Sunday, August 19, 2007

Escaping Sacramento as Swarms Held at Bay

From the Sacramento Business Journal:

It might seem counterintuitive that apartments are suffering. Families losing their homes in a flood of foreclosures have to live somewhere. But [Charles] DeLoney DeLoney [a multifamily broker with CB Richard Ellis] and others point out that there's now a "shadow market" of homes that are rented out after owners fail to sell them. Add to that condo reversions, where units that were once for sale are now being rented out as well.

Tom Cross, manager of Star-Crossed Properties, which he describes as a "blue-collar" complex in Arden-Arcade, said the housing market had a direct impact on his property when several out-of-work construction workers moved out starting in January, presumably to find jobs elsewhere. "We got hit with eight vacancies in one month," he said. But he said he believes the market is not crashing, just landing softly.

David Harrison, a senior investment adviser with Sperry Van Ness who concentrates on the multifamily market, said there's been a lull in investment activity in apartment buildings while the market sorts itself out. Realtor friends have said foreclosed-on families might be moving to other areas. "They want a fresh start," he said.
From the Lodi News-Sentinel:
Inside Lodi's tony Sunwest subdivision, "for sale" signs dot nearly a dozen of the neighborhood's well-kept lawns. Some of those signs have become fixtures in front of the two-story mansions, staying as long, or longer, than anywhere else.

The high-end of the area's housing market — from sprawling ranches in Lockeford and Clements to river-view palaces in Acampo — has sputtered this summer, mimicking the rest of the region's slowdown. "It's the toughest market to move — anything over $1 million is sitting six months, even at a reduced price," said Pam Murray, a real estate agent who specializes in the region's pricey homes and ranches. "There's a shortage of buyers in that price range," she added.
Potential high-end buyers — often retirees or families from Southern California or the Bay Area — haven't swarmed the area this year, looking to buy country properties, Murray noted. They've struggled to sell their own homes in their areas. "Our clients that would have been coming up here in droves and raising our prices — they're not able to close on their properties, and that's really slowing us down," she said.
"The Central Valley is not going to look good for the next couple of years," said Thomas Davidoff, an assistant professor who specializes in real estate at the Haas School of Business at the University of California, Berkeley. "Five years out, I think things will be fine and dandy," he added.
From the Sacramento Business Journal:
A community bank has foreclosed on a high-end Rocklin condominium townhouse complex, the second luxury condo complex to collapse in Rocklin in a year. The Terraces at Stanford Ranch featured 132 condos in 29 buildings. So far, four buildings are completed, along with the pool, said Pete Guisasola, Rocklin's chief building officer.
During the run-up of housing prices from 2000 to 2005, many people were getting priced out of homes in south Placer County. Developers responded and started building condominiums. Many of the entry-level projects have sold, but those targeting high-end buyers have struggled, said Bruce Slaton, president of With all the negative publicity in the housing market and the subprime disaster, few people are interested in buying anything, Slaton said. "Prices are falling, and now you can find some single-family homes in Rocklin for less than they were asking for the condos," he said.
Also from the Business Journal:
New-home prices and sales continue to slide in the Sacramento region, as the housing market struggles, according to a report released Friday. The median price for new single-family homes dropped 10 percent to $418,000 in June, from $464,990 a year ago, according to the California Building Industry Association and Hanley Wood Market Intelligence report.
From the Stockton Record:
If it weren't already tough enough in the home sales market, the recent rash of grave news coming from the credit sector and an antsy Wall Street are putting more pressure than ever on the real estate sector. Some of the news about credit woes affecting investors and major lenders is even spilling out of the housing sector, where the trouble began piling up beginning this spring with many subprime loans going sour.

Even though there hasn't been a whisper of bad news from the commercial real estate sector, deals in that field are harder to make these days because of tightening credit standards as investors worry about all types of loans, said Randy Thomas, a Sperry Van Ness commercial real estate broker in Stockton. Commercial lenders are re-examining their loan commitments and loan procedures, he said. A lot of commercial loans are funded from the same pool of resources as subprime residential loans, Thomas said, and that means tighter credit standards.


Patient Renter said...

Over the weekend, Dean Baker argued that ARM resets aren't the only problem with mortgages:

"The FDIC found that 10 percent of the subprime adjustable rate mortgages issued in 2006 were seriously delinquent or in foreclosure within 10 months of issuance. Since no mortgages had reset at the 10-month point, clearly there were other problems. Either borrowers could not afford even the low teaser rates or they were defaulting because they realized that their homes were worth less than their mortgages. The latter problem will only get worse as house prices continue to decline in response to the glut of housing on the market (the inventory of unsold new homes is 50 percent above the previous record and the number of vacant ownership units is almost twice the previous peak) and tightening credit conditions curtailing demand."

Gwynster said...

"they were defaulting because they realized that their homes were worth less than their mortgages"

This just happened to a house on Archer in Woodland. They didn't even try to sell according a neighbor. It just went straight to default.

RMB said...

Kind of OT, but go check out Lockewood's latest post. He has taken a revisionist approach and is now trying to say he wasn't really all that bullish in the past. Give me break.

The greatest part is where he says with all of the decline that condo's may be getting to be a good investment vehicle now. Then he talks about exchange rates and cash flow. Makes me wonder is this guy has a clue about anything....

norcaljeff said...

Anyone wanna buy a home? LOL