Friday, June 01, 2007

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.
...
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.
...
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.

9 comments:

Patient Renter said...

"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."

Victory :) Let the market be free.

rocklin renter said...

“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.”

$900 a month for two cars?!?!? Basic everyday activi... what?!?

Where does she live? 100 miles from the nearest town?

Get this chick a Prius, STAT!!!!

Even in our worst consumption months we barely crack $200 for both vehicles. And to do that I would need to take several 100+ mile trips!


PS: huge thumbs down on AB1538. Thankfully it got shot down.

Cmyst said...

I drive between 30 to over 100 miles per day for my work. I usually spend about $100 per week on gas. My employer reimburses me for mileage, and covers more than what I actually spend, but it's meant to also cover things like tires, oil changes, etc.
I consider my work to be pretty driving-intense. Usually, about 2 to 4 hours of driving time daily.
I do drive a Matrix, though.

Gwynster said...

bahahahaha

Some of you may recall my Dixon bashing from a little while back. >; )

Solano foreclosures on the rise
Times-Herald staff writer

'The number of home foreclosures in Solano County is rising along with those of other Bay Area counties, even as local median home prices continue to fall, industry experts report.'

'Overall in Solano County, the median price of a home sold was $428,000 last month, a 7 percent drop from $460,000 in April, 2006, according to a recent California Association of Realtors report.'

'Within the county, Dixon saw the sharpest decline, 16.3 percent'

Pass the cabernet please

wimpyVO2max said...

patient renter: "Let the market be free."

No thanks. Unregulated free markets are inherently unstable and inevitably collapse from excess greed, larceny and fraud. See South Sea bubble, 1929 market crash, 1981 Savings and Loan crisis, California electricity crisis. Now we can add the 2005 Subprime Mortgage crisis to the list.

Unregulated free markets are like swimming pools without chlorine: everybody is allowed to swim, including algae and other forms of scum.

Sippn said...

How bout we just enforce current law? Fraud is fraud, with or without a free market.

Cmyst said...

Sippn, on this we must agree.

Gwynster said...

I think we could all drink to that >; )

Patient Renter said...

"Now we can add the 2005 Subprime Mortgage crisis to the list."

I wouldn't say the 2005 subprime crisis was the result of a free market. Having a central body such as the Fed fixing interest rates at such a low rate doesn't seem like something that would have occured in a free market (without a Fed).