Thursday, March 01, 2007

Sacramento Housing Market: 9th Biggest Loser

The Sacramento region was the ninth weakest housing market in the country during the fourth quarter of 2006, according to a report [pdf] released today by the Office of Federal Housing Enterprise Oversight (OFHEO). The Sacramento housing market ranked 274 out of 282 markets for price appreciation, according to the government's House Price Index (HPI). For the first time since 1997, Sacramento's HPI declined on a yearly basis, falling 2.41%. (HPI typically lags other price indicators.) That decline pushed Sacramento onto HPI's "Bottom 20" list for the first time during the current housing cycle. Historical graphs of Sacramento's HPI are available here.

So with Sacramento's HPI having peaked one year ago, how does the current housing bust compare with the one experienced by Sacramento during the 1990s? According to OFHEO historical data [xls], home prices declined 2.34% in the first year of the 90's housing bust. So in review:

  • 1990's: -2.34% after 1 year
  • 2000's: -2.41% after 1 year

9 comments:

Sittin' Out This One said...

Last week Sippin mentioned multiple million dollar homes in Placer county had gone pending. I decided to look at some of the sales and went to Catte Verdera.

First, Countrywide has a forclosure for sale. 5593 sq.ft. for $959,900. No pending sale there.

Deutsche Bank foreclosed on a 5500 sq.ft. home and listed it for $859,000. No pending sale there.

Oh, here are a few pendings. The listing brokers are Lyon, Richmond American and Complete Realty (with 2 houses pending). Wow, look at the prices: $1.25 million to $1.60 million. And they are all smaller homes than both the foreclosures. That seems very strange.

Perhaps the FBI and the DRE will want to look at those transactions after they close. You never know what is going on in this market.

Dr. Brightside said...

So "biggest bubble ever" = 2.41% decrease in value in one year after 100% increase in 5 years = 97.59% gain in value still. Much better than the stock market that lost 3% in one day.

Patient Renter said...

Yea I'm not impressed with the losses so far either. Really though, every sign points to continued falling prices. We knew it would be a while, and it still will be.

RMB said...

Dr. B. - Picture the housing market as an Aircraft carrier. Once the momentum is built up it take a little while to turn the ship, but once it starts turning it keep turning and starts to accelerate and it gets really difficult to turn it back. If you look at the fall as 2.4% down YoY it doesn't look like much, but when you look at the change from the previous YoY change ~+20% it is quite dramatic. Down ~20-25% in the rate of change. This year should get interesting with all of the foreclosures.

fishtaco said...

How about looking at price per square feet numbers. Here are the drops from the high for the counties in the area (using Lyon Real Estate data). In terms of real estate I would say these numbers are horrific.

Sacramento -11%
El Dorado -11%
Placer -16%
Yolo -16%

I am seeing so many houses being relisted in Davis from last year (at lower & higher prices). Get ready for an absolute inventory explosion. This spring and summer will make last year look "good".

Gwynster said...

Fish,

You and I have talked about Davis before. I'm watching the inventory in Davis and Woodland too.

Now have you seen what they are building just up RD 102 in Woodland? New construction of smaller SFRs for $200 per sqft just now begin released. And UCD is about break ground on the 1000 unit West Village site this spring.

The Davis natives are nervous.

Embdddsgnr said...

Now what's interesting to me is that some places here in E. Sac. are selling, when the asking prices are set lower than the others in the area. They're still way too high though: $370K for a ~1400sqft fixer with the trains in your backyard? It went pending. Compare that to two places only blocks away, asking $420K for ~1100 sqft. and $425K for. . . 900sqft!

I guess the first place looks like a bargain in comparison, but still.

It will be interesting to see what happens here by fall.

fishtaco said...

For all the great things about living in Davis, delusional home owners/sellers are definitely not one of them. Every time I crunch numbers on houses, I keep coming back to the fact that my rent is only double what my taxes would be if I were to purchase the house I live in. That is f*&#ing insane if you think about it. There are so many overpriced POS in Davis it puts many surrounding areas to shame. 600k for a lot with a teardown on it? 420K for a dump that has been trashed by students and rents for 1500? 1.2M for a 4000 sqft energy-devouring castle? In Davis? Davis, like the rest of the region, is crashing.

Gwynster said...

Fish,

I so agree with you. Our patience has run out.

The DH and I are traveling for 2 weeks in late april - doing interviews and picking out our relocation spot.