Waiting
From the Roseville Press-Tribune:
In a reflection of the continued sluggish housing market, the Roseville City School District's newest elementary school will probably have to sit empty for a year as officials wait for more students to arrive in the school's attendance area. That's the word from Superintendent Richard Pierucci, who updated trustees last week on the status of Junction Elementary School, located on Ellison Drive in the WestPark development.From the Sacramento Bee:
Too few students are currently registered with the district in the developing area, making opening the school financially irresponsible, Pierucci said at the board's July 19 meeting. The developer-built, kindergarten- through fifth-grade school was completed in January 2007, but officials have been waiting for enough students to materialize before opening it...The lack of students is due to the area's sluggish housing market, Pierucci said.
Developer Sammy Cemo is a retail and commercial guy. Residential construction? "That's a little out of my realm," he says. But he's pursuing a residential development, nonetheless, in midtown Sacramento...The developer may not be a residential guy, but he knows this much: "Timing-wise," he says, "the market sucks." But he also knows markets turn. He'll start work on his apartment-condo-whatever at the first sign that things are improving.
9 comments:
I wonder if those home owners will get a mello roos refund for funding an empty school. What a scam.
Waiting looks to be good thing!
New home sales down substantially
http://news.yahoo.com/s/ap/20070726/ap_on_bi_go_ec_fi/economy_48
"Sales of new homes fell in June by the largest amount in five months as the housing industry continued to struggle with its worst downturn in 16 years. The median home price also fell."
The media just keeps spitting out more bad news for real estate.
Moody's Sees Further Decline in Median Home Prices
http://www.cnbc.com/id/19970949
"Zandi estimates that mortgage defaults, which are now below 3%, will rise to a record 3.6% next summer, Liesman said. This means some 2.5 million first mortgages will go into default over the next two years."
At a 46% foreclosure rate against defaulted mortgages, another million homes hit the overall inventory and 3.5 million people are affected. Add that to nearly a million foreclosed today and we have 6-7 million people on the streets looking for rentals over a two and a half year time frame.
This is the summer of truth regarding real estate and there's enough information coming forward that will really put heady buyer's on notice.
Imho, a naked market like Sacramento pays dearly for past excesses. New home developments will lead prices down in every neighborhood throughout the area. Banks will add a big blow when they begin their dumping campaigns. Even the insulated enclaves, thought to be immune, will suffer right along with those communities that obviously overbuilt. It will all come back to sentiment...and will dictate where prices go from here.
We're headed for a "winter of discontent".
I've started tracking homes that are priced not just 25% above my limit, but 50 to 70% above my limit. These are all modern/contemporary homes, not new construction. I'm mostly doing it because I like these homes and I truly want to see what happens to them; I don't have any pretensions to living in these very upscale areas and I don't think the prices will ever drop to where I would feel comfortable buying even in a worst case scenario. However, two of these homes in very nice neighborhoods in Fair Oaks and Carmichael are REO. It boggles my mind how anyone that couldn't afford these homes could end up in them. It makes me feel uneasy even DRIVING in these neighborhoods, they are so lofty. Really.
And FYI, there is a difference between folks who THINK they are wealthy (like most of the ones up in Serrano) and folks who actually are. These neighborhoods reflect the kind of wealth that is intergenerational, Ivy-league school, trust fund, etc.
It's getting ugly right now...Lot's of uncertainty regarding real estate, credit quality, and the economy. Something's not adding up. The economy is supposedly on good footing, inflation's in check, and the Fed predicts moderate growth ahead...but the stock market is indicating something totally different.
Real estate is weighing heavy and seems to be getting worse daily. Oil is topping $77 per bbl. and the dollar is tanking. Australia raised their rates last night to combat dollar's inflationary pressure worldwide.
Adding in all the factors and looks like good earnings are being trumpted by more pressing issues that have impact on the overall economy.
Might be wise to seek cover for awhile and see if this one blows over. I sense this is a replay of the dot.com bubble. Imho, we're in for some rough road ahead.
It's probably not going to help the real estate situation here if the national situation starts to break down.
My boss asked me about 3 months ago about the stock market, and how its gone up so fast to around 13000! in such a short period of time.
-I'm no expert, just a paltry BA in Econ (which only means my 12th grade AP Econ teacher was amazing cuz I didn't learn diddly in college), but I said I didn't buy the run up, and definitely didn't think it could sustain another 1000 pts right away. I figured that most of the increase in stocks was courtesy of all the investors who were dumping their real estate investments. Combine that somewhat artificial run up with the dominoes being set up perfectly for housing doom that were just beginning to fall, and you are ripe for widespread economic pain.
I predicted then that 4th quarter 07 would be the first negative GDP growth. When the general election season heats up next summer its going to be a repeat of '92 in many ways. What are you going to do about the three quarters of recession we just went through?
Brian,
I admit I barely made it through Macro and Micro myself but my hunch is that Wall St has been living off margins debt and with credit contracting, it's get out now and hope to cover.
Brian...Good observation...I would argue that since M3 has been elimnated from the report roles, liquidity has been increasing steadily up an over 10% per year. Some economists would view this as the true rate of inflation. If that were half true, we've been in recession for the last several months as GDP has faltered since the beginning of '07. I tend to think this is true and we've been seeing the numbers juggled to "put on a happy face" each quarter.
Gwyn...can you say "My shorts are on fire, someone get the garden hose"?
As credit dries up, rates have to increase whether the Fed steps in or not. This makes the carry trade less attractive and causes an unwinding of cheap borrowed money(yen and Swiss Franc) that bought higher yields in other currencies. These low yielding currencies are on an upswing against the dollar as traders are having to sell these leveraged positions and buy back the original currencies. It's another good reason why gold has taken a dive. The bill collector is at the door and you have to give up something to stay solvent.
A couple more walls on this house of cards have blown off. It appears that the LBO's and merger and acquisition activity was built on money tied to subprime and the mortgage market in general. There's now questions whether these deals ever get financed. One things certain, the new credits rates certainly don't make them as favorable as they were two weeks ago.
does anyone know how you can do a search or locate the actual price of sold homes in placer and sacramento county? if anyone can point me to a website where i can do a public record search by address easily, i would appreciate it.
serenity,
Try this: http://tinyurl.com/2x5y4q
The Bee is usually behind a couple months on sales prices, just FYI.
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