Tuesday, April 03, 2007

Sacramento Home Price/Sales Results - March 2007

Agent Bubble has kindly provided some March statistics for Sacramento County.

  • Change in average price per sq. ft. since last year: -8.4%
  • Change in average price per sq. ft. since 2005 peak: -10.9%
  • Change in # of homes sold since last year: -32.6%
To compare with previous months, simply click on the topic "Monthly Reports: AB MLS" below the post.

Max has it all graphed here.


cba said...

It would be interesting to see a breakout of the info by zip codes. One of my thoughts on the adjustment to home prices is that the "best" zip codes will be impacted only slightly during the near term, the "average" zip codes will experience moderate declines, but the areas with poor schools, poor infrastructure and crime issues will be impacted the most. Obviously, these areas are the ones that benefitted most from the sub prime loan availability and now they will suffer larger percentage adjustments.

Basically, there will be a flight to quality and that will support the upper part of the market. IMO

Patient Renter said...

The flight to quality theory has a bit of promise, but over a prolonged decline such as the one we're in for, I think the pain will trickle down pretty evenly through all areas.

Diggin Deeper said...

Flight to quality is an interesting thought in a stable market where prices are at least moving with the rate of inflation. It actually makes sense.

Buying perception, imho, is the key to the market. The media key's in on weak perception and cements a mentality in the buying public. Foreclosures, bankruptcy, and a general malaise in the real estate market fuels this mentality. Buyer's respond by either holding off until the storm is over (thus the falling sales figures we see each month),or buy but buy right. I believe all buyer's want to get a good deal. When prices are falling, what may be a good deal today, may not be two months from now. Hesitation occurs ane why not? It really doesn't matter what zip code you are in when this happens. There have been reports on this blog of high end homes selling at heavily discounted prices. These undoubtedly are in your best zip codes. Prices filter through to the neighborhood comps. As a seller you now have to deal with the appraisor who has these comps to work with. Gone are the days when a few lunches with the appraisor gets a home appraised at the "selling" price. It was a joke then, and would be fraud now. He's now part of the perception problem and his job and reputation is at stake. Your home is no island if the dam breaks and water is rising all around you.

Sittin' Out This One said...

Osmosis. It takes time, but it will all even out. You learned it in high school. The salty brine eventually works thru the permeable barrier and the clear water on the other side takes on the same consistency.

If the economy turns further down and construction continues declining, you will even see bay area transplants that moved to Sacramento (with lots of equity), move back toward the bay area where jobs are based on more fundamental industries. This will happen more in the further reaches: Chico, Redding, Bakersfield, and especially Oregon. It happened in the early 1990's. A lot of people moved to Nevada, Arizona and Colorado during that time, but I don't think those areas will be much help to job seekers for a while.

If the economy putters along without a recession, it will take longer for the osmosis process to work and the changes will be less intense and more graduated.

It is hard to tell which way it will go, except it is clear the economy will remain sluggish for a while and nothing is going to be appreciating for a long time. It is a fundamental change that is uncomfortable, but in the long run, will be good when we have a more balanced market.

Cmyst said...

I think cba is right that in the "near term" the biggest declines will be to areas like Oak Park and South Sac. I've seen a lot of bank-owned for sale signs in those areas.
However, I also agree with DD and PR that over time this is going to spread into all areas.
A year ago, I chose not to buy after selling my condo because I felt I could not afford to buy. I figured that when homes dipped to 300k I'd buy. Well, homes have dipped. There are actually quite a few homes in Carmichael in decent, stable neighborhoods that are now being sold between 250-300k. And I'm not going to buy yet, because I really strongly feel that we aren't close to the bottom and that waiting another year or two is going to save me thousands of dollars and allow me to buy a better home. After all, I know from doing the research that I saved at least 50k by not buying last year, because I was looking at similar homes in similar areas and none of them was priced under 350k. So now, instead of feeling wealthy because of the equity growth of my home, I feel wealthy because I didn't buy last year. If I'm feeling this way, a whole bunch of people in my same demographic are feeling this way, and that demographic is the one that is the target market of most of the sellers out there. There will come a point, and I think we're far from it, where the prices will have normalized to the median.
I'm watching the zips that interest me. To be truthful, if a great deal came along in one of them, I'd probably take it. But a "great deal" isn't so great if there are about 10 other such "deals" in the neighborhood.

wait n c said...

I agree to a point about the price declines in less desirable neighborhoods....However....I think many folks got in over their heads trying to buy into more desirable neighborhoods(even those with good credit). These are the areas I believe will be hardest hit by the ARM resets.

Pay my morgage said...

I think a fun post on this blog would be to have everyone, experts, and regular people poll what they think will be the bottom of RE prices in the sacramento area.

We are currently 10-11% down from the peak in summer of '05

where do you think the bottom will be and what year?

I personally think we will end 20-30% down from the peak. With inflation adjusted terms probably- 30-40% down overall before real estate picks back up.
2009-2010 will be the year bottom.

Anyone else have their own thoughts- I believe this to be the be the central topic this entire blog is after, and me for that matter.

wait n c said...

Py my mortgage -

As an average buyer (okay yes I have an MBA...but still pretty average)

Based on my calculations (adjusting for for interest rates, points, and inflation), if the economy is in okay shape, I predict the average price of a house will decline 31%. I did my calculation based on average monthly payment since, in the end, that is what our budgets must accomodate. Point of fact, in monthly mortagage payment terms, 1981 actually saw a higher peak than today, due to 16% interest and 2 points.

Diggin Deeper said...

I'm no economist but I do study the trends and try to look at the big picture.

Wild prediction here is that the economy is faltering, real wages are stagnant, and job growth is a mirage. Inflation is rising which normally bodes well for the real estate market. Unfortunately, inflation and prices for real estate are completely out of sync...Real estate prices have risen so fast over the last five years while inflation is just now making its way into the economy. Therefore, by 2009 real estate prices in real dollars go down over 40% from the top in those markets where excessive ramp ups occurred...Sacramento being one, the bay area another, and all of SoCal.

As I said it's a wild guess at best

Diggin Deeper said...

said "in real dollars"

meant "in today's dollars"

Cmyst said...

PMM: "where do you think the bottom will be and what year?"

Well, I just killed an hour researching (in my limited non-industry accessed way) all sorts of stats for Carmichael, Fair Oaks and the Sac 818 zip.
I really tried to find median sales price info for the year 2000 for those areas, but the best I could do was August of 2002 from the Bee's sales data.
2002 showed Carmichael median home sales price at 257K, with a price per sf of $161. Fair Oaks medians were 257K and price per sf of $155.
Sacto 818 median was 267K, but price per sf was $238.
Median family income was 49K per year in 2002. Home prices had risen that year by around 31% (according to the Bee's sales charts)over 2001.

In 2006, median price in Carmichael was 399K, with $238/sf. Fair Oaks, 408K, with $235/sf. Sac 818, 461K, with $341/sf.
Median Sac family income last year, 2006, was....47K.

Given the resets on ARMs, foreclosures, growing inventory, etc. I think it will be about 3 years from now that we'll be near the bottom, and that the bottom median prices in those areas will be about 4 to 5 times the median family income.
So, if median wages stay stagnant or mildly declining as they have been, I'm calling for somewhere around a 40% decline in sales prices from today's prices (not 2005's peak ones), in those particular areas. I think some areas (Oak Park, Del Paso Heights) could drop even further than that and I don't even want to speculate on them because I'm not interested enough in them to even look up their stats.
40% drop by 2010, probably going very slowly downward for the next year or so, then suddenly just dropping like a dead weight in 2010.