Falling Prophets

From the Sacramento Bee:

Like all businesses, real estate is one grounded in optimism. It likes to minimize doubt and look for the silver lining. So it's not surprising that when its industry prophets make forecasts, they lean toward high.

Nor does it come as a surprise when they revise downward. Already, the national associations for real estate agents and home builders have scaled back January expectations for 2007 home sales and starts.

On Thursday, the California Building Industry Association did the dance. It now projects 20,000 fewer permits for new houses and condos in 2007 than it predicted in January. Half that downturn is attributed to Riverside County alone.

Alan Nevin, CBIA chief economist, is downsizing expectations for the Sacramento area, too. In January he predicted 13,500 to 16,500 residential building permits for El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties. His new guess is 10,500 to 12,800.

It's not easy peering into crystal balls. In early 2006 Nevin said Sacramento was likely to repeat the frenetic home-building activity of 2005. That was revised, too.

From the SF Chronicle:

Amid slumping home sales and pessimistic forecasts, a subdued group of builders gathered at Moscone Center this week for the Pacific Coast Builders Conference.

"There are fewer people here and there's not the upbeat intensity there was a couple of years ago," said show-goer Frank Prach, owner of Dezines Plus, an architecture, building and design firm in Auburn (Placer County). "There is a sense of uncertainty."

Attendance at the annual trade show was projected to be 28,000, down about 15 percent from last year's record high.
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Builders said home-buyers seem to be taking a wait-and-see attitude, hoping that home prices will come down still more.

Robert Becker, president of Wintergreen Enterprises Inc. in Tiburon, said sales have stalled at a high-end development his company has in El Dorado Hills near Sacramento. From 2003 through 2005, it sold 55 lots ranging from $400,000 to $700,000 for custom, $2 million homes. Last year it sold two lots.

"This year, there is nothing," he said. "Nobody comes through the subdivision. I think we're in for a down year and we're in a bad situation for next year."

From the Central Valley Business Times:

Talking with the congressman there was Stockton Realtor Carin Nelson. Ms. Nelson says her family-owned business, Lela Nelson Realty, which has been selling residential property for 30 years, is hard pressed by rising gasoline prices. The cost of filling up her economy car, which she uses in business, plus the family van, has reached astounding numbers, says the mother of four. “When I combine those together, it’s about $900 a month for our two cars,” Ms. Nelson says. “And that is just basic everyday activities.”

The Realtor says the cost of gas has impacted the bottom line of her business, just as the real estate market has declined. “We are making ends meet but it has affected us greatly,” she says, adding that paying for gas is now the second largest household expense after the mortgage. “Above groceries, above car insurance, above medical bills,” she says.

From the SF Chronicle (Hat tip: HBB poster GetStucco):

A bill that would have created a pool of money to help subprime mortgage borrowers facing foreclosures to refinance their loans died in the state Assembly Appropriations committee Thursday.
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AB1538 would have allowed some of those homeowners to refinance their loans with affordable interest rates by using a new fund created by tapping into the housing bond that voters approved in November, floating bonds in the future and asking banks that have large numbers of subprime customers who face foreclosure to pitch in.