Tuesday, April 03, 2007

Red, Bluff(ing) Realtors



From the Red Bluff Daily News:

No surprise, but there's a reluctance among real estate professionals and developers to acknowledge that in a short two years the housing market has gone from red hot to tepid. But 2006 figures statewide and nationwide showed drastic drops in homes sold over 2005, and clearly the California boom of earlier years has turned into a dull thud.

It wasn't as apparent in Tehama County, where even into late summer last year it looked like homes by the hundreds would soon be under construction and many more hundreds - no, thousands - of people would be heading here to enjoy life under whichever oaks the developers didn't cut down.
...
Members of the Tehama County Association of Realtors concede the obvious, that sales are flat or in decline. But it appears most want you to believe that the market has bottomed out and will soon start back up.

Homes aren't selling very well and several hundred of them are on the market right now, and a large number of others are for rent, some of those brand new.

Those who sell real estate for a living are reluctant to concede that the bloom is off, not only in California, but in most of the United States. But the headlines and the signs have been and still are there for all to see.

Early last winter, Rich Henley, then the president of the Tehama County Association of Realtors, attempted to put a better face on what was happening. An article in the Daily News on Nov. 13 has as its lead:

"Ignore the reports you've heard about the real estate market crashing ." Henley said that according to figures the association keeps, the market hasn't fallen drastically; it's merely decreased from the record year of 2005.

"In fact," he said, "it has stabilized.'" "The growth in 2005 was not sustainable," he said, and now, instead of collapsing, it's simply going back to normal."

Lee McLeod, president of the Tehama County Association of Realtors, also used the word "stabilized" in a recent interview with the Redding newspaper. In a conversation with the Daily News, she also expressed cautious optimism that things may soon turn around.
...
You need only to look around at all the homes with "For Sale" signs on them to make it clear to even the casual observer that it's a down time for home sales.
...
Willow Creek Estates, off Luther Road near the airport has many brand new homes sitting unoccupied, many of which have been completed and ready for occupancy for close to a year.

All in the third-of-a-million dollar range, "For Sale" signs abound for both new and already occupied dwellings. A drive down one of the streets a recent day showed a dozen houses in a row all on the market.
...
None of this would appear to mean that Red Bluff, Corning and environs are about to go back to the sleepy little towns of just a couple of decades ago. But there's no way you can spin what is happening. The county's growth is going to be slower than many thought as recently as 12 months ago.
Maybe the Red Bluff Realtors could learn from those crafty Marin Realtors:
The Marin Association of Realtors Monday pronounced a rosy outlook for the Marin real estate market - especially in the long view.

In a presentation to the San Rafael City Council - the first of its kind before a municipal body in Marin - the association said newspaper headlines announcing Marin's recent real estate highs and lows are accurate, but not a true measure of the market's rock-solid history in Marin as a steady climber.

Association officials, concerned about the media's recent portrayal of the market as weak based on "snapshot" data, are making the rounds to Rotary clubs, chambers of commerce, community groups and others across Marin hoping to spread the word that business is good. About a dozen association officers have undergone training as part of the "proactive" public education campaign, Segal said. Officials expect to appear before all of Marin's local councils before the end of the year.
Read more at the Marin Independent [sic] Journal.
Hat tip: anon1137.

17 comments:

Patient Renter said...
This comment has been removed by the author.
Patient Renter said...

"In fact," he said, "it has stabilized.'" "The growth in 2005 was not sustainable," he said, and now, instead of collapsing, it's simply going back to normal."

Collapsing is the prerequisite to "going back to normal".

"Association officials, ... are making the rounds to Rotary clubs, chambers of commerce, community groups and others across Marin hoping to spread the word that business is good."

If things were so good, the realtors would be too busy selling houses to spend time trying to convince other people how "good" things are.

Diggin Deeper said...

This one kind hits close to home.

Red Bluff will eventually be home in the next several years with Sacto just a brief stopping point unitl we build. Have seen the boom since 2004. Really hasn't taken off like Sacramento but prices are up with plenty of inventory to choose from.

Del Webb bought 3500 acres north of town to develop another Sun City project. But the project's been deferred until the "boomers" start opening their wallets again.

The plan is to build a place 7-8 miles out of town on property we own. Originally was looking at $200-250 per sq. ft. but I believe that number will be close to $125-150 before this one's over.

Can someone answer why in Austin, Tx or Winston/Salem, NC you can buy a palace for under $125 per sq.ft. but in this area it can be up to twice that? I know land is a factor but are materials and labor that much out of whack in between the areas mentioned and northern CA?

Pay my morgage said...
This comment has been removed by a blog administrator.
Diggin Deeper said...

Pay my morgage said...

"At least the morgage is a tax write off- If I did not have the extra write offs I would be paying more taxes to take care of the section 8 housing you losers live in."

Looks like Real has returned.

That's only works if you have a mortgage. Some of us don't and still own the asset. Pay a little higher taxes but keep more of the nut. Great concept when the market's in turmoil.

PS is probably closer to right than you are with your predictions. But anyway you want to cut it ... 15% to 50% ... a renter that waits this out will be able afford to buy. Might even afford to buy two at some point.

rocklin renter said...

PMM -

How do you know they didn't?

Just because we are renters now doesn't mean we weren't owners then.

Cmyst said...
This comment has been removed by a blog administrator.
Coltster said...

digging deeper:
2 houses

I have accumulated over 3 apartment complexes 4 duplexes and over 20 houses over the years.

sounds like a sad approach to just save for a couple houses here by renting.

I really do not consider it to be success to just save for a couple houses- but that is your measure and I understand.

I have made it to a point where I do not have to care about the fluctuations- just gotta keep paying me the rent, and pay for my house in granite bay and 3-5 vacations a year!

Thanks for paying my debt service guys!

;)

That was lame that my last post was deleted- is this site only for negative people who want to complain about the sub prime market and make fun of the people who paid too much in 2005 and are over their heads- oh and make fun of my grammer cause I do not proof read?

Perfect Storm said...

I am glad to see Lander deletes other blogs other than mine.

anon1137 said...

Hey Lander - the feed I get from your blog via Yahoo is still titled Sacramento Sip(pin).

Thx again for your great web site!

Lander said...

the feed I get from your blog via Yahoo is still titled Sacramento Sip(pin).

Wow! The evil Captain Lander from Episode 37 must be trapped in cyberspace.

cba said...

Diggin Deeper

The direct costs to build a home throughout the country vary only slightly. Materials are essentially the same, with small variations for labor.

In parts of Texas there are no zoning laws similar to CA. It is easy to buy land, immediately start development and build homes.

California leads the country in fees charged for new construction. In the next several years new home building fees will increase significantly as most communities are maxed out for sewer and water capacity. There is one small city in the Central Valley where the sewer fees alone will be increased from $5,700 per home to $20,000 per home. It's not unheard of for total fees to exceed $50,000 per home. And that's not going to get cheaper.

New home development fees are necessary because of the Prop 13 limitations for property taxes. If you purchased 10 or more years ago, you pay a fraction of what homeowners pay if they purchased more recently.

Add the regulations required for infrastructure and the holding costs during the lenghty entitlement periods and you basically create very expensive housing.

The biggest variable that builders can control is the land cost. If home prices come down, persumably the builders will factor that into their land purchases and pay less than the market peak of 2005. But... land sellers are often relunctant to sell for much less if they are sitting on raw dirt, so it becomes a standoff until one or the other blinks.

Builders generally run with 3-4 years of inventory, so there is no great need for "new" dirt at this time.

Patient Renter said...

"Thanks for paying my debt service guys!"

No problem. Thanks to you and landlords everywhere for owning the liability for a depreciating asset that I get to live in, risk free! Nothing like the carefree bliss of being a renter in a depreciating market. Have fun watching your value drop through the floor.

Sold in '05 said...

Sorry CBA, but $50,000 worth of fees does not explain the housing costs being nearly 100% higher.

Houses here are built on tiny thin slabs with no basements and minimal footings, extra small partially landscaped lots, with thinner walls, and less insulation than just about anywhere in the mid-west. They are not priced $50,000 higher, they are $250,000 higher or more. It is pure markup, plain and simple.

A quick example: Centex is selling 212 Twin Birch Court in Lake St. Louis, Missouri for $305,000. This is a four bedroom, 3,197sqft home on a HALF ACRE lot (you’ll pay a large premium for a lot larger than .15 acres here), in a low crime suburban locale, easily commutable to a large city. This amounts to $95/sqft. Raise the price by your $50,000 worth of permits/B.S. and you’re still only at $111/sqft.

The bottom line on new home pricing here is that the big builders are STILL making HUGE profits in our market and have large amounts of margin that they can afford to slowly bleed away as the market drops. They will also keep building here, because in places like St. Louis, they probably ARE getting close to breakeven prices and by milking out our bubble markets they will be able to keep their companies solvent (maybe) while this down-market works itself out.

I’m more than happy to pay something more to live here vs. St. Louis, but I’m not stupid enough to believe for a minute that the recent cost of homes here is set by anything but greed and speculation supported on the back of reckless lending. Looks like the backbone of this market is now being broken and maybe next year we’ll see homes being priced based on the “cost” of building them not on imaginary “value”.

Sold in ‘05

Diggin Deeper said...

cba

Thanks for you thoughts. Since we won't be hooking up to any city services, those costs will basically go away. Owning the ground takes a chunk away from the price per sq ft and the infrastructure is in good shape.

Sold in '05

I tend to agree about the builder's margins. When manpower is short in the trades, you pay. When demand is high with the builder, you pay. I'm figuring all that swings the other way and prices paid come come down with the market.

colster

"I really do not consider it to be success to just save for a couple houses- but that is your measure and I understand."

Sounds like you've made Real Estate a business over the years. Hat's off to you. Many are just looking for a place to live without consideration of "multiple streams". As for paying your debt service, I hope you're not one of the ones who's bought late with cheap money and variable terms. The bloom is off this rose and "the times they are a changin"

Cmyst said...

Coltster :"That was lame that my last post was deleted- is this site only for negative people who want to complain about the sub prime market and make fun of the people who paid too much in 2005 and are over their heads- oh and make fun of my grammer cause I do not proof read?"

I was deleted, too. :)
So the blog isn't for people who make fun of grammAr.
If you're doing well in actual real estate investment, vs. the "flipping" that so many so-called investors were engaged in, more power to you. Being a landlord isn't all fun and games and vacations 5 times a year; there are also repairs, terrible tenants, taxes, code mandates, etc. If you enjoy it, and you make enough to live well on, who can fault you for that?
Most of us don't want to make real estate our life's work and our daily bread. We just want a decent and sturdy house in a pleasant and relatively safe neighborhood. I don't think I'm negative. In fact, I think I am positive. It's a good thing when homes become more affordable and when people earning a good middle-class living (for Cali, 100k - 200k is middle class)can afford a decent home. It's a good thing when lending institutions have standards on lending their money, and when people are required to prove their income and to put some of their own money down on such a big purchase.
The negative thing about all this is that it likely will have a much bigger effect on the economy than many people want to admit.

lizzibug said...

Can any one tell me what commerical freeway frontage land is leasing for these days? I also have 1500 sq. building to include in the lease. Do you calculate the lease based on square footage? Do you include the building in the land lease or calculate it separately? Any advise would be greatly appreciated.
Lizzibug