Friday, September 28, 2007

No Crystal Balls in Manteca

From the Manteca Bulletin:

"I don't have a crystal ball, but prices appear not to be dropping as much any more," [Tom] Wilson [of Wilson Group Realtors] said. In fact, Wilson has had clients who have been "fence sitting" while trying to gauge the bottom of the market take as position that this is as close to the best prices they'll get and are starting to make serious offers. It's a view shared by Allison Chinchiolo of PMZ Real Estate. She believes the Federal Reserve's rate move coupled with Manteca's appeal as a high growth area is what is responsible for her office seeing an increase in buyer interest in the past three weeks.
...
"People have been waiting for the bottom," said Chinchiolo who also emphasized she doesn't have a crystal ball, but added there are a lot of buyers who have been looking have expressed the belief prices probably aren't going to go much lower. "That's what makes this a great time to buy especially if you are going to stay put four to five years," said Chinchiolo. "You'll be amazed in what equity you're build up then compared to if you just rented."
...
Manteca currently has a 21.7-month supply of available resale homes based on the current rate of existing homes closing escrow...The current supply of homes [in Lathrop] is large enough to last 51.5 months at the current absorption rate...A six-month supply is when most economists - and Realtors - believe that buyers and sellers are on an equal footing with neither having an advantage.

Chinchiolo noted properly priced homes that reflect the market are selling in four to six months. "That isn't what people have become used to in the past six to eight years so they don't think it's normal but it is," she said.
...
A quick read of the Manteca economy based strictly on the housing slowdown that was severely compounded by the wacko lending practices that obviously benefited only those making commissions off loans that ultimately could never have been viable might tempt you to abandon ship.

But the funny thing is the only people who view this economy as Titanic are those who signed loan documents betting - or blindly hoping - equity growth would allow them to refinance in time to stave off an uptick in payments after two years that actually include a part of the principal. Some deserve empathy. Others were reckless. But one thing is for sure - the world isn't coming to an end.
...
This is not 1989. People aren't losing their jobs in wholesale fashion. The economy isn't in a dump even though the housing construction slowdown has hurt that sector. But even so, the number of new home sales are on pace to sell more this year than in 1990, 1991 and 1992 combined. The Manteca economy is different. Even though major retail and other non-residential construction activity has already taken place, Manteca is literally just on the cusp of a significant economic growth era. It is reflected in retail and office projects that are actually moving to construction.
...
No one is dismissing the sub-prime debacle - which is more accurately described as loans made to people who weren't credit worthy enough to ultimately pay them - as no big deal. But in the overall scheme of things it is a mere bump in the overall economics of the Northern San Joaquin Valley that is expected to be the fastest growing region in California for the next 20 years...The foreclosure mess is exactly that - a mess. It would be devastating if the Manteca economy wasn't as strong as it is. Keep that in mind if you're tempted to run around crying "the sky is falling down."
From the Stockton Record:
Homeowners in the upscale Paseo West development in Manteca are getting organized to see whether they can convince Lodi-based Anderson Homes to change plans to auction off 34 homes next month. Owners of 26 homes there think the home builder is treated them unfairly and in bad faith by planning to auction off vacant or under-construction homes at prices that could be more than $200,000 less than what current residents paid for their homes within the past year, said Dave Cantrell, one of the first to buy a home in the subdivision.
...
It is unlikely Anderson Homes will drop the auction, he said, and purchase contracts state that the builder might sell other properties there via auction. But homeowners would like to see at least from $20,000 to $30,000 each in cash compensation for the property-value drops that would result in the neighborhood, Cantrell said.
From the Manteca Bulletin:
"Doing something like what Steve Jobs did with iPhone when they slashed the prices seems fair," Cantrell said. In that case, Jobs cut the price of the iPhone by $200 just two months after Apple rolled at a suggested sale price of $599. Jobs made a $100 rebate offer available to earlier iPhone buyers good toward certain Apple products.

Paseo West residents concede house prices are down and many - including one owner who put $70,000 down - understand that they have lost value. But if the homes sell for the minimum bid - which is 40 percent of the last discounted prices that Anderson Homes offered - many who bought their home in the past year will see their investment drop by almost 45 percent from the original price.
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The Paseo West homeowner paid Anderson Homes $629,000 for the same model that the builder plans to sell at auction on Oct. 13 for a minimum bid of $345,000...Cantrell understands he bought at the top of the market.
From News10 (and video):
"They didn't treat us very good as far as I'm concerned at all," said Amy Sturdevant who in August 2006 paid $585,000 for her family's four-bedroom, two-bathroom home. Now, a nearly identical home with the same floor plan right across the street from Sturdevant is set to be auctioned at a starting bid of $295,000. "I saw myself losing potentially a quarter million dollars," declared Dave Cantrell, a neighbor of Sturdevant who is rallying other neighbors to protest the move by Anderson Homes.

Not only do residents who live there feel their homes are being devalued, they are worried that investors will gobble up the houses at bargain basement prices. "The concern is that we bought into what was advertised as luxury homes in an upscale neighborhood for the area," said Cantrell. "We feel strongly at this point an investor potentially could buy and we'll become a rental neighborhood."
...
"I was talking to my wife just an hour or so ago and I told her, you know, I think we made a very serious mistake by buying this home," Cantrell said.
From the Tracy Press:
The number of houses on the market in Tracy, 946, is closing in on the total number of houses built in town at the peak of the housing boom in 2004, the last year the city added more than 1,000 houses. At the same time, RealtyTrac, an Irvine company that tracks foreclosures across the U.S., reported this month that 1,138 Tracy homeowners had received notices of default.

As a result, homeowners have slashed their asking prices to 2004 levels. “Actually, I’d have to say it’s a little lower than that,” said local broker Dave Konesky, a director with the California Association of Realtors. Konesky said one of his clients bought a Tracy house in 2004 for $430,000 and now is asking $419,000, “with no bites, and it’s a beautiful home,” Konesky said. He said that’s about as low as the homeowners want to go. “They said they’ll sell it for less than they paid for it,” he said, “but they won’t give it away.”
From the Sacramento Bee:
Granite Bay's Dunmore Homes, which raised eyebrows Wednesday with a sale to Comstock Mortgage senior loan consultant Michael A. Kane, has been slow to pay its bills, according to a report by Costa Mesa-based credit tracker Experian. Experian says that, as of Sept. 10, Dunmore Homes was an average of 52 days overdue on bills. The home-building industry average is six days. Under the category of payment trend, Experian says simply: Increasingly Late.

Dunmore officials did not return calls seeking comment. On Wednesday, Dunmore Homes said its sale will provide capital to restructure the company, which owes money to lenders and to area subcontractors. Negotiations are under way to make everyone whole, the company says.

15 comments:

Max said...

I cruised down 120 last year, and I couldn't believe the asking prices on some of those houses. Why would anyone pay $600K for a house there anyway? It's in the middle of nowhere, the town's a dump, and it's in a flood plane. WTF?

Those houses won't sell for $600K again until the year 2050.

smf said...

"She believes the Federal Reserve's rate move coupled with Manteca's appeal as a high growth area"

Manteca (and the whole central valley) has appeal?

To whom?

Sittin' Out This One said...

Close to the bottom?

With a 20 to 50 month supply of homes currently on the market?

Foreclosures are rising. Prices are dropping, credit is tightening, buyer pools are shrinking.....hmmm, when all those trends change, you will be about 12-24 months from the true bottom. Until then, only a fool buys a home today.

Alls these "bottom callers" are wishful thinkers. Send them back to Econ 101 at Manteca Community College.....

Patient Renter said...

"Wilson has had clients who have been "fence sitting" while trying to gauge the bottom of the market take as position that this is as close to the best prices they'll get and are starting to make serious offers."

HAH. Just because some people are stupid enough to buy doesn't mean we've hit bottom. People were stupid enough to buy last year, and in 2005. Where was the bottom then? Yea, that's what I thought.

Sippn said...

Manteca - the population is so small its almost silly to measure it in terms of # months inventory - its really a suburb of the south bay/livermore etc. smaller than the size of Folsom. Its the closest edge of the central valley. I wouldn't be surprized if what they're saying is true. Per city records 400-700 per year in permits, so a 2 year supply is an extra few hundred homes? thats a good weekend or 2 in Sacramento. Perspective people.


Experians comments on Dunmore published by the Bee - I'm just thinking thats confidential data, but if they start printing YOUR credit report, I'll retract that.

Besides, 59 days is probably industry wide now.

RMB said...

Ah Sippn, your knowledge of the central valley is astounding. Manteca is about the 4th city once you hit the valley. There is Tracy, Mt. House and Lathrop before hand. Ripon, Stockton, modesto and lodi are all within a stones throw also. Manteca is just the poster child of the problem. When you look at the rest of the cities and see they are in similar multi-year inventory positions you get the picture of how bleak things are in the area.
It is all about context not perspective. Keeping things in context allows you to not lose perspective on how bad things are really going to get.
BTW - If Manteaca is just a suburb of the south bay, then your really have to say Sac is just a suburb of the north bay -- all about context.....

pavlovianvestor said...
This comment has been removed by the author.
pavlovianvestor said...

It's beginning to bug the shite out of me that these articles keep referring to people's homes as "investments" and in the same breath make it sound like we should pity those who are losing money on their "investments." Playing on traditional sentiments of Home with a capital "H" have no place in a discussion about greedy FBs who traded their future well being for granite countertops and Hummers.

Mr. Cantrell, you want a Steve Job-ish rebate on your i-Home? I'm sure Andersen Homes would be happy to give you a $20,000 refund voucher redeemable towards one of the many fine homes at an upcoming auction. Past posts have pointed out that some folks felt entitled to a big house in California. These articles prove that even worse, there're some folks who feel entitled to not losing money on their "investments." I'll support their point of view, as soon as I can have my $5k "investment" back from Webvan and Pets.com.

Patrick Hake said...

I miss Webvan. There was nothing like getting Lays when you ordered Doritos or whole milk when you ordered non-fat. It was like getting a grab bag of groceries.

I loved the convenience of being home for a delivery on a Tuesday afternoon between 10am and 2pm, so I could avoid the hassle of picking up groceries in under 30 minutes at a convenient time.

Oh, the glorious .com bubble.

I actually had a friend in college who was excited that he picked up 2,000 shares of WBVN when it was selling at 20 cents a share.

I begged him to order a certificate of his shares, for memorabelia when it went worthless. Unfortunately, he didn't order it and now I am left without the certificate and online grocery shopping :(

Lander said...

Manteca is located in San Joaquin County, which has a population of approximately 620,000. SJ County had 21.9 months inventory in August, per TrendGraphix.

pavlovianvestor said...

Webvan had a small, very small window when they were great. Even better was Kozmo.com who delivered rental dvds and cds via bike messenger within an hour of purchasing online (I think they lasted all of about 6 months). Ah the heady days of the dot com bonanza in San Francisco, such fond memories . . .

norcaljeff said...

Complete idiots, bottom line. They should have never paid that much or they should just shut up and suck it up. The homes prices are whatever the market will bear, so if they overpaid by $200K, so be it, it's call life, get over it.

RMB, great points, dont let him get away with his BS. I completely agree with you, I was thinking the same thing.
PH, you otta take your own internet advice and apply it to your knowledge of the housing market.

dvobell said...

"I was talking to my wife just an hour or so ago and I told her, you know, I think we made a very serious mistake by buying this home," Cantrell said.

...ummmmm....ya THINK??????

...Congratulations, Mr. Cantrell! You just won this week's 'Unintentionally Profound Utterance' award! Please accept this statuette of St. Joseph made entirely of crushed granite counter tops!

Cmyst said...

"Please accept this statuette of St. Joseph made entirely of crushed granite counter tops!"

LOL! It's funny, but granite has almost entirely lost its appeal, having moved from being rare and a symbol of good taste to being common and a symbol of the excess of the bubble.

I can't believe these people. Such whiners. No one forced them to buy at a ridiculous price. And now, they'd rather live next to vacant houses than "lose value"? How incredibly stupid.

It's folks like these that give Californians a bad rep.

Jacob said...

"It is unlikely Anderson Homes will drop the auction, he said, and purchase contracts state that the builder might sell other properties there via auction. But homeowners would like to see at least from $20,000 to $30,000 each in cash compensation for the property-value drops that would result in the neighborhood, Cantrell said."

And if the prices were going up and thier $600k home was being sold for $800k these people would be fine with the building coming to everyone with a bill for $20k to make up for the proerty value appreciations right...