Thursday, April 26, 2007

Sacramento Real Estate Market - 'Nothing Positive to Report About'

From Roseville and Rocklin Today:

No March flowers for Sacramento real estate

There is nothing positive to report about the Sacramento real estate market in March. Sales volumes are down, prices are not showing any strength, and inventory of available homes continues to grow. Slice it and dice it anyway you want and I’m not sure who you are to find anything to feel good about. Well, I suppose there are a few “bubblers” out there who seem to take delight in seeing the Sacramento real estate market in trouble.
...
For many of us who follow and work in the Sacramento real estate market the March results are disappointing, especially from where we were a few months ago, starting to think that 2007 might be a rebound year. Mike Lyon, head of Lyon Real Estate, and President of Trendgraphix said, "Information on market conditions has become the brass ring for sellers who need to sell and buyers who want a deal." He also went on to say, "There seems to be a new round of sellers who will miss their opportunity in this market because they have priced their homes at 20% more than buyers are willing to pay."
Trendgraphix March 2007 Sacramento Real Estate Market Report

17 comments:

Sippn said...

So I read her article and she spent a lot of time talking about double didget sales inceases - what gives?

Cmyst said...

Yeah, I wondered about that, too. She sure seemed depressed, even so.

So, I took 20% off the asking prices of the houses I'm tracking. These are tract homes built from the late 60's to the early 80's, in well-established and safe neighborhoods close to shopping and parks, in Carmichael and Fair Oaks (I don't even track 818 anymore because for the crime rate and the size of those homes, it's not worth it). Even with 20% off, I would not be tempted to buy right now. Now, with 30% off......I'd probably jump. I wish I had Gwynster's huevos to lowball some of these places. Is it really lowballing if you're offering the price you can afford on a home in a neighborhood in which the median family income is anywhere from 20k to 30k less than I make?

Diggin Deeper said...

Economic growth in 1Q slows to 1.3 pct

http://news.yahoo.com/s/ap/20070427/ap_on_bi_go_ec_fi/economy_66

Most analysts were projecting GDP @ 1.8%. Basically was due to the housing slow down. Inflation ticked up (although the numbers don't really reflect the true picture).

The big picture appears to be setting the table for a zero or negative growth/ inflation based economy, somewhat like the 70's.

Cmyst

Hold tight, wait and be patient. You'll get your price. Its obvious there's nothing moving the market upward.

RMB said...

Ah come on Sippn, Look at the source for this article. She is a shill from Lockwood's group, not an unbiased journalist. She has to sound positive, her livelihood depends on it.

As far as double digit increase, they are all the MtoM numbers which happens every year, nothing to crow about since the YoY numbers are down double digits.

I loved her little dig on the "Bubblers". I guess wanting reasonably priced housing tied to some fundamental measures of value makes you a bad person in these peoples eyes. Oh, the Karma of this whole sitution is going to make great book fodder in the coming decades.

Diggin Deeper said...

"I guess wanting reasonably priced housing tied to some fundamental measures of value makes you a bad person in these peoples eyes."

When the seller's whipped up pricing and demand seemed endless, these same RE people were there to coach buyers about the market and what price was reasonable. It was a perfect scenario for "Buy now or get left behind". Now the tide's turned. The market's ugly and prices waver each month.

If there's a new round of buyers that are pricing homes 20% above the market, who's fault is that? Shouldn't a good agent walk away from a listing that has no chance of resulting in showing, mush less a sale? Shouldn't they advise in the best interest of their clients? No, their greed (or desperation by now) gets in the way of their responsibility. Better to have the listing in place at an unreasonable price, then not have it at all. When there's no response they'll get the owner to drop their price. By that time prices may have deteriorated even further and the owner walks away unhappy because he wasn't priced in the real world to begin with.

If RE agents only took listings that fairly reflected current prices, and managed those prices throughout the listing period, I would bet their personal sales would increase 50%.

Gwynster said...
This comment has been removed by the author.
Gwynster said...

1.3 GDP with 3% inflation sounds like stagflation. I was hoping for true deflation but the fed has lost it's collective mind.

I was young but I remember the Carter years well in Orange County. I remember construction jobs were no longer plentiful or well paying and if you had a government job you were considered well off. What goes around comes around.

Now my question is, what happens to interest rates. They are already at record lows so we can't really can't hit that pump again. Does BB get serious and raise rates finally?

Diggin Deeper said...

Gwyn

What can the fed do? You're spot on about stagflation. I've heard some go so far as to say we are in an inflationary recession. Based on the numbers its pretty hard to argue otherwise.

Helicopter Ben is pinched between two points. He either takes the dollar further into the hole and inflation just keeps gaining momentum (and real estate gets some protection), or... put the breaks on by raising the rates and real estate starts its second leg down. Either way, there's pain. Since BB is a student of the Great Depression, bet he continues to flood the market with dollars and allows inflation to rise for awhile. Better to inflate our way out than to crush a market with so many bloodied voters at stake.

Imho, no matter which way the fed goes, RE's tanked either for the short term if he lowers rates or a much longer term if rates rise.

Patient Renter said...

"I wish I had Gwynster's huevos to lowball some of these places. Is it really lowballing if you're offering the price you can afford on a home in a neighborhood in which the median family income is anywhere from 20k to 30k less than I make?"

If you feel bad about lowballing, just give a justification for your offer as Gwyn did. Take the 1999 (or some old) price, tack on inflation, and arrive at the current value. An offer at such a price is more than justified.

Patient Renter said...

"Since BB is a student of the Great Depression, bet he continues to flood the market with dollars and allows inflation to rise for awhile. Better to inflate our way out than to crush a market with so many bloodied voters at stake."

Agreed. I think rates will be held or lowered simply because the Fed and most government acts to improve short term conditions while screwing us longterm. Inflate our way out of it as you say..

Cmyst said...

Ok, but if interest rates go up (and based on my very limited understanding of economics, that would seem logical to me) doesn't that cause RE affordability to drop?

I remember the 70's too -- I was a very young adult then. And with the double digit inflation, home ownership was an impossible dream and the notion of home ownership being impossible settled into my psyche to the point that even when inflation came down and I could afford it, (not being an economist) I just assumed that things were still the same and didn't even try.

edmend said...

GDP are always in real term I think.

Diggin Deeper said...

pr

Humbly, when considering real estate, in such a small microcosim as Sacramento, we tend to overlook the big picture and dial in local economics, incomes, supply / demand, and other financial and demographic issues that could affect our market.

But I think we tend to overlook the big picture.

The Fed is playing a dangerous game of "chicken" If they allow the dollar to continue its slide, and allow inflation to ramp up, there are Trillions of dollars held in this country and in foreign countries losing value every day, by inflation in goods and services coupled with the weakening of the US dollar.

If it were you or I and we (and it basically is) watched our dollar holdings continue to erode by this double-clubbed effect what options would we have?

BB better wake up and wake up soon. It's easier to deal with the problem as emerges than to let build.

Cmyst

Yep, it takes a whole bunch of people on the fence out of the market. However, more want to sell than want to buy right now so it should put pressure on prices.

rdm said...

I think the Fed's hands are tied and they will (or should) do very little. One one hand they have looming inflation and on the other slowing growth with looming deflation fueled by the housing market. My bet is they do nothing unless there is a dramatic change.Right now it is like Chinese water torture, drip drip drip. Must be a very uncomfortable place to sit for the masters of our economic domain

smf said...

Just when I thought RE could not get worse, I get first hand accounts from friends about how bad the mania still is.

I have friend telling me that people they know first hand are planning to get into RE RIGHT NOW! because its perfect timing.

I have relatives in RE that tell me that the only people that are buying now are investors, because the prices have gone down.

And I know several stories of people who make a very decent living planning on starting their career in RE to make 'really good money'!

Patient Renter said...

smf: I'm hearing a lot of the same, mostly from people I work with. It's amazing how these well educated intelligent people are so absolutely unintelligent and uninformed when it comes to real estate. I gave up trying to save people from themselves a while ago, although a few have already told me they regret not considering my advice.

Diggin Deeper said...

New RE agent to prospective buyer:

"What model, on what block, in what neighborhood, do you want to live in? Chances are we've got what you're looking for"