Saturday, June 23, 2007

Sacramento Real Estate Market - June 2007 Water Cooler

Post off-topic links, observations, and stories about the Sacramento real estate market here. Please read the comment policy before posting.

36 comments:

Perfect Storm said...

Foreclosure activity is up a staggering 90% from a year ago, according to online Realtytrac.com.

Realtytrac.com indicates 6,700 banked owned homes.

I think the majority of homes foreclosed on in the Sacramento area are not listed, putting inventory at around 23,000.

smf said...

I live close to a small street (Tiffany West) and it is a small enclave of houses here.

Tiffany West has 5 houses for sale (take a look at a map to see how small it is), 1 is FSBO and the other not listed on the MLS.

So the MLS is only showing a percentage of what is for sale. And there was another house that was FSBO and it is now a rental.

waiting_for_the_fall said...

In 3 years, it will be up 1000%

Perfect Storm said...

I have noticed a lot of homes not listed on MLS, inventory numbers are being skewed. Anybody check out South Natomas, new homes sitting empty all over. I will check out some small builder areas in Norwood and Rio Linda area later, but I bet tons of small builder homes in these areas are sitting empty. Its funny how there are a lot of FB's trying to get what they paid fo their stucco box two years ago. I saw a 2,000 sq foot house in Elk Grove for $529,000, I was amazed that they think that is a good price when compared to flippers in trouble have homes pratically for the same price, but at 3,500 sq feet.

Housing/Mortgage Doom 2007

Were easily on track for a 50% to 60% decline by 2009.

Perfect Storm said...

What IF somebody threw an Open House…and NOBODY shows up ?

Whoops…they’re doing that Tomorrow…

All OVER America !

Housing/Mortgage Doom 2007

Sippn said...

Hey looke, Time/Money/AOL calls Rancho Cordova 1 of "10 red hot spots for new homes in US".

Geez, they missed Lincoln.

I know It was a slow news day and as Rehab is the new black in Hollywood, Real Estate is the new sex in selling newspapers.

Remember, these are the same people that call Sacramento (and CA) overpriced. Calls their opinions into questions, doesn't it?

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

Yeah, good thing we don't rely
on "experts". There is no bubble,
there might be a tiny bubble...
there is a bubble... we're near
the bottom, we're at the bottom
..we're really at the bottom this
time... let's focus on the bargains
out there and forget about all the
foreclosures with no buyers for them... blah blah blah... it's
not a good time to buy. Period.

norcaljeff said...

Gee Sippin, I leave for a few days and your already spreading misinformation. Anyway, no one listens to TW/AOL on anything and AOL isn't even a viable company anymore. Try something from 2007.

Diggin Deeper said...

Its pretty clear that each of us has to do alot of research to find out what the real answers are about inventory levels.

If the 6700 bank owned homes number is close to being correct, it would make up over 25% of the inventory out there. The tipping point on prices will probably be centered on the banks' inventory. When they've had enough and watch their investments continue to erode, they'll respond and neighborhood prices will go down with them.

This should be a big week on the housing picture. Just make sure to check out all the sources you can because its getting more difficult to find anyone willing to tell the whole story...

Diggin Deeper said...

Got an interesting email this morning regarding inflation.

I read this from Agoura Financial's 5 Minute Forecast:

"Inflation is running at a little under 3% annually… or over 10%, depending on which president you ask.

“Restated using pre-Clinton (1990) methodologies,” writes our friend John Williams at Shadowstats.com, “annual inflation was roughly 6.0% in May.”

But if you restate the numbers using pre-Reagan (1980) methodologies, back when inflation was seen as a real threat to the economy, the annual inflation rate in May was about 10.3%, up a point from the 10.2% Williams calculated in April."

I guess its just another way of saying there's too many dollars floating around worldwide...

Imho, inflation is the singlemost problem facing the real estate market today and the only way the fed can deal with it is by raising interest rates.

Some will say that its good for home prices. I disagree. That would only be true if prices had marched along at their 5% appreciation yearly. The market got way out of hand and prices will have to come down in order for those to be able to handle pricing pressures from other areas...

Sippn said...

Diggn, I do agree with the higher than politically stated inflation rates.... I try to measure my personal inflation rate by the things I want.... Porches, Bimmers, college education for my kids, In-n-out burgers, I don't think the BLS measures that the house you can afford is now 10 miles out further from the job and will increase your bills all around...

So, where do you invest your money just to protect it from inflation? DJIA was down and back 5% in the first 2 weeks of June.

Diggin Deeper said...

sippn...

"So, where do you invest your money just to protect it from inflation?"

Currencies outside the US dollar (try Everbank.com) in countries that are responding to inflationary pressures by raising rates (Euro, NZ, Aus, Scandanavian currencies). Gold and Silver (stocks)are a great hedges against inflation (weak dollar). The same with Energy stocks like natural gas, oil, and peripheral industries supporting these markets. Most inflation at this point is "dollar weak" inflation, but the longer we go without responding by raising rates we run the rist of it getting out of control...

Lastly, when rates finally do go up, cash becomes interesting if we finally do decide to fight the inflation battle.

Real estate used to be a great hedge but as said earlier, the run-ups have bee too great (in some areas) and there's too much pressure to the downside for real estate to get any traction...It becomes nothing more than a supply/demand issue and we all know where supply is right now...

G Spot1 said...

Re foreclosures, what are the banks doing with these homes?

It seems to me a bank would want to get it off the books as quick as possible, even if that means a drastic price reduction. But from what I'm hearing, banks are holding on to these homes right now. Is the foreclosure rate so high that they are afraid to flood the market with inventory? And if that's the case, is there a break point for them where they have no choice? Would love opinions on this.

Also, anyone know where you can get city by city comparisons of inventory and foreclosure activity? Thinking specifically about Roseville...

Gwynster said...

ED county is looking into making permits easier to get. Builders have to keep building or the local economy tanks. The The counties are all addicted to the money too now. Anything to keep from stopping the parade >; )

norcaljeff said...

More credit fraud, wonder how long this has been going on. http://tinyurl.com/2n2wpm

Gwynster said...

Hmm I was thinking (I know, I know, scary) that we haven't heard anything about the "auction" at Cal Expo a few weeks ago. Was anyone there? I know turn out was low but I'm hoping someone has some news.

affdesco said...

West Sacramento has recently been discovered by those seeking Luxory and Location. Six homes on Rivercrest drive have been purchased in the past several months.... All in the value range of $1,5000,000.00.
What could they be getting for this much money. The homes are on the river with views of the River and of the Downtown Sacramento Skyline. after visiting the site I knew why. It's clear ... the big homes are located higher than any others in the Sacramento area. They look out on sunrise, sunset, the river and the city. WOW! Why buy a condo for 1.5m when you can have a 1/4 acre and a luxory home for about the same price.

Cmyst said...

Ok, here's my story for the day. The man involved is a very nice guy, but he's dreaming.
I'm in an old house in Roseville. There are cracks in the ceiling and in a wall, but there are also some improvements: a family room addition, for one. Of course, some of the improvements are owner-made, and are kind of cheesy. The lot is 1/8 acre, but the house sits very close to the front of the lot which makes the front "yard" quite shallow -- it's also a very narrow lot. The owner has made some minimal landscaping improvements, including a koi pond (again, put in by the owner and not a landscaper).
The owner has evidently cashed out quite a bit of equity to buy a motor home which he proudly announced was only 20k less than he had bought the home for several years ago. He mentions the house was appraised at around 450k.
It was very hard to keep a straight face. There is no way in this world that I can imagine *anyone* offering more than 200K for this house. I managed to choke out a response, questioning if the gentleman had heard that real estate was slumping and had actually dropped in value in the last year or so, and he assured me that his home would never appraise for less than 350k.
It was unbelievable. To my credit, I kept a straight face.

Lars said...

Was out with the kids today and thought I would drive by a few homes I knew were in foreclosure (Folsom), just to check them out.

One in particular had an open house where I met the owner on the sidewalk before getting out of the car. She said the bank had foreclosed on the house, and she is in a 'short sale'. I said I was sorry to hear of her situation, and she said 'that is life'. She then said they had listed the home for $550k, then $500k, and now $484k with no luck.

She had the direct number to the 'short sale' department for the bank, but she had received offers of $400k and $425k that were not accepted. She thinks that an offer of $460k would be good. Also, she said the banks just refused to respond to the earlier offers. Too bad...

Looking at the home and the neighborhood, as well as the rents, I would have put a offer of $400k max.

Still waiting for the banks to come to grips with the current market. This may take a while.

mopar777 said...

Could somebody please look up 2611 Bowdian Way 95826? This 42 year old house down the street from us and is right up against hwy 50. In late '06 and early this year this terribly located 4&2 was on the market for $419K. WTF? It would rent out at $1200/mo max - to deaf people. Right now lockboxes adorn the doors and the HELOC pool has turned green. Can someone please tell what happened?

Sittin' Out This One said...

2611 Bowdian Court is now owned by Lasalle Bank. The foreclose FB paid $365,000 for it on 2/28/04, using Fremont Investment to get a 100% 80/20 piggy back loan. (Fremont imploded several months ago and the Feds issued them a cease and desist order).

The house has 2055 SF and in 1989, it sold for $152,500 or $74/SF. Bringing inflation forward at 3% a year would indicate that house may be worth $195,000 today.

Cmyst said...

Visited my son again, who lives in a newer subdivision near Marysville.
This is the same kid who has now lost all the equity he had in this home and then some, but at least he's in a 30 year fixed mortgage and he can afford the payments. On this trip, we found out that the owners of the house to the immediate west of my kid have been seen exactly 2 times in the past year, and actually live in San Francisco. The house isn't for sale, but according to my son the owners are planning to sell it soon, so that they can retire. I'm not sure how that's going to work out, since homes in that subdivision are now selling for 100k less than when they were originally built. The house on the other side is about a year old, and the people who had it built backed out of their purchase agreement, so it's been vacant since it was built.
There are large areas in this subdivision that are just desolate brown empty lots, and there is no construction going on any longer -- about 4 months ago, there was still some building.

Brian said...

crappy housing related story of the day... digest version: I work in gaming (non-Indian, CA cardroom casinos). One of the customers from one of my newest client in Modesto's cardroom reportedly burned himself to death in a park last night after coming by the casino to say his goodbyes. Apparently he had lost $300k or so to my predecessor and the bank was taking his house. HELOCs are basically legal loan sharks to gamblers.

Diggin Deeper said...

Gambling and real estate losses....that's some bad medicine!

We had a party with the neighbors over the weekend and one of our friends who is a real estate agent was there talking about the "deals" that were available for "flipping". Said that she could make 25-30K "no problem" on some of the homes in Natomas she was looking at and was looking for investors... No Thanks! I wouldn't lever $350K for a 7-8% potential profit....that's bad medicine too...

mopar777 said...

Thanks! Sittin'

Sippn said...

Damn Diggn, pretty good advice.

Empty residential real estate typically costs over 1% per month to hold when you factor in interest on both the loan and the down payment, short term loan fees or prepayments, taxes, mowing, utilities, etc. Actually I figure close to 2% for some.

Diggin Deeper said...

Sippn... The broker/investor gets the big break. They can negotiate the commission off the selling price(or some variation thereof)which probably gives them an automatic 3-5% depending on the deal. The point is if you can't steal the property in a market like this, it's probably not worth owning the downside risk.

Gwynster said...

Had someone contact me today to see if I wanted to lease to own in East Sac. That was a good giggle.

Gwynster said...

Is it me or does ZipRealty not cover Winters or Zamora, or Knights Landing?

norcaljeff said...

Gyw, who would want to know that info for those towns :)~

So, been checking these blogs for about 9 months ago. When I first went to FIT for Placer Co it was 2 1/2 pages of homes...now on June 23 its nearly 5 pages, 226 homes $12M in cummulative losses. Hmmm, sounds like things are turning around.

paranoid renter said...

Median income in some parts is much higher than I thought.
http://www.sacbee.com/wheels/story/235458.html
Of course, most of those people already own homes.

Sippn said...

Hello. Nice catch PR.

And why was prime real estate wasted on a Target?

Gwynster said...

I happen to like little paudunk towns. If I can find one on an acre where I can keep a horse, so much the better. I always had horses growing up.

I know we'll never be able to afford a large lot near enough to campus to bike in so we're looking at either large rural lots within close commuting distance or small lots within biking distance.

I'm looking for the house I'll be living in for the 15 years, not the next 4 so so I don't worry about resale like many here do. I do worry about being able to check saving money after the PITI each month and being able to improve the property without resorting to nutty loans.

Gwynster said...

No offense but Marketing studies rarely return real results on median income. They may be using spss and sas but they still use the worst sampling fundementals.

Cmyst said...

Folsom and EDH are in the 100K median income range. Granite Bay, 125K.
Something tells me that the median home price in Granite Bay is well over 500K -- probably in EDH and Folsom as well.
IOW, the median wage-earner in these affluent communities can still not afford the median-priced home.