Friday, July 06, 2007

"No Sign of a Turnaround"

From the Merced Sun-Star:

Howard Jarvis would be turning cartwheels down Main Street. About 6,500 Merced County property owners will receive tax breaks this year — 65 times as many as last year — because their real estate values have fallen.
[County Assessor Kent] Christensen said most of the reductions were made on single-family homes bought after December 2004. The average affected property dropped in value by about $50,000, he said.
Scott Oliver, president of the Merced County Association of Realtors, said the reductions show Merced's housing market is now "normalizing" in the wake of the 2005 boom. "When you bought a home for $600,000 in 2005 and now all the homes around it are selling for $450,000, obviously there needs to be that adjustment," he said. "This is a sign that things are getting back to normal, and that's all it really is."

Oliver is among the thousands who received a reduction. The North Merced home he bought in 2006 has declined in value by $80,000, he said. "Getting that letter in the mail was pretty nice. Any break you can get is nice."
From the Sacramento Business Journal:
The area's top general contractors report they haven't seen a decline in work that typically accompanies a new-housing slump. They're tied up with projects for years to come. Still, those in the industry have cautioned that the wider effects of a prolonged housing lapse might yet materialize.
On the flip side, homebuilders are struggling. Second-quarter figures are expected to be issued next week, but the early indication is that housing analysts will report dismal sales in the Sacramento market. That's despite modest gains earlier this year and late last year; and this drop-off is hitting during the peak homebuying season...The current new-home slump is already two years old with no sign of a turnaround.

One sector that might not escape housing's effects is retail establishments. Construction of stores and other retail-related buildings is 8.3 percent lower than it was at the same time last year, a decline that has been masked by the overall surge in other types of buildings.
Other contractors reported competition for small construction jobs has increased, suggesting there is less demand at the lower end of the business. That might also be a sign of a slowdown. But Davis said the demand for large construction projects such as schools has not caught up with the rapid growth of new homes between 2000 and 2005.
From the Stockton Record:
Concerns about levee safety have Lathrop officials and at least one big developer worried about the viability of building homes on what soon could be classified as a flood plain. The Roseville-based developer Richland Planned Communities already has some roads built and pipes laid into areas of the Land Park project, a 1,500-acre community bordered by Interstate 5 and the San Joaquin River in Lathrop slated to include 6,800 houses, 5 million square feet of office space, a riverside public park, the under-construction Lathrop High School and three planned elementary schools.

But the developer's concerns over an upcoming federal re-evaluation of area levees and a desire to learn more before continuing with the housing project recently caused Manteca Unified School District to postpone building Ethel Allen Elementary, one of the community's schools.
Richland is not pulling out of the project, Taylor said, but the combination of levee concerns and the slowing real estate market means the company will need to exercise caution.
Homeowners already living in the newly designated flood plain will be required to have federally backed mortgages and flood insurance. If they already have flood insurance, their costs could rise up to $1,200 a year. If they had no such insurance before, they could be paying $2,200.


Lander said...

The North Merced home he bought in 2006

Good to know that some RE agents took their own advice and bought at the peak.

AgentBubble said...

Oliver is among the thousands who received a reduction. The North Merced home he bought in 2006 has declined in value by $80,000, he said. "Getting that letter in the mail was pretty nice. Any break you can get is nice."

Let's see...He just saved $800 or so a year in taxes while also losing $80,000 in property value. Yeah, that's a good break.

Patient Renter said...

"Good to know that some RE agents took their own advice and bought at the peak."

Yep, although I don't really attribute it to a genuinely informed outlook on the market. I have a Realtor relative who bought at the peak right along with everyone else whom she helped buy.


Diggin Deeper said...

That's the sorriest $800 he'll ever save. It's the only time you'll cringe when you see lower tax bill. Bet he's hoping next year's "savings" aren't quite as generous as '07's.

"Good to know that some RE agents took their own advice and bought at the peak."

They weren't immune to their own hype and agency chatter. I can hear it now,

"Alice, this one's a moonshot! Buy it today, refi the equity out in six months, and come talk to me after that and we'll do it again."

Fanchew said...

RE agents are human too and subject to greed. Plus, so many RE agents became agents during the boom to rake in the cash. They could hardly be considered experts.

cole said...

good to know the Sacramento Business Journal is still "right on top" of all the latest news...

the Sacramento Business Journal is one humdinger of a reputable news service that you can bet ON to be consistently correct and honest...and you can take that to the bank...along with the Sacramento Business Journal's golden boy, john Saca

Perfect Storm said...

Posted by Ambrose Evans-Pritchard on 04 Jul 2007 at 12:06
Tags: Economics, World economy, Debt, stock markets, Bear Stearns, Credit markets, Subprime market, Bonds

The creditors orchestrated a quick cover up, but the CDO cat is already out of bag. We now know that some $2 trillion of subprime and 'Alt A' mortgage debt is falsely priced on the books of banks and funds worldwide. Worse is surely to come. Bank of America warns that $500bn of adjustable mortgage debt in the US will be reset upwards in the second half of this year by an average 2 percentage points, and a further $700bn next year.

For now, bears are all watching the yield on that 10-year US Treasury bond – the benchmark price of world money, the Christmas Tree upon which all the other baubles hang: property booms, the emerging market bubbles, leveraged buy-outs, hedge funds and private equity, those $410 trillion in derivatives contracts (seven times global GDP) and that $2.5 trillion of debt packaged as “structured finance”.

The yield surged 65 basis points from early May to mid June to nearly 5.25pc on inflation scares, the fastest rise since 1994. Interestingly, the 94 bond shock did not in itself cause a US recession. But then the US was a very different country. There was no housing bubble, for starters.

Tim said...

As far as that community in Lathrop goes...

Does anyone remember the flooding that occured around new years 1997 in Lathrop. It's right where they have and will plant more homes. Only an idiot would build there and even a bigger idiot would actually buy a home there. It doesn't matter how big of a levee you build, it will come down at some point.

Gwynster said...

Ran around this listing and had to share it so perfectly illustrates what happened with the RE market in Sacramento. I know these condos well since I lived right across the park from them for 10 yrs.

MLS #: 70071999, listed for 314K
1519 P St APT 39, Sacramento, CA 95814 2 beds,1.5 baths, 1,014 sqft

Based on List Price: $340
Based on Zestimate™: $311
Sold Homes: $283

Sale History
08/18/2004: $300,000
11/22/2002: $177,500
02/16/1999: $85,000

Selling every few years and doubling the price. Wish my salary had doubled just once during those years.

B. Durbin said...

Heh. Remember Meridian?

Lathrop will be a bit harder to save..