Thursday, July 19, 2007

Sacramento Median Price Down 15% From Peak; Placer Drops 19%

From the Sacramento Bee:

Two years into Sacramento's real estate slowdown, the gulf between what sellers want for their homes and the price buyers are willing to pay continues to widen across much of the eight-county region...[E]scrow closings for all homes were the lowest for any June in a decade, according to newly released figures from DataQuick Information Systems.
...
The median sales price of all homes in Placer County was $428,500 in June, 18.5 percent below its December 2005 peak of $525,500. Existing homes sold at a median price of $432,750 in Placer County last month, the same as in January 2005 and February 2005.

In Sacramento County, median sales prices for all homes have returned to September 2004 levels. At $329,500, they are 15 percent off their August 2005 high of $387,000, the firm reported. As for existing homes in Sacramento County, the new median is $326,000. The last time it was that low was January 2005, 2 1/2 years ago. Median prices for existing homes peaked at $374,000 in August 2005.
...
"We're not prognosticators," said DataQuick analyst Andrew LePage, "but my forecast for buyers would be sunny skies ahead."
...
"Sacramento is sort of out there drifting all alone again without much influence from the outside, namely the speculators or investors from other parts of the state," said LePage. "We know that's what helped fuel the frenzy that brought us to a peak in both sales and prices."
DataQuick Sales/Prices by County
DataQuick Sales/Prices by Zip

From the Modesto Bee:
So much for summer being the hot selling season. June home sales were dismal throughout the northern San Joaquin Valley, and sales prices plummeted.

Merced County home prices plunged more than 23 percent in June compared to a year ago, dropping to a median $290,000 selling price. That was the biggest decline in California, according to DataQuick Information Systems....

Stanislaus County homes sold for a median $343,250 in June, which was about 9 percent below last year. San Joaquin County homes sold for $396,000, which was a nearly 12 percent drop.

As low as those prices were, homeowners who sold property in June should consider themselves lucky because most who tried failed. Home sales nose-dived throughout the region by more than 43 percent, compared to last year.

Things were even worse in some places:

Northeast Modesto, including the new home developments of Village I, had sales volume drop 31 percent and prices tumble 23 percent to a median $336,000. Ripon sales dropped 60 percent and prices fell 27 percent to $455,000. Patterson sales dropped 54 percent and prices fell 23 percent to $407,000. Waterford sales dropped 46 percent and prices fell 28 percent to $285,500. Atwater sales dropped 42 percent and prices fell 25 percent to $275,000. Livingston sales dropped 70 percent and prices fell 25 percent to $310,000.
...
Home prices now are back to about what they were in 2003," said Ernie Ochoa, who manages the Century 21 M&M and Associates office in Merced. Even those rolled-back prices are too high for most families. "The median-income family earns about $47,000 a year in Merced County," Ochoa said. "So it only can afford to buy a home priced about $175,000."

28 comments:

AgentBubble said...

"We're not prognosticators," said DataQuick analyst Andrew LePage, "but my forecast for buyers would be sunny skies ahead."

Think he meant wouldn't?

cba said...

Regarding the 4,889 new homes in inventory... what exactly is this number? I do not think it is compeleted and unsold homes, but I believe it is at least any home started that is unsold (whether finished or just started).

My understanding of months of inventory for new homes reported by govt agencies is that it includes both completed unsold and started and unsold homes, so that it is not is direct comparison to existing home inventory (they are ready for sale). Anybody have a different understanding.

rocklin renter said...

"The median-income family earns about $47,000 a year in Merced County," Ochoa said. "So it only can afford to buy a home priced about $175,000."

Soe Ernie, are you making an argument for the median price to fall to that level?

Hmmm.....

Diggin Deeper said...
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Diggin Deeper said...

Don't forget to add in the bank owned as they usually tend to be put off on their own little island...their own seperate market with different set of rules.

The overall inventory number is probably pushing 24-25K with everything included.

It's going to take some time to work all that down to a level of stability. Assuming it doesn't get any worse...is something I'm not about to do yet

Patient Renter said...

Message for Andrew LePage:

Keep your mouth shut dude. Your predictions are worthless.

anon1137 said...

Before anyone gets too excited about the headline number, let's not forget that this bubble deflation phenomenon has been very spotty. Most of the deflation has happened in lower priced areas where subprime was more common and in new developments. East Sac, for example, is still at or near (within a couple %) of peak prices - it has only gone sideways while other zip codes are dropping. Zillow even shows East Sac trending upwards again (unlikely, IMO).

Some regions of the Bay Area haven't even topped out yet, they are still inflating, including SF, supposedly the 4th riskiest market in the US according to Forbes. Prices *increased* 2.4% y-o-y for the LA region overall and about the same amount for the Bay Area overall. So let's keep things in perspective - the sky is not falling, knives are not falling, the overall economy is healthy.

(This is where everyone chimes in with dire predictions about what *might* happen in the wide open zone of their own imagination.)

cba said...

I think LePage was suggesting that it is a good time to be a buyer (buyer's market)as opposed to being a seller in this market. That would be my take anyway.

RMB said...

As far as why things are falling in some areas and still rising in others there is a great graphic out there in the webosphere that explains what is going on pretty well. I think it is on itulip

http://www.itulip.com/housingpriceregionscascade.htm

Its the graphic on the bottom that shows how bubbles travel in waves and how you can have one area declining while other stay level for long periods. What I think is telling about the graph is two things. 1st that everything will be affected at some point, and 2nd is that the rural areas are affected for almost twice as long as the urban areas. No mention of declines but only time will tell for those.

smf said...

"let's not forget that this bubble deflation phenomenon has been very spotty"

Right, and?

Even the real good tech stocks took a tumble back in 2000. Do you not remember when Cisco Systems reached the same worth as GM?

Same here now, the lower end is falling down. As I told my wife, the lower our current house value falls, the lower price we can afford for our move up home.

And if you don't think prices are falling in the higher end areas, you have not looked hard enough.

Remember, just because the listing shows as 'Sale Pending' does not mean that the sale went at the listing price.

This was my first realization that the bubble had burst, when I noticed that actual sale price was lower than listed price.

Diggin Deeper said...

I guess if I believed everything I was told about the economy, jobs, real estate, and the stock market, all I'd have to do is tune to CNBC for a recap each day.

Imho, Sacramento is a such a small market that it probably takes a harder real estate fall then most. It had a spectacular rise and it will have an equally spectacular fall.

Isolating areas from the fallout is a little like trying to dance dry through a heavy downpour without an umbrella... you're probably going to get wet.

To buy everything at face value? I'll leave that to others.

cole said...

jim wasserman and data quick huh?

the knowledge, expertise and common sense of these guys makes the great prognosticator Cheney sound like a genius....

30 to 50% drop from peak prices..

turnaround in 2012...

unless George Soros says otherwise

Patient Renter said...

"I think LePage was suggesting that it is a good time to be a buyer (buyer's market)as opposed to being a seller in this market."

Now, sure. But if you've seen his endless stream of predictions over the last year or two, you'd know his opinion is slightly more useful than David Lereah's was. At best, he'll state the obvious. At worst, he'll severely understate the inescapable.

Caddis said...

Bank inventory is MUST SELL inventory. House prices will be set by the BANKS...As they required to not carry too much inventory if they wish to continue to be lenders. Therefore there will be a point in the near future ( 6-12months ) where bulk purchases will be made ( super discounts ), deals cut to investors and finally a bottom will emerge. I concur with Patient Renter at least 50% decline. However it may be more since some area's of the Central Valley are not supporting the house with a job.

~Caddis

skipintro said...

Prices in Sac went up about 200% over a 5-6 year period (remember the days of 25% or better per year?).

To date, I would argue that any price correction has been measly compared to the prior runup, almost insignificant.

Thus far, it looks like a very soft landing to me.

SacramentoCrash said...

Like Prince said Party like its 1999

Because that is where price levels are going to fall back to!

paranoid renter said...

>>>>
Thus far, it looks like a very soft landing to me.
>>>>

I agree. It's quite a soft landing so far. A hard landing would be when almost nobody wants to buy a house because they know prices will fall. So even if a house is needed, people start thinking they are better off renting and investing their money elsewhere. I don't know if that will ever happen. There's too much liquidity in the market.

More likely dollar will keep falling. It'll lead to equal opportunity screwing across the board - house prices stay flat while our saving buy less of everything.

Perfect Storm said...

Home prices now are back to about what they were in 2003," said Ernie Ochoa, who manages the Century 21 M&M and Associates office in Merced.

Merdead home prices should roll back to 1936, then maybe they might be priced right.

Sippn said...

CBA - yes new home imventory is a strange thing - BLS counts empty lots ready to build on as "inventory" but the local number may have been counted differently by a local new home consultant/expert.

Cmyst said...

I'm tracking an interesting modern-style house at 3333 McCowan in zip 608. From the pictures on MLS, the house has had some kitchen updating -- the usual granite counters and stainless steel appliances. That appears to be the extent of the updating. At least two rooms would need repainting, as the colors are nauseating. They don't show any of the bedrooms in the pictures, so it's anyone's guess. The lot size is very nice at 10,500 sf and the house is reasonable for us at 1800 sf. It has significant curb appeal if you're into modern, and looks much better on the outside from my drive-by than from the pictures, and most places don't. It is vacant -- or it was at the time of the drive-by.
The original asking price was 489K, and they've made two significant drops after 108 days on the market, to 429K. That's about 12%.
Since homes that I'm tracking of similar modern style with nicer features in similar neighborhoods are asking anywhere from 10K to 79K less than that, it seems unlikely that this place will sell unless it sells to a total moron.
Another place has dropped from 439K to 389K, on market for 99 days. About 11%. (Same size house, same size lot as the first place. More extensive remodeling, comes with hot tub and pond/landscaping. The remodeling they did doesn't suit the style of the house, unfortunately, but it is tolerable.)
These places have dropped the most of any of the places I'm tracking, and it's still not enough and they still aren't selling. The neighborhoods are older with larger lots and more trees, but middle-class and not in any particularly trendy or desirable area.
#1 sold for 445K in April of '05.
#2 sold for 128K in 1996.
#2 could drop their price to 300K and they'd probably sell; for sure they could sell (because I'd buy, and I'm watching!) at 250K and they'd still make well over what they paid on the place. Even if you subtracted the cost of the remodeled kitchen, they'd make at least 80K.

Diggin Deeper said...

"More likely dollar will keep falling. It'll lead to equal opportunity screwing across the board - house prices stay flat while our saving buy less of everything."

Dollar Index sits at about 80.4 today. Broke resistance of 82 earlier this month. Any break below 80 is serious and should be watched carefully. Central banks throughout the world are raising rates to combat the dollar's inflation causing liquidity in their economies. Interesting, the world is experiencing and dealing with inflation, but we're not. If you believe what you're told, inflation in this country is muted but under the watchful eye of the Fed.

Gold doesn't much like the dollar either. It punched through $673 resistance this week and is now poised for another run at $730.

Normally one could believe that inflation is good for real estate prices. Trouble is prices have risen in some areas 200%...beyond the affordability of a dollar that's now worth less then it was during the run-up. Unless wages increase dramatically, home affordablity keeps falling as inflation keeps rising.

Not the best of scenarios for home prices...

Keep your eye on the BIG picture as Sacramento's real estate market will be affected by it.

Diggin Deeper said...
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Diggin Deeper said...

BTW Patient Renter....Imho, Ron Paul is the only political voice in America telling the trutn. Too bad he's too tough to stomach for most of the Goldilocks crowd.

Gwynster said...

The Bee is all full of good news today. My favorite-

Area rents increase at snail's pace
http://www.sacbee.com/103/story/282174.html

The graph shows davis Occupancy at 95% but I'd guess it's really 90% which is low. Also explains why I'm seeing so many MFRs hitting the market. These used to be gold mines.

Though this is good too

McClatchy sees earnings drop as realty ads slump
http://www.sacbee.com/103/story/282214.html

anon1137 said...

Gwynster, what about the reader comments on Wasserman's story about inventory in the 95616 zip code. Was the reader correct, that the zip codes in Davis were realigned last year, and that accounts for the inventory drop?

Gwynster said...

From my SacBee post
"Davis had a zip code change and that is why you see the big drop. If you go to Zip realty and do a search for 95616,95617,95618; you'll see that inventory is up."

This has data mining folks all messed up.

When they split it, it wasn't just El Macero that was split off. It was all the post 97 construction. So if you go into Zip Realty and hit the market est. page on a property, it will give you a no info available message. Just go to Zillow directly and look the property up under the old zip and there is your data.

Now I suspect we will see a big spike in listings next year in Davis as the rental base decreases further. Occupancy levels under 85% will hammer this town. We've seen it before and we'll see it again. This is why you are now seeing a lot of people listing their MFRs now.

Gwynster said...

And the hits keep coming

Housing slowdown puts a crimp in state, local hiring

"Weighed down by the housing sector, the job markets in California and Sacramento nearly ground to a halt last month."
http://www.sacbee.com/103/story/283321.html

Lander said...

Busy day, isn't it?