods will go into default and/or Section 8 rentals. Some new developments will be bulldozed for lack of buyers.

It happened in the early 1990s, when the pyramid of exotic financing wasn't nearly so shaky. It can happen again.; Monday, January 01, 2007 10:08:00 AM
Lander said...: Flood-risk DVD now part of pitch for Natomas homes; Monday, January 01, 2007 11:05:00 AM
Anonymous said...: Sac Bee and dullard who bought into the "retirement home" that WILL surely flood up to the eaves in the next 25 years....

one born every minute

"I dunt knowz we wuz in a Floodin Area and I done did need no rowboat"

Where do they find these dullards, people...

Gee, there's a couple of big rivers, and there's some pretty shoddy levees, and gee that land doesn't look like high ground...; Monday, January 01, 2007 12:08:00 PM
Perfect Storm said...: Anybody thoughts?

So how do you feel about Fannie's Mae decision to buy loans from lenders where the borrower must be qualified at a fully indexed rate that assumes a fully amortizing repayment schedule.

Wow sort of show stopper right there. I mean the borrower can still get an interest only death loan if they want, but first they have to qualify for a conventional loan product.

So the borrower gets to make the chioce on loan they get, but in order to make that choice they have to qualify first with a conservative loan and then they can pick the interst only death loan.

Sort of weeds out all the losers who could only qualify for the interet only death loan, but not the conservative fixed rate fully amortizing loan. How many people are going to be denied now? Wow I bet a lot.

So all you sub prime freaks of nature can stick it, all your funding is drying up and you will back to flipping burgers soon. I hope the majority of you neg am freaks go to prison.; Monday, January 01, 2007 5:08:00 PM
Anonymous said...: >>>>>>
So the borrower gets to make the chioce on loan they get, but in order to make that choice they have to qualify first with a conservative loan and then they can pick the interst only death loan.
>>>>>>>>>

I think that this is the best thing that they could possibly do, although it's coming rather late and will only serve as another prick in the inflated balloon.

If they were doing this earlier, we wouldn't be in this mess. Now I guess they have to do it since the "equity" (which was previously appearing from thin air by just sitting on a home for some time) is now no longer available.; Monday, January 01, 2007 6:35:00 PM
Anonymous said...: >>>>>>>
Entire neighborhoods will go into default and/or Section 8 rentals. Some new developments will be bulldozed for lack of buyers.

It happened in the early 1990s, when the pyramid of exotic financing wasn't nearly so shaky. It can happen again.
>>>>>>>>

Do you have any specific instances where new developments were bull-dozed. That just doesn't make sense. I am sure they would rather sell at a loss than incur the cost of bulldozing, unless they expect to sit on the empty land for many, many years until prices start appreciating again which would mean a loss on their capital.

I doubt something like this will happen in Sacramento. A lot of people are going jump in and buy once prices fall to 2003 levels. If nothing else, people from the Bay Area will buy it for investment and/or retirement. To get to those levels, we probably need just a 40% drop...at that point, there would be a mad rush to buy, so expect resistance at every step along the way. Especially in areas with low crime and good school districts like Roseville and Rocklin.; Monday, January 01, 2007 6:42:00 PM
Perfect Storm said...: December 20, 2006

Expansion of Interest Only Mortgage Loans Eligible for delivery to Fannie Mae

IO mortgage eligibility criteria states: requires borrowers to be qualified at a fully indexed rate that assumes a fully amortizing repayment schedule.

That's why I want any thoughts what else could it mean?

I think they are doing because new management wants to be set apart from the crooks who ran Fannie Mae before.; Monday, January 01, 2007 6:46:00 PM
Anonymous said...: "So how do you feel about Fannie's Mae decision to buy loans from lenders where the borrower must be qualified at a fully indexed rate that assumes a fully amortizing repayment schedule. "

I hadn't heard about this yet, but it sounds great. Unfortunately a lot of people aren't going to be able to refinance now. Can you link some source information?; Monday, January 01, 2007 7:58:00 PM
Anonymous said...: "If nothing else, people from the Bay Area will buy it for investment and/or retirement. To get to those levels, we probably need just a 40% drop...at that point, there would be a mad rush to buy, so expect resistance at every step along the way. Especially in areas with low crime and good school districts like Roseville and Rocklin."

In theory this makes sense, but from what I know of previous drastic price drops, when times are tough prices can go down without getting too sticky.; Monday, January 01, 2007 8:01:00 PM
drwende said...: ***
Do you have any specific instances where new developments were bull-dozed.
***

Modesto, I think roughly where Village I now is, though it could have been where the later phase of Naraghi Lakes went in -- or possibly both. My parents would know better than I do. Their current house was a model for another subdivision that was never built due to the 1990s crash, so they were surprised to see models and partly built homes bulldozed nearby.

***
A lot of people are going jump in and buy once prices fall to 2003 levels. If nothing else, people from the Bay Area will buy it for investment and/or retirement.
***

Won't happen. The small-time Bay Area investors have their money locked up in money-losing, depreciating rentals in the Valley already. That's their savings -- kaput! (Remember, I used to live there -- these are my former neighbors.) They have no more money to pour into this project, plus they've been burned once.

You'll need your 40% decline to get to 2003 levels, by the way. And 40% is very possible. The problem is, there won't be that many people who have the money to buy at that point. Remember where your potential buyers are:

(1) People who'd have to sell at a loss in order to buy. They won't. And that's a huge portion of the available market.

(2) People moving into California. There aren't that many. Growth is virtually entirely birth replacement and foreign immigration.

(3) People who held their house through the bubble and decided to move later for compelling personal reasons. Again, few.

(4) People who sat out the bubble as renters. We're loud, but again, we're in the minority -- and many will have done as I did and moved to a less expensive region with more jobs.

(5) New first-time buyers in their 20s. These would be the children of "Baby Busters" like me. We were a tiny generation, so we'd have to have bred like bunnies to produce a bulge of buyers.

(6) Bay Area investors -- but they've lost their investable money.

There just isn't anyone left to buy. Baby Boomers are not going to retire to Sacramento in proportions greater than their stake in the local population -- most people want to stay in their own community, and if they don't, they move places like Arizona. Bay Area people do not want to retire to Sacramento -- they only invested there because they thought the locals were rubes who could be ripped off for exorbitant rent and/or flipping. (This was dumb of them.)

Goodness, I'm verbose. My predictions have been accurate to this point, though, and when I've erred, it's been on the side of being too optimistic.; Monday, January 01, 2007 9:20:00 PM
drwende said...: Housing slump continues to drag on economy in 2007; Monday, January 01, 2007 9:33:00 PM
Perfect Storm said...: www.efanniemae.com/sf/mortgageproducts/index.jsp

Source information, please review.; Monday, January 01, 2007 10:01:00 PM
Perfect Storm said...: Jan. 2 (Bloomberg) — Lennar Corp., the fourth-biggest U.S. homebuilder by revenue, said it will post a loss in the fiscal fourth quarter due to a one-time charge of as much as $500 million.

The loss in the three months ended Nov. 30 will be as much as $1.28 a share, the Miami-based company said today in a PRNewswire statement. The charges include inventory writedowns and costs related to land it no longer plans to buy.; Tuesday, January 02, 2007 6:28:00 AM
Perfect Storm said...: Here are some of the subprimes that have taken a header. Every few days another subprime bites the dust. For all you subprime loan officers is your company next??????

Own It - CLOSED
Sebring - CLOSED
Maribella - CLOSED
MLN - CLOSED
Encore - CLOSED
HMIC - CLOSED

The housing market is collapsing under the weight of subprime fraud. Have you been involved in a fraudlent loan or better yet has your broker been involved in fraudlent business practice? Then unload your concious and report them to the FBI. Your actions are destroying the economy, just think of thousands upon thousands of foreclosure you created.; Tuesday, January 02, 2007 6:54:00 AM
Perfect Storm said...: The New York Times
By FLOYD NORRIS
Published: January 2, 2007

With prices falling in some regions, home builders reported a surge of cancellations of purchase contracts. Housing starts plunged, and although starts showed a reassuring increase in November, newly issued permits to build new homes continued to decline.

Oddly enough, rising home sales could be a bad sign in 2007, particularly if prices continue to sag. A surge in sales of existing homes could be an indication that people were being forced to sell, and that could have a depressing effect on purchases of other things.

In the past, when home prices fell, the number of homes sold also fell, as homeowners hung on to wait for good times to return. That could be harder this time, at least for those with mortgages that allow large increases in monthly payments.

Subprime loan officers this is your doing.; Tuesday, January 02, 2007 7:08:00 AM
Anonymous said...: Here's a question:

If you are a new homebuyer to Sacramento region, where is the best place to buy a home today in the $250-500K range?

Based on today's Bee, it might be Lincoln as it is discounted significantly.

Based on Dataquick or Zip realty information on appreciation by zip code, it might be East Sacramento or Arden.; Tuesday, January 02, 2007 8:42:00 AM
Anonymous said...: >>>>>>
If you are a new homebuyer to Sacramento region, where is the best place to buy a home today in the $250-500K range?
>>>>>>>>

I would say Roseville/Rocklin. Chances of it degenerating into a ghost town with high crime are virtually nil.; Tuesday, January 02, 2007 11:09:00 AM
Dave W. said...: If you are a new homebuyer to Sacramento region, where is the best place to buy a home today in the $250-500K range?

Depends on your definition of "best".

I have a 4-year old and 1-year old, so finding good, proven school districts is a priority, as are low crime and community activities. Roseville was at the top of my list, and we just signed a purchase contract this weekend. (We're relocating from the Bay Area. Sold our home 2 years ago.) Detached homes are starting at about $400k.

There are clearly some great deals to be had in Lincoln. But its schools are somewhat of a mixed bag.; Tuesday, January 02, 2007 2:29:00 PM
Anonymous said...: Suddenly big news today:

"Mortgage Lenders Network USA, a large U.S. subprime lender, said it has stopped funding loans and accepting applications for loans, citing deteriorating conditions in the mortgage market, and has temporarily laid off about 80 percent of its 1,800 employees."

http://today.reuters.com/news/articlebusiness.aspx?type=bankingFinancial&storyID=nN02342721&from=business; Tuesday, January 02, 2007 4:29:00 PM
Anonymous said...: Westpark in Roseville is looking good:

www.westparkroseville.com

Elk Grove is not to bad if you are purchasing at Madeira:

http://madeiraelkgrove.com/; Tuesday, January 02, 2007 4:49:00 PM
Anonymous said...: David W.

"we just signed a purchase contract this weekend. (We're relocating from the Bay Area. Sold our home 2 years ago.) Detached homes are starting at about $400k."

If you bought last week you may have missed the point of some of the postings on this blog. It is clear that there are no "deals" in a sliding market. Unless you really like to buy overpriced products.

If you can, rent for 1 year or even 6 months and see how good that deal was going to be. I've waited 20 months and the prices have dropped 13% and are predicted to go down another 7% next year. There is no way I'd buy for several years no matter how good the "deals" are purported to be.

I currently rent a very nice home at 1/2 of the cost of mortgage not to mention no taxes, mello roos, HOA, and etc. And when the sink leaks I make a phone call without worrying about "what I got in my Wallet."

David, look at the fundamentals of housing before you finalize your purchase.; Tuesday, January 02, 2007 5:06:00 PM
Anonymous said...: David is exactly the kind of person that I had in mind when I talked about folks from the Bay Area ensuring that prices will not crash (at least not in Roseville/Rocklin). Lincoln is a different ball game and so are all the other not-so-desireable areas.

People from the Bay Area have tons of money. There will always be successful companies flooding the market with buyers (either through IPO or acquisition). They will pay expensive Bay Area prices to those that want to sell and move to Sacramento. This especially makes sense for homeowners in the Bay Area that are not into high-tech since there's enough of an industry in the Sacramento area to support such people. On the high-tech front things are different. You either have to decide that money is not important if you want the Sacramento quality/standard of living or you have to put up with Bay Area prices and hope that your turn comes up at the roulette table (i.e. your company makes it big enough that you can afford a house).; Tuesday, January 02, 2007 6:28:00 PM
Anonymous said...: "If you bought last week you may have missed the point of some of the postings on this blog. It is clear that there are no "deals" in a sliding market. Unless you really like to buy overpriced products. "

Only if you believe some people. I believe some properties are already priced as far down as necessary. Certain parts of Roseville where you bought have only rare opportunities.

Lincoln prices have gotten below cost...when these projects are done, why would a builder do more at a loss? Won't. Price will increase. Sales in Lincoln now approaching 25/week in the deadest part of the year....not bad...I think they fixed the price.

Of course, if you're only looking for a lawn to park the Hemi on, there's plenty to rent.; Tuesday, January 02, 2007 6:32:00 PM
Anonymous said...: >>>>>>>
If you can, rent for 1 year or even 6 months and see how good that deal was going to be. I've waited 20 months and the prices have dropped 13% and are predicted to go down another 7% next year. There is no way I'd buy for several years no matter how good the "deals" are purported to be.
>>>>>>>>

What you say does make sense. However, if you want to own a _new_ house in a desireable area you have to a premium. That premium is today's price. Already most of the desireable areas in Roseville are built up. The new stuff that's in desireable areas around Pleasant Grove, for example, is crap...really cramped floors plans. The good floor plans are around West Park but look at where that is...it will take 15-20 min just to get to 80!

I think if one can comfortably afford to buy a house (for example with cash outright or with around 50% down) there is absolutely nothing wrong with buying, especially if you care about owning a new place. The "new" thing may be overrated but it does have some appeal at least for me.; Tuesday, January 02, 2007 6:44:00 PM
Anonymous said...: Paranoid and sippin,

Why buy now if it is or has the potential of being cheaper in a few months?

David is a fool if he jumps in now. We all know that real estate cycles require years not months. This is probably a false "bottom" that will likely be pulled out from under him.

The housing fundamentals don't make sense and are likely to falter for the next several years. A market cannot rocket up 15-40% for 5 years without a downside. The correction is here and it isn't likely to be pretty (see 1991-1996+ housing market).

As far as rental property goes, there is not a single hemi on the lawn in my neighborhood, nor is there a bunch of guys in "wife-beater" shirts. You guys spent too much time at your father's rentals growing up.; Tuesday, January 02, 2007 6:56:00 PM
Perfect Storm said...: If it is such a good time to buy and the housing market has bottomed why are so many subprime lenders going down the tubes?

Anybody who buys now is a fool.; Tuesday, January 02, 2007 7:13:00 PM
Perfect Storm said...: 55 Freakin’ % decrease in new home sale in Lincoln. I did not think any market could stop THAT fast. Is someone driving around shooting buyers who try to make an offer.

This market is going down the tubes faster than a subprime can declare bankruptcy. Do not buy a home you will be making a fools decision.; Tuesday, January 02, 2007 7:16:00 PM
Perfect Storm said...: And the alluring discounts for new Lincoln homes have flattened sales to the north in Yuba and Sutter counties.

Builders in those two counties sold 811 homes in the first nine months of 2006 -- after selling 1,789 during the same time in 2005, according to Paquin.

It looks like we have ourselves an old fashioned housing war. Get ready to rumble. Hold out for tell the end, let a couple of builders go bankupt.

Were on track for a 50% decline by 2009.; Tuesday, January 02, 2007 7:54:00 PM
Perfect Storm said...: Read below is talk from an Mortgage Lender Network insider.

This is a reality check for the lending industry. Every indicator is there. Easy qual neg-ams and no money deals are going by the wayside as these are the real weapons of mass destruction. It was a nice ride as everyone was so busy refinancing and living off of their homes to be blinded by what else is going on. The survivors are going to be going tighter and the days of turn in an incomplete file and go to docs "subject to" are gone.

This is what the subprime guys are saying. Still want to buy in this market. Think about it. Think hard. Real hard.; Tuesday, January 02, 2007 8:01:00 PM
Anonymous said...: I work in retail..I did a survey on my own...for a few hours while working the register..we have to get zips to finish the trans...8 out of the 10 peole I asked where they came from, were either from Wa,Or or the bay area most moving into lincoln crossing...where they said the deals were great....so there you go...and by the way retail is up :); Tuesday, January 02, 2007 8:26:00 PM
Perfect Storm said...: Why that survey goes against the numbers that the Dept of Finance put out that more people are moving out of California to other states than moving in. Everybody I know in Oregon and Washington think California sucks and would never move here.; Tuesday, January 02, 2007 8:46:00 PM
Anonymous said...: Real Estate & Subprim Lenders

I was in secondary subprime automobile business for twenty years .... at the peak of subprime auto financing boom, almost anyone regardless of credit history could purchase the vehicle of choice with very small cash down payment. It was too much money chasing high yields and ROI that fueled the secondary auto finance boom of the nineties.

Same thing occurred in recent housing boom ..... the induced inflation causes speculation, the speculation necessitates greater risk in a weaker market, the weaker credit consumer is always "in demand" for credit .... once the flood gates are opened to weaker credit risks, the secondary credit consumer artificially pushes market prices higher and higher by artificial demand! The secondary markets are and were a part of the tools used to push real property higher to contain the desinflationary forces ....

When the secondary auto lenders started to go bust around 2000, it first started with one or two, then became exponential until most were gone, never to be heard from again ....

Same thing will occur housing markets .....

The artificial demand for used automobiles created by secondary subprime financing supported much higher trade-in values, the higher trade-in values then supported demand for new vehicle sales ..... look whats happening to the auto manufacturers without the artificial subprime supports, the automobile bubble and record "new vehicle" sales is bursting .... and will prolly, in the long run bankrupt GM and Ford .....

There are many, many tricks being used to fend off the K cycle and desinflation!; Tuesday, January 02, 2007 8:57:00 PM
Perfect Storm said...: You know a lot about U.S. automakers, why don't they just build better cars so they can compete. Toyota and Honda seem to be doing pretty good.; Tuesday, January 02, 2007 9:03:00 PM
Anonymous said...: am looking for a lender to do a cash out refi 100%

I need to use bank statements which is why I used MLN. MLN only looked at the total deposit page not each deposit.

612 mid score, wage earner, in Florida, Primary residence. I have a full(appraisal too) file ready to send to a lender that can do this.

If we cannot go Bk statements then I need a lender that will do this same scenario going stated 100%

thank you,

DANKA

201 Posts
Posted - 01/02/2007 : 6:10:42 PM
--------------------------------------------------------------------------------

try long beach mortgage, equifirst, originate mortgage

Maybe these are the next subprime to bite the dust. What do you think????

Another subprime bites hey, hey, hey another one bites, another bites the dust.; Tuesday, January 02, 2007 9:21:00 PM
Anonymous said...: Perfect Storm,

The 55% sales decrease happened in Sutter/Yuba and is being blamed on the incentives in Lincoln according to the Bee.

No flood concerns, good retail, close to 65, Prices slashed...I don't know, looks tempting.

Will it go Bust? Try this:

FDIC study, 2005

"only 20 percent of the 361 cities for which OFHEO currently publishes an HPI have ever witnessed either boom or bust.

....So, must a bust always follow a boom? Based on our look at history, our answer must be "no." Only infrequently do home price booms lead to busts, at least by our criteria. ...... in just 9 of 54 unique boom episodes prior to 1998, or roughly 17 percent of all such events, did a bust subsequently occur within a five-year window..."

Hmmmm; Tuesday, January 02, 2007 9:53:00 PM
Perfect Storm said...: Sippin,

The housing market is going down for the count.; Tuesday, January 02, 2007 9:56:00 PM
Anonymous said...: OK that changed my mind; Tuesday, January 02, 2007 10:04:00 PM
Anonymous said...: Sippn:

Looking at prior history is good, but it's tough to compare any previous boom that failed to bust with what we just had: the biggest boom in the history of our nation.; Tuesday, January 02, 2007 10:26:00 PM
Anonymous said...: Need Help!!!

Does anyone know how to find recently sold homes with pools?; Tuesday, January 02, 2007 10:39:00 PM
Perfect Storm said...: The biggest boom in the history of our nation.

Do you hear that Sippin,

The biggest boom in the history of our nation. Brought on by the most liberal lending standards since before the great depression. Look at the numbers, the largest amount of inventory ever, slower population growth, mortgage lenders who have been in business for years are going bust, Fannie Mae turning the screws on lending, massive amounts of new home sales cancelations, thousands of mortgage lenders out of work, millions of Americans are going into foreclosure and mortgage fraud is running rampant.

This housing market is on the ropes with weak legs. The count is on.

Anybody who buys know would be catching a falling knife.; Wednesday, January 03, 2007 6:42:00 AM
Perfect Storm said...: Anon 10:39.

Just look in the Bee, Business Section for home sales on Sunday and then get the address and look over the fence.

Maybe you can find out by looking at builders permits and cross reference to home sales.

Looking over the fence could lead to an awkard situiation.; Wednesday, January 03, 2007 6:45:00 AM
Perfect Storm said...: This is why subprime needs to go bankrupt. This is a conversation about a subprime loan officer.

I wish my LO's would learn their DU. Had a loan close last week on the subprime side that was approved EA1 when we ran it DU during a post-closing audit. It really pisses me off that the LO basically screwed the customer by placing them in a subprime loan. It pisses me off even more since it's just as much my fault for not baby-sitting this new LO that was in the business for over 6 years...

They probably cost the borrower thousands, but because of pure stupidty and greed they screwed over the borrower. This sceanrio is being played out thousands of times daily throughout the U.S. at least this borrower appeared qualified, what about all the unqualified borrowers they run through financial ruin, just for a commission.; Wednesday, January 03, 2007 7:28:00 AM
Anonymous said...: Yea there's problems... like FNMAE taking a fire truck to the fire loaded with gasoline.

But we aren't dealing with military base closings coupled with aerospace slowdown (early 90s recession) or dot-com busts or State govt layoffs or City govt bankruptcys (San Diego). We don't have S&Ls working as partners in every commercial development project. Interest rates aren't 22% (early 80's) on the 1st, 2nd, 3rd, 4th and 5th loan that encumbered homes 120%.

Ya know, FNMAE has a lot of power, but what will keep a corp like DR Horton from packaging its own loans and selling them off to the secondary market.... or China.; Wednesday, January 03, 2007 7:46:00 AM
Anonymous said...: "But we aren't dealing with military base closings coupled with aerospace slowdown (early 90s recession) or dot-com busts or State govt layoffs or City govt bankruptcys (San Diego). We don't have S&Ls working as partners in every commercial development project. Interest rates aren't 22% (early 80's) on the 1st, 2nd, 3rd, 4th and 5th loan that encumbered homes 120%."

This is all true but doesn't matter. These are some of the arguments that economists were making for the last few years claiming that real estate prices WOULD NOT drop in real terms... but they have. So what are these arguments worth? Not much, but I'll comment anyways:

"we aren't dealing with military base closings coupled with aerospace slowdown"

Right, now we're coupled with Housing/lending/construction/etc slowdowns. Read up on what (large) percentages of new jobs in CA over the last few years were tied to industries that support housing and how companies in those industries are going belly up now.

"But we aren't dealing... dot-com busts"

The real estate bubble simply stepped in and saved a recession that would have and should have followed the dot-com bust. Now that real estate is busting, recession will follow.

"City govt bankruptcys"

I'm not sure about bankruptcys, but state and local govts. will definately be feeling the pain over the next few years with drastically less revenue coming in from building permits and expected growth that didn't pan out (See articles on Lincoln).

"We don't have S&Ls working as partners in every commercial development project"

Worse, we have the majority of new jobs created in our state tied to housing development.

"Interest rates aren't 22%"

Worse again, home owners have loans they can't and won't be able to afford. At least in the 80s people couldn't take out a loan unless they could afford it, regardless of what the interest rate was.; Wednesday, January 03, 2007 1:06:00 PM
Anonymous said...: Someone said housing cycles do not take months to recover, but years. That is a true statement following the 90's market correction.

There are still several factors affecting this market than the 90's so its not apples to apples.

The internet has opened the door for more speculators and smarter buyers who have greater effect on speeding up the correction. I'm not denying there will be no correction, rather the cycle for which it will finish will be much faster in lieu of the technology available to us.

Consider the following:

Mortgage comparisons (bankrate.com)
Housing comparisons (zillow.com)
Housing search (realtor.com)
Blogs (too many to count)

The correction will occur, albeit much swifter. My prediction is the correction will occur not in the order of several years but in 1 to 2 years.; Wednesday, January 03, 2007 1:37:00 PM
Perfect Storm said...: There are still several factors affecting this market than the 90's so its not apples to apples.

You named one the internet. What are the others?; Wednesday, January 03, 2007 1:48:00 PM
Anonymous said...: "its not apples to apples."

Absolutely right. It's not apples to apples at all. Read my previous post that comments how this downturn is different.... in a worse way.

A 1-2 year recovery period is simply too optimistic. Have you not seen a graph of the inflation adjusted median price runup that occured in this bubble!? It was about 3 times as large as the runup in the late 80s. What makes you think it will be back to normal in 1-2 years when it took 11 years last time? 11% of our nation's mortgages are set to adjust this year (2007). Statistics beyond that don't exist but are likely similar.

The market can't recover with over a trillion dollars in mortgages adjusting upwards beyond what people can afford. Forclosures will continue (read the Center for Responsible Lending study) causing inventory to stay high and this thing has a long ways to go.; Wednesday, January 03, 2007 4:14:00 PM
Anonymous said...: Perfect storm, when you adjust for population growth, inventory never made the largest ever - see Sac real stats.

A friend of mine called today and said at her sales meeting this morning, several agents were dealing with multiple offers on properties in the $300-500K range.; Wednesday, January 03, 2007 4:14:00 PM
Anonymous said...: “Thornberg said those in the most trouble are newer home owners whose mortgages will re-set this year. ‘There are a lot of people out there who are in trouble, who were promised that real estate could be a no-lose investment,’ he said.”

“In fact, Thornberg sees the entire California economy for 2007 in a negative light. When asked why, he said the state is in a completely unsustainable situation. ‘Consumers cannot continue to spend more than they earn,’ he said.”

Don't buy now things are getting worse so says Chris Thorneberg one of the most respected economist in the Country. Or you could just listen to Sippin. Take your pick.; Wednesday, January 03, 2007 4:31:00 PM
Anonymous said...: Sippin,

What are you saying, the buyers could not find another home for $300,000 to $500,000 in Sacramento? What, are they going to, overbid eacy other on the way to $600,00 now? Don't make me laugh. There is so much inventory it is scary. 12,000 homes on the market right now, at the lowest point of the yearly cycle.

This "buy now or be priced out" is over. The market is reverting to affordability standards, just like it always does. Always, always, always.; Wednesday, January 03, 2007 5:28:00 PM
Anonymous said...: Appreciate the lead on Thornberg - Chris Thornberg on 2007... "Price growth remains at zero. This is the good scenario. The bad is that the rest of the economy also cools, and prices fall. But don't expect that prices will collapse by, say, 30%. Housing markets aren't that liquid. Declines will be moderate."

Could you lead me to the date or source of your quotes, they may be newer.

Stayn Dry, I'm not saying they overbid the price, I'm saying more than 2 pairs of buyers made offers on the same homes, they could have been low offers.

In a resale area, homes are not interchangable commodities, also some may have been priced so they were obviously a best buy.

But when you go out to a new home tract, and there are 4 plan Bs on the golf course with yellow carpet, the only issue then is price.; Wednesday, January 03, 2007 5:46:00 PM
Bakersfield Bubble said...: Another One Bites the dust:

http://bakersfieldbubble.blogspot.com; Wednesday, January 03, 2007 7:58:00 PM
Anonymous said...: WHERE'S THE MARKET HEADED? ECONOMISTS GIVE THEIR ... EDUCATED GUESSES
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/12/31/REGM6N9C4A1.DTL&hw=Thornberg&sn=001&sc=1000

12/31/2006

If this link doesn't work, you can go to sfgate and do a search on Thornberg.

BTW, this guy has been, IMO, during the last couple years, one of the most pessimistic of the economists who watch the CA real estate mkt. I thought it was interesting to note in the article that he is also one of the least experienced.; Wednesday, January 03, 2007 8:21:00 PM
Perfect Storm said...: It looks like Secured Funding is going down the tubes. All rumors point to total shut down.

Another one bites dust, Another bites the dust, hey, hey, hey, Another one bites the dust.; Wednesday, January 03, 2007 8:36:00 PM
Perfect Storm said...: Subprime is going down faster than a fat guy who slips on his own vanilla ice cream cone.

No offense to fat people, just be clean don't use toxic loans.; Wednesday, January 03, 2007 8:45:00 PM
Anonymous said...: "BTW, this guy has been, IMO, during the last couple years, one of the most pessimistic of the economists who watch the CA real estate mkt"

You can call him pessimistic, or you can call him one of the only economists who said that prices were going to drop at all this time last year while all the others were saying that they wouldn't drop. As we know, he was right, but I still have issues with some of his predictions myself.; Wednesday, January 03, 2007 8:54:00 PM
Lander said...: Admin note--I'm tinkering with the placement of this thread, so pardon the whiplash.; Wednesday, January 03, 2007 9:07:00 PM
Anonymous said...: Your Bay Area home as profit center
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/01/04/BUGDBNCBRC1.DTL

"The median estimated profit for the nine Bay Area counties plus Santa Cruz and Monterey counties was $315,000, or 88 percent, with a median holding period of six years."; Thursday, January 04, 2007 8:48:00 AM
Anonymous said...: Resetting the DOM to sell "stale fish"
http://sfgate.com/cgi-bin/article.cgi?f=/g/a/2007/01/05/carollloyd.DTL

" . . . thousands of agents relisting properties to make them seem new obfuscates all sorts of important information -- including price reductions, how many real estate agents have tried to sell a given house and how long the house has really been on the market."

My comment: The DOM data is hard to get for Sac home shoppers without relying on an agent. When I was looking for a house in the Bay Area, I used a service called Cleanoffer which gave me access to most of the MLS data including DOM. But as this column points out, the DOM is frequently unreliable. This is just another way that home buyers are put at a disadvantage.; Friday, January 05, 2007 3:03:00 PM

Monday, January 01, 2007

Sacramento Housing Market Water Cooler - January 2007

63 comments:

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