'We may be at the very bottom of this thing, I hope.'
From the Stockton Record:
Central Valley existing home sales and prices continued to slide in June, the California Association of Realtors reported Wednesday. While the pace of sales dropped by more than a third, 34.3 percent last month compared with June 2006, the Valley's median sales price skidded to $329,960, down 9.1 percent from $362,960 a year earlier, association figures show. That is a worse showing than the state overall....From CNBC:
One Stockton real estate agent, Mike Collins with Collins Realty Inc., said there are signs the housing downturn may be hitting bottom. "We have seen it decrease throughout the year, as those numbers report," he said Wednesday. But recently, he said, "It does feel stronger. We're getting sales. We're getting inquiries. We may be at the very bottom of this thing, I hope."
...
Over the past year, according to DataQuick, San Joaquin County's median housing price fell 12 percent in June, down to $390,000. Prices fell most sharply in Lodi, where the median sales price was $320,000 last month, down 15.5 percent from June 2006.
The credit quality of U.S. mortgages is set to weaken substantially through the remainder of 2007 and well into next year, with delinquencies peaking in mid-2008, Moody's Economy.com said on Thursday.
...
The deterioration of mortgage credit quality can partly be blamed on prices, with all parts of the housing market experiencing declines...The erosion of mortgage credit quality will also be due to the fact that many borrowers will soon be facing measurably higher mortgage payments. October will be the peak reset month
when about $50 billion worth of mortgages will be adjusted to reflect higher interest rates, he [Mark Zandi, chief economist of Moody's Economy.com] said.
...
About 2.5 million first mortgage loans are expected to default over the next two years, with credit problems rising sharply in California's Central Valley, Florida, and the metropolitan areas of Las Vegas, Phoenix, Washington, and New York, according to the study.
24 comments:
"We may be at the very bottom of this thing, I hope."
This reminds me of Ron Paul's grilling of Ben Bernanke earlier this week:
BERNANKE: The Federal Reserve is committed to maintaining low and stable inflation, and I'm very confident we'll be able to do that.
PAUL: You're not answering whether or not you anticipate the problem [inflation].
BERNANKE: I'm not anticipating a problem like '79-80. No.
PAUL: With your fingers crossed, I guess.
:)
I hope this lifeboat still floats, I hope I win the lottery today, I hope the sun comes up in the east tomorrow....
just hummin a very old song....
"Because I've got high hopes, I've got high hopes. I've got high apple pie in the sky hopes."
...apparently this guy's waiting for the messenger to arrive and give him the news...
PR - thanks for the BB passage - really wondering about him.... still using October 2006 vs 2005 housing numbers.
SJ valley probably impacted more easily by changes in employment from over the hill in Pleasanton, etc.
When prices are rising there is never a top, it will just keep on forever.
When prices are dropping someone calls the bottom every week. Which is true I suppose, we are at the bottom right now, until next week.
With foreclosures set to outstrip sales pretty soon I think it is a but premature to call the bottom.
Patient Renter:"This reminds me of Ron Paul's grilling of Ben Bernanke earlier this week:"
RON PAUL 08!
$560/ft2 in East Sac.
Is this in Manhattan or Sacramento? 1224 47th St., 95819 (MLS # 70079029). $685K for 1220 ft2, lot size = 7013 ft2. Listed on 7/25. Any bets on how long it takes to go pending??
Looks like it's being flipped. Sold for $600K in May.
The party continues, in some neighborhoods.
anon1137,
These are just the crazy people who think there is value in Old/east sac do to the location. It will take a little longer but in the end these house too will fall to the foreclosure monster. Just because someone is paying over half a million dollars for a home, doesn't mean they have any financial sense at all.
yea anon 1137, get with it.
There's no value in being 5 minutes from 3 major hospitals, the Capital and all the jobs based downtown.
You can buy this same home in Detroit or Nebraska for $30K. Just a little commute.
Sippn:There's no value in being 5 minutes from 3 major hospitals, the Capital and all the jobs based downtown."
yeah, but you can always rent for
half the cost of a mortgage payment
and still be in the same location
with no risk of housing price
declines.
Renting is good, especially after watching the indexes this morning. I'm holding my cash very dear.
Even a fake GDP can't hold the market up.
"There's no value in being 5 minutes from 3 major hospitals, the Capital and all the jobs based downtown."
There was always value in these areas. Downtown was always more expensive. Same for San Francisco and LA. Rio Linda was cheaper. The prices always had the value of the location determined.
But what happened was that the value increased beyond logic. The 'demand' used to justify the increase in prices was not real, but speculative. Hence the rise in prices was not real, but speculative.
And guess what? Once prices go down to a more logical level, the areas that were more expensive before will still be more expensive than others.
Close-in neighborhoods like East Sac. and Land Park will hold their value better than the new stuff in the 'burbs. A lot of people (myself included) like the older, tree-lined neighborhoods, and unlike the new developments, the supply is limited. Plus, with gas prices and longer and longer commutes people want to be closer to things.
If you are waiting to pick up a nice house in Land Park for $300k you'll be waiting a long, long time.
I agree with Sippn. City living is back in vogue. As the public begins to understand that high energy costs are here to stay, people see the value of being central to most of their daily needs and they will pay a little extra for it. There will be offsets that make up some of the difference. And Sacramento is just small enough to still be able to still be able to control normal "city" problems.
Now whether city real estate prices are worth the value, in today's market, is another question...
"people see the value of being central to most of their daily needs and they will pay a little extra for it."
And this has not changed at all. When I purchased my first house, I tried to find the closest area I could to downtown.
And guess what? I could not afford buying a house there at the time. Neither could I do so in Old Fair Oaks.
That has not changed. It has always been more valuable to live close to downtown. This has not changed lately.
And why would the prices here not go down much?
After all, when we get ready to move up again, the price of the move up home will be partly determined by how much we can sell our current home for.
And if the price of our current home goes down, you bet that the price of our move up home will have to come down as well for it to be affordable to us.
And I can guarantee that we are not the only move up buyers that think this way.
That's quite a sales pitch Sippin "5 minutes from 3 major hospitals." I hardly think there's anything major about Sacto Hospitals, in fact, we've been dinged for only having one trama 5 hospital, e.g. Davis Med Center. And I hardly think when people are buying a home they are looking for a close hospital, unless you're 80 and live in Boca. Paying over $600K is really stupid to live near a hospital. Damn, you could live near Folsom of Roseville hospitals for less than half that. Get real.
I think Sacramento as a city is a bit unique in that it's really small and contained, compared to the cities I'm used to. And it probably hasn't changed much over the years because of its size. The services provided are capable of preserving its safety and integrity.
Coming from the Socal area, I considered LA a war zone to be avoided at all cost. 10 years ago people were moving out. Today with redevelopment they are starting to move back to the close in neighborhoods. It might not be new to Sacramento, but it is happening in the mega cities accross the country
Sippn,
I used to live in the downtown area of a city back east. Wasn't all it was cracked up to be. Still had to drive everywhere and find parking even though I was "Withing 5 minutes" of everything - Hell of a lot more than sac has to offer at least-. Was killed me were the cost associated with living downtown. 2X insurance, High energy cost for the 80 year old home. The noise of the city. not really knowing whether it was night or day through the sodium fog.
I guess each to their own. Give me 2 to 5 acres on the outskirts of town and I am a happy man.
I think the downtown areas of Sac are going to be surprised at what happens to property values in the coming years...Even the "Bubble proof" areas of SF took it in the shorts in the last down turn...
OK now if I can pull this hook out...
I too live in the burbs with kids going to school.
But, close in east sac will always be in demand and priced more, the further out you are willing to drive, usu the larger the home or property.
My point about hospitals wasn't about convenience if you're sick, its about jobs and proximity, well paying jobs.
"But, close in east sac will always be in demand and priced more, the further out you are willing to drive, usu the larger the home or property."
Of course, that has never changed in my 23 years in Sacramento.
And even when the prices in these areas goes down, they will still be priced more.
But just because they went up so high, it doesn't mean that they won't come down significantly to a more reasonable level, while still be pricier than other areas.
"But just because they went up so high, it doesn't mean that they won't come down significantly to a more reasonable level, while still be pricier than other areas."
What is different this time around is that there is a nationwide trend of people wanting to move closer to the city centers, fueled by higher gas prices and longer commutes. We are starting to see a reverse of the flight to the suburbs that began after WW II and construction of the Interstate Highway System. The supply of these older close-in houses is finite and demand is increasing, hence price pressures.
I agree that all areas will be affected by the current downturn, but the suburbs will be hit a lot harder than the more centrally located areas.
Sippn,
It looks like we all agree here. The expensive 800k house in East Sac will slide back to a still very expensive 400-500k when the median home price in Sac is 250k. All those Doctors from those hospital can still feel very exclusive having payed double for a 1200sf house.
I know a fair amount of people who live (rent and own) in E. Sac and not one of them works in a hospital, in fact not one works in Downtown for that matter. They all seem to work in Rancho, Arden, Sunrise area. Funny that.
"The supply of these older close-in houses is finite and demand is increasing, hence price pressures."
Honestly, there is no real proof that this is occurring. This thinking might be related to the supposed demand for condo living, which did not prove quite true.
We don't know what the real demand for these areas are, as their higher price excludes many from even thinking about living there.
And honestly, we are forgetting the reasons behind why many moved to outlying suburbs: schools. There was/is a premium also placed on neighborhoods with good schools.
"but the suburbs will be hit a lot harder than the more centrally located areas."
Only because new homes were a haven for speculative buyers.
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