Sunday, April 22, 2007

'Pretty Close to the Bottom' in Davis

From the Davis Enterprise:

...Davis average home prices are down from the market peak in late 2005. Depending on the property and the neighborhood, prices have dropped by 7 to 12 percent. Currently, the median home price in Davis is about $525,000. During the first 14 weeks of 2006, the median price was $564,500. And during the fall of 2005, it flirted with the high $500,000s.
...
Just about everyone agrees what's happening now is a market correction, the almost inevitable follow-up to the heady run-up in home prices from 2001 to 2005.

But to [Herb] Cross [vice president and manager of the Davis office of Lyon Real Estate], it doesn't look like the last market correction - the drawn-out downturn that lasted from 1990 through 1997.
...
That's led several observers to predict that the current cyclical downturn won't be as prolonged as the market correction in the early 1990s. Some say Davis prices might recover sooner rather than later, and they might even be starting to rise now.

“I think we're pretty close to the bottom,” said Doug Arnold, co-owner of Coldwell Banker-Doug Arnold Real Estate. “We saw some numbers in February and March that we hadn't seen in a long time. We're having more interest, more action than we've had in a year.”
...
Some categories of buyers who were once keen to buy in Davis have largely disappeared. Five or six years ago, open houses would attract out-of-town families with a son or daughter enrolling at UC Davis. In a market where home prices were increasing by 10 or even 20 percent each year; some families were able to cover the cost of college education through the appreciation of owning a house over a four- or five-year span. But now, with home values dropping, “we're not selling many homes to families of college students anymore,” Arnold said.

13 comments:

Garth Farkley said...

Is Herb whistling past the graveyard or lying through his teeth?

Gwynster said...

Just trying to plug the hole. A piece like that means Herb knows buyers smell blood in the water. This does mean that DVO, Fishtaco and I might get lucky in a few years.

Luis said...

I'm still waiting too! My wife and I just moved into a triplex in North Davis. The one next door is for sale, 2/1.5 in the very high 500's. I don't think the bottom is near.

Garth Farkley said...

At the risk of being crude and offensive, my new theme song for Real Estate is "We've Only Just Begun." Sacramento home equity has a bad case of anorexia.

Gwynster said...

Garth,

When I was out on Sat looking, the common theme was "make me an offer". Some agents are insulted at 10% off but they know that their clients are unreasonable.

I did notice that the ablatross on D street for 689K had a sold sign today. It has been serial relisted for a year at least with price reductions. It had two rentals on the property. I can't wait to see what it really sold for.

fishtaco said...

As an example of where the davis market is or isn't, a 2/1 cottage type house on 11th street sold last summer for 600k. The buyer apparently had second thoughts and put the house back on the market a few months later at 575k. It sat around for months and I heard it sold for 525k. That is in the 7-14% range mentioned. I do see people buying nice places that are priced right. The overpriced un-updated places are lingering on the market and that is keeping inventory relatively high. I would guess that buyers who have owned previously somewhere else are keeping the market afloat.

drwende said...

Haven't we been "pretty close to the bottom" for over a year now?

The market was slow over the holidays but going to do a major turnaround in the spring... of 2006.

Gwynster said...

It's always been "it won't happen here" in Davis.

My landlord is now talking about selling. If she does, it will have to be as is because the structural issues on this house are a monster. The house is literally separating in half. We've had to plaster over .5 wide cracks from this once a year eveyr year since we've been here.

head attached said...

One large problem for the Davis market is that the university will built hundreds of units (1800?) in the next few years. It's the university that has supported Davis prices for years by subsidizing profs with loans, etc. Once there is no reason for it to do so because of the university-built units, the Davis market will lose its pillar of support. I fear the descent will be so long that those of us on the sidelines in Davis will have to move on before it's done.

Gwynster said...

You are speaking of the Village West development. I was scheduled to break gound this spring.

Approx 1100 of the units are for staff and faculty purchase only. The plan also mentioned housing for another 4000 students. First units were to be available next summer.

Loosing 4000 potential renters will be a wake up to the 'hood. frankly I can't wait.

Now the staff and faculty units will be interesting because along with those units coming online, the campus is right now beginning to loose it's boomers. Don't forget to add those homes coming into the market into the mix as well.

Garth Farkley said...

Gwynster,

I do believe that people who are renting and saving their money, and have impeccable credit, will get their opportunity to buy after the credit crunch. But we'll have to be patient.

I try to keep telling myself, in the style of Bill Clinton, "it's the fundamentals, stupid." I'll wait till gross rent multipliers are back to some semblance of reality, until the ratio of median income to median price comes back down to earth. Until prices re-enter the atmoshpere we are nowhere near "the bottom."

Sippn said...

Its time those "boomers" finally got out of school. geez. some of them could be grand parents.

We'll know if HerbandDoug are right by the end of summer.

Davis hasn't had any major development or home building going on for a couple of years as they had from 1996-2004, so theres not a lot of supply to the inventory like West Sac or Natomas or Woodland. Fishtaco, $525k could be the right price for a teardown in Davis.

Hey, just for fun, how much have people made selling Davis "affordable" homes they won on the lottery?

Gwynster said...

Well Sippin, people already sold here made a killing. The homes that are not selling here aren't doing so well.

You can get a teardown for 360K in davis now in a pretty good area. I just saw 2.