Sacramento Housing Market: One Away from Dead Last
From Market Watch:
In the OFHEO index [pdf], prices fell in seven states from the fourth quarter to the first, including California, Nevada and Florida, three states that saw the largest price gains in 2004 through 2006...The cities with the biggest [yearly] price declines were Punta Gorda, Fla.; Sacramento, Calif.; and Modesto, Calif.
Click here to compare with other Sacramento price indexes.
22 comments:
Its fallen 4.4%. Yup. You betcha ...
Lets see, Casey's Serin's larchmont house sold last month for 199K. Casey paid 330K for it in march 2006. So Yup, 131K in 330K is what ... you guessed it, 4.4%.
No wonder american kids are so bad in math.
Cool.
Cow_tipping.
you can find the larchmont history here.
and here's this month's look regarding Sacramento's foreclosure numbers via foreclosure.com:
Sacramento 4 County Metro REO/NOD
10/31/06: 671/3,059 (21.9%)
11/30/06: 908/2,985 (30.4%)
12/30/06: 1,062/3,167 (33.5%)
01/30/07: 1,322/5,000 (26.4%)
02/27/07: 2,804/5,209 (53.8%)
03/30/07: 3,581/5,467 (65.5%)
04/30/07: 4,627/5,791 (79.9%)
05/30/07: 5,096/6,639 (76.8%)
If Sacramento had something more than state government (which may dwindle due to loss of RE revenue), it might not be so bad.
Economically, Sacramento is like an island, set apart from the rest of California, just a bit too far to get to the money centers, with no dominant private industry to set it apart and draw workers to sop up the excess.
With all the new construction during a "Build it and they will come" era (and still ongoing)... Sacramento built out but no one's coming, and those that did for speculaton, have left looking for their next fortune.
When one really digs in and looks at all the inventory, resets, foreclosures, etc., and compares it against Sacramento's economic backdrop, imho, its a rather ominous signal.
I think SMF said it best in a previous blog:
"Is not even a issue of buyers on the sidelines, but houses for buyers that don't even exist"
Things might change to absorb the excess, but I believe it would take thousands of new jobs to make up the difference, and many years to get them all to come this way.
YAY!!! WE BEAT FLINT, MI!!!!!!
Diggin,
When you put in that wish for jobs, make sure to be descriptive. We need real jobs for real industries, not more lower wage service jobs in a shrinking economy.
Patrick -
Diet pepsi + laughing = big mess
You owe me a new computer monitor for that Flint comment >; )
Gwynster are you sure you're a GENXer? If so you're pretty bright & witty for your age. I e-mail boomer ladies all the time in my neck of the woods (Folsom & EDH)
and none of them are as sharp.
Gwynster...
Ok, no new sandwich makers, convenience store night shift clerks, yogurt dippers, blood drawers, attorneys, real estate agents, mani and pedicurists; newspaper, pizza, chinese food delivery executives, rug cleaners, home stagers, telephone solicitation junkies, and the list goes on...
Give us biotech, high or other low tech with credible wages, defense, innovative ag with a paycheck, healthcare service centers, alternative fuel technology, airline hub center, and anything else that's growing and in need of qualified well paid people.
What's this city doing to attract businesses?... other than service workers who'd need two people working two jobs each in order to afford a bachelor condo in the worst neighborhood.
"What's this city doing to attract businesses?..."
Raising fees?
And they are still building...
Surprisingly enough, we got another condo project due very quickly. (Forgive the anonimity, for if I tell you where it's at, it would be very easy to find out where I work)
BTW, I found out that a project I worked in way back in 2000-2002 has several units for sale. We did not design the project as condos, but one of them is called 'barely lived in'.
and did you see? Serin's site is no more as of today....or so he says.
Bahhh Casey needs the ad revenue to keep from getting a real job.
Mopar, yep definately a GenX but I'm at the front of the herd. I just read a lot. I mean a whole freaking lot >; )
I attended my granddaughter's HS graduation tonight in Yuba City (and it took waaaaaaaay too long). Real Estate was a very hot topic of conversation. We had at least half a dozen separate conversations during a 8 hour period.
#1) At granddaughter's house, found out from her dad that house next door is now REO. He says there are at least two other homes in the neighborhood that are in trouble. It's a small neighborhood. A home also burned down in the neighborhood a few months ago, very mysteriously.
#2) My daughter-in-law called the office of the subdivision in which they bought their own home last summer (we begged them not to) and found out that the same model home they purchased for 330K last year is going for 230K this year. This, in essence, ate all the equity that they put down on the home and then some. At least they are planning on staying in the home and do not have an ARM.
3)The ex-hubbie reports a neighbor in our old 'hood who had owned for over 20 years who is on the verge of foreclosure. He had been draining equity from his home during the bubble. The house has been on the market for over a year, and recently an auction was attempted, but the neighbor wanted 299K for a house that needs a roof, has termites and some other problem that I forget. The ex says the neighbor "has to" get 299K 'cause that is what is owed, and that in reality the house is worth 400k. I severely questioned this assessment, and asked what he was basing it on, since the house wasn't selling at 299K. At which point the ex (who is kind of eccentric and given to hyperbole) launched into a diatribe about how the economy was going straight down the tubes, housing was totally shot, and he was (at age 54) going to dump his plumbing business and try to get a welding job at the railroad. Which, btw, the son who lost 100k equity also reports he is going to try to do. Not a bad idea, since he works for the plumbing company his dad owns! (if you wonder how I can be detached, let me assure you that my son has inherited the ex's good looks and good fortune, and is very likely to land on his feet. And the ex really does have good fortune, or his business would have failed years ago. He is a lousy businessman, has never learned how to balance a checkbook, invests in the stock market while owing hundreds of thousands in loans that are charging interest higher than his investments are making, and has never met a salesman he didn't like.
3 out of 6 of the extended families at the graduation had a real estate tale of woe. The other 3 were renters.
cymst,
Hate to break it to you, but this downturn in construction may be the end of the ex's run of good luck. If he was prudent with what he has been able to make over the last few years, he is going to be in for a lot of trouble in the next few.
Interesting...we get reports like Cmyst's and Cow tipping quoting price drops that amount to 25-30% discounts off last year's price. Not just a couple of reports... many bloggers tracking this market are finding that prices have fallen big time. Yet when the figures hit the street by "credible" sources, prices seem to be falling in a gradual and orderly way. I say b.ll s..t to any organization that has its stake in Sacramento's real estate market... from the Sacto Bee to Chamber of Commerce and everything in between. Its clear this market is now in a momentum phase and there's nothing but ill-crafted data in its way. Stand aside or get run over becasue this train's on the move.
What is the most encouraging (for me at least, since I'm only really interested in resale homes) is that homeowners seem to be beginning to smell the coffee. I have had several long-time residents of neighborhoods tell me recently that they could not afford to buy their same house if they were to be in the market now, and that this makes no sense as the neighborhood demographics did not change. Many people can quite easily identify the causes of the bubble as speculation and very loose lending.
Of course, most of the people I talk with aren't trying to sell their home -- but I think it points to a fairly widespread realization that something was really wrong with housing prices and that people can't expect those kinds of prices now.
I get kind of irritated at being labeled a "low-baller" or "bottom feeder" in articles about falling prices. The reality is that other than hapless and clueless sellers, most people seem to grasp that prices have to drop by as much as they shot up.
"but I think it points to a fairly widespread realization that something was really wrong with housing prices and that people can't expect those kinds of prices now."
I too am noticing some changing sentiment with the folks I interact with, particularly that a lot of people can identify speculation and loose lending as having caused the price runup.
At the same time, the majority of people I interact with are still stuck in the thinking that 400k is normal for a basic tract home. There's still a long ways to go with the shift of mentality, I think.
"At the same time, the majority of people I interact with are still stuck in the thinking that 400k is normal for a basic tract home."
I see this all the time. They often follow it up with a "I could never to buy now and aren't I so wonderful because I bought before the prices ran up". Flipping knob bonnets
I put the Arm reset schedule on my door with a large ballon and arrow taped next to it that says "you are here". I've had some good responses and a few giggles over it.
I love it!!
From craigslist:
$200000 Qualified Buyer Looking For Short Sale or Pre Foreclosure
--------------------------------------------------------------------------------
Reply to: hous-342285955@craigslist.org
Date: 2007-05-31, 4:53PM PDT
We are a young family with GOOD Credit who can qualify for a conventional first time buyer mortgage. We make $4000/mo and can qualify for just under 200K. We are not looking for a half million dollar fixer-upper with granite counter tops in Folsom.
We have been looking for a reasonably priced home without all the "flipping" games. If you are in trouble and can sell the house for its pre-bubble price let us know the address and your contact info. Ok, to be contacted by seller agents.
We will submit a reasonable offer immediately on your Short Sale or Pre-Foreclosure House!
Ahhh, what a nice little ad. Nice to see they clearly aren't going to let themselves fall victim to anything.
Maybe next year we'll finally reach first place :) I'll do my part.
Looks like 1/2 of the top ten are valley cities.
The market for existing homes seems to be showing some weakness--"change in sentiment," as others put it--but most asking prices I see are still not too far off the peak.
The shift in the market might be much more apparent after this summer--especially with the benchmark mortgage rate headed to 7%. Remember not too long ago when it was 4.5%?
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