Monday, October 22, 2007

Anderson Auction Sets Minimum Price in Manteca?

From the Tri-Valley Herald:

THE BAR has been set for new home prices here, real estate experts suggest. When Anderson Homes decided to put 34 brand-new homes in the Paseo West subdivision up for auction to clear out inventory, some were worried the results would negatively affect Manteca's already inert housing market.
...
Now, real estate agents and developers are saying the auction's strong turnout, coupled with the successful sale of all 34 homes, is encouraging. "It sets the market pricing," said Cindy Foster of Re/Max Executive, adding that the auction made buyers realize $380,000 to $390,000 is the range where housing should be. "There should be a positive affect, because we kind of know where the price point is now," she said. "At the very least, it established a range for those buyers that may have been nervous."

"Since Anderson Homes sold all the homes, it shows that there are buyers out there," said Tom Wilson of Wilson Group Realtors, adding the sales set a "de facto bottom of the market." "Now we can see where the bottom of the prices are and what buyers are willing to pay," he said.

Many prospective consumers have had a "misconception" that the struggling housing market would "drop to $100,000," Foster said. "A lot of people have been sitting on the fence, but this shows that prices aren't going to continue dropping," she said.
~~~
There are somewhere between 1,000 and 1,200 empty homes or a three-year cumulative inventory of foreclosures, resale homes and brand-new homes, said Mike Hakeem, an attorney who addressed the [Manteca city] council on behalf of the developers.

41 comments:

rocklin renter said...

adding the sales set a "de facto bottom of the market." "Now we can see where the bottom of the prices are and what buyers are willing to pay," he said.


Priceless! That is the bottom for today. Does this knucklehead actually believe his own line of BS? I think yes!

smf said...

The question to her should be:

Did any 'investors' buy these homes, or did the people who bought them actually intend to live in these houses for the long term?

If a lot of investors bought, then we are only (again) postponing the trip to the bottom.

Jacob said...

Its the bottom for now, but how many of those 34 homes will be back on the market as a flip. How many are actually going to be occupied?

And a 3 year supply means prices have a ways to come, unless the owners / lenders / builders are willing to hold the homes for 5-10 years to get rid of the excess.

Gwynster said...

MLS #: 70110363

OK Davis fans, check the last sale date and amount.

smf said...

And to prove my point, from HBB links:

- A savvy inner-city housing investor with $11 million in her pocket emerged as the leading buyer Saturday for north Minneapolis homes that are part of a two-day auction

There seemed to be about seven investors, who planned to rent or rehab and sell a property, for every person who showed up to bid on a house in which to live.

"I don't know whether I'll live in it or not," said Anderkay, who lives in Brooklyn Park and works in Savage. "It would be closer to work. If I don't live in it, I'll fix it up and rent it or sell it." -

http://www.startribune.com/462/story/1497706.html

So we had a large oversupply problem, and these foreclosed properties are selling to investors. These investors WILL NOT solve the oversupply problem, they will only temporarily hide it.

Yep, we have YEARS to go before this is over.

I get the same feeling that this is what happened in Manteca. A bunch of 'investors' got hooked by the 'instant equity' line.

Jacob said...

Wait, what do you need to fix up on a new home?

So lets see, buy a home that you will lost money on each month if you rent it, and that you can't see for what you paid.

Or, stick that $11 Million in the bank and earn a ton of interest.

Diggin Deeper said...

We're going to get a few head fakes before we reach the bottom as were seen in past markets. Just realize what's out there, what's headed this way, and watch the pricing data confirm whether the bottom is in... or the "defacto bottom" is just a ledge to fall off of.

Patient Renter said...

Lander, don't let anyone accuse you of only printing negative stuff. This is clearly great news! The bottom has been reached... right?

Sittin' Out This One said...

Gwenster, you have a live one on El Macero in Davis. It is owned by the Bank of New York. They took the loan in from WMC mortgage and must have foreclosed recently. They lent $887,000 with 80/20, 100% financing in 9/2004!

Currently asking $789,000, so we are officially below 2004 pricing in Davis!

Oh wait, it sold for $505,000 in 3/2003. The Kent Powell Trust cleared a cool quarter mill. So we have a long way to go to get down to 2001 prices, which should probably be $300,000, given it is only $2700 sf

golfer_X said...

The bar has been set! The only problem is that it's a limbo bar and every time some one goes under it, it gets lowered. Ye haw, I love a good limbo, especially after a few stiff drinks.

anon1137 said...

Anyone buying this junk needs to make an appointment for a head examination.

elkgrove said...

This piece of news is a bit misleading. Everyone please check out http://www.mercurynews.com/ci_7175582?nclick-check=1 Same story, a bit different details. $380s and $390s sets the market? I dodn't think so. It appears in other news that high $300s to low $400s were the winning bids for the larger homes of over 2700 sq.ft. to 3310 sq.ft. These are not your average size homes, these are huge luxery homes!!! I would really love to see Lander post this one up for all of us.

elkgrove said...

patien renter,

This is not bottom, it is just a beginning. I wouldn't believe anyone who tries to tell me otherwise. Realestate agents and developers are just doing thier jobs to sell homes, they'll say anything. Don't believe everything they say.

golfer_X said...

A tract home in Manteca, Ca does not qualify in my book as a luxury home. They are just big tract homes. The average home size for new homes in 2004 was 2400 sq/ft. So, these are just slightly larger than average.

Rob Dawg said...

In a declining market these prices set the current top of the market. Absolutely criminal spin. Call the math police.

tim said...

Didn't Anderson sell half of their remainder? I remember an article that said the auction company told them to sell only half of their homes at the first auction. They still have many unsold in that development.

tim said...

http://sunpost.net/content/view/1417/190/

Here is the article about Anderson.

Cow_tipping said...

Its got a nice term in the stock market. Its called a "dead cat bounce".
Here is one more thought, you buy a house for 437K, your neighbors have just a few months prior paid 700K for that same house. Get this through your head, every time you leave your house someone will break your windows, slash your tires, throw trash in your backyard and vandalise your house. And further, 3-6 months later, the builder will turn around and sell the rest of the houses for 150K less. Remember, a popped bubble = building costs are also a lot less now.
BTW, did the bank even approve these sale prices or they still are holding the final say ??? cos if that is the case, they will simply refuse and hold for a few more months and repeat all over probably at lower prices. You auction "winners" are just losers who wasted a perfectly good few weeks with legwork and probably a weekend bidding.
Cool.
Cow_tipping.

Sippn said...

These guys have been around longer than the condo guy in west sac. Those sales should be OK.

The new home inventory accd to the article is about 300 or so. My guess is that they'll wittle it down by spring to a managable number.

Hey, where are those 35 per day new Google hires gonna live?

Sittin' Out This One said...

"Hey, where are those 35 per day new Google hires gonna live?"

Not in Manteca, guaranteed.

alba said...

"Meanwhile, in the background, Moody's is telling us in no uncertain terms that massive downgrades of subprime-laden CDOs are coming. To be sure, the ABX has been telling us for many months what the market thinks about the value of these things, but until the actual downgrade comes, an investor isn't necessarily obliged to sell. The IRS is also investigating accounting for mortgage-backed securities."

Gordian Knot has about $58 billion in SIVs outstanding, and Fidelity has about 4% of its money-market funds invested in Gordian-Knot-generated paper. This explains why Fidelity may be willing to be involved in the super-SIV bailout program.

http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/ASuperDuperBadLoanBailoutPlan.aspx

Institutional investors will be bailed out, but don't be misled, homeowners are at the end of the food chain, and will not. We have a ways to go, the pain hasn't really even hit yet.

smf said...

"My guess is that they'll wittle it down by spring to a managable number."

Not if (as slowly reported) these homes are being bought by another breed of investors hoping to flip them 'when the market comes back'.

Again, the problem is excess inventory. If 50% of these auctioned homes are going to investors, these homes are NOT being removed from inventory. The homes WILL be back, sooner rather than later.

Perfect Storm said...

From Businesss Week. “After three decades of stability, the national rate of homeownership suddenly began rising around 1995. The rush to buy homes fueled an enormous surge in housing construction and home prices. Experts differed on the cause of the increase in homeownership, from 64.2% of households in early 1995 to 69.1% in early 2005.”

“Surprising new research published by the Federal Reserve Bank of Atlanta concludes that the bulk of the increase was caused by innovations in the mortgage market. Young families with little savings flocked to those loans to buy first homes.”

“Trouble is, lenders aren’t making many of those loans anymore because default rates on the smaller, second loans have been extremely high. That means that one of the main props of the housing market has been kicked away.”

“If the homeownership rate drifts back to where it was in 1995, the outlook for housing construction and home prices could turn out even worse than the pessimistic projections.”

alba said...

Over the last month, out of about 100 homes available for PUBLIC auction in Placer County, only 2 homes were sold. The vast majority were "sold" back to the bank who had the home on auction. There's just too much for them to lose in the value of the loans they bundle to admit they're holding worthless loans. This will change, and these homes in limbo will flood the inventory.

http://www.fidelityasap.com/ts.aspx

Diggin Deeper said...

"Institutional investors will be bailed out, but don't be misled, homeowners are at the end of the food chain, and will not. We have a ways to go, the pain hasn't really even hit yet."

I think the mere fact that 2-3 million people will be negatively affected by this meltdown is enough for one to take a "wait and see" approach.

Sippn, you keep feeding the realty hog here. You project that fewer units of new construction will offset any foreclosure activity that may accumulate over the next several months thus inventory levels will decrease. Say it long enough and it might happen some year.

The assumptions there are enough strong qualified buyers, pent up demand, in a growing area, is just a little too rosey imo.

Stagnant wages, inability to sell and moveup, credit restrictions, negative price acceleration, foreclosures, an uncertain economy, and general cost creep, all are working against those assumptions.

Monthly inventory reports have continued to increase and prices have responded by falling. Until something changes either one for a sustained period of time...it's nothing but noise.

Jacob said...

Regardless of prices, until I see inventory steadily go down and get closer to a balanced market (6 month inventory) I will be waiting this out.

It makes little sense to me to jump in right now. No matter what rhetoric I hear, the numbers speak for themselves.

Sittin' Out This One said...

Jacob, you are exactly right. In 1990 the market peaked in June. Yet the peak in foreclosures was in 1996. The best buys for investors was in 1998, when rents had recovered and you could by a house for $140,000 and get $1200/mon rent.

I believe that will happen again in 2011. $650,000 houses were renting for $2000 a month last summer. Now you have the same houses selling at $400,000 and rents are $1900 if you shop around. In 2011 those houses will be selling at $300,000 and you will be able to rent them for $2450/mon. 12 times the rent equals $294,000. Bingo. That is when it will be a buyers market.

waiting2010 said...

Wow, lots of interest in this topic. Check this out!

http://www.mercurynews.com/ci_7175582?nclick-check=1

Mercury News reports that A year ago, one man bought his home for $670,000. A winning bid for an identical home just five doors down was $391,000, which is pretty close to 40% drop but the price is still very high in my opinion. Nonetheless, this is no 25% drop as mentioned by Ms. Cindy Foster who is by the way a Remax executive. She went on to say "the auction made buyers realize $380,000 to $390,000 is the range where market should be" and "this shows that prices aren't going to continue dropping." She couldn't be more wrong.

SheWrestles said...

Although there is certainly more depression coming, I'm not convinced that a home that's value priced at around $400,000 will get to the low $300s. Obviously, those that are overpriced have no choice but to come down, but when a home is HONESTLY priced to sell, there are some buyers willing to submit offers. The overpriced homes don't even get a nibble.

I got my 5 bed/4 bath home for $130/sf and the seller paid all the closing costs, plus $6000 towards the down payment and then the brokerage paid another $2000. I think the 5th bedroom gives us added value when it comes time to sell, so I can be somewhat optimistic right now.

Gwynster said...

She,

So prices will only drop to the point you bought and that's the magic stopping point?

Keep publically cheering yourself on. Just don't be surprised when we point and laugh.

Diggin Deeper said...

She....just hope you got a 30 year fixed note and plan to stay put for awhile...$130 sounds good today but who knows where this one's going? Those, including on this blog, that've tried to call a bottom have been wrong.

SheWrestles said...

So prices will only drop to the point you bought and that's the magic stopping point?

Keep publically cheering yourself on. Just don't be surprised when we point and laugh.


I've previously stated that I'm overpaying by about $20-25K in order to get a new house. I'm anticipating another 5% decline over the next 6-9 months for comparable homes due to the huge inventory. Because we're talking a medium-range investment, I'm comfortable with those numbers and my mortgage is only $400/month more than I paid in rent. Being self-employed, the numbers are a bit more favorable for me, and I should add that it's worth at least $20-30K for me to move at this time as opposed to waiting until 2008 or later.

If you start seeing today's fairly-priced homes in the $400,000 range fall into the high $200s, believe me, I'll be among the first in line to buy.

In fact, I'm going to an auction in Auburn today. :)

Cow_tipping said...

Shewrestles wrote
I got my 5 bed/4 bath home for $130/sf and the seller paid all the closing costs, plus $6000 towards the down payment and then the brokerage paid another $2000. I think the 5th bedroom gives us added value when it comes time to sell, so I can be somewhat optimistic right now.

In 2003 I paid $55 a sqft for a 2800 sqft + 2 car gar house. Brand new.
That house without land is replaceable for under $45 a sqft.
Your house will effectively be replaceable on the same scale. AKA $45 X sqft area + cost of the land its on (including permits and utility hook up's).
You'd be surprised how cheap it can be.
Cool.
Cow_tipping.

Gwynster said...

She,

Drawing the line in the sand just below your personally justified price isn't science.

It's you calling the housing bet with your money, which is ballsey. I'll give you that. But bragging here isn't going to get you the warm fuzzies I think you are looking for.

Anyone calling the bottom in this market, moi' included, is just stupid. Job declines and the after effects of the SD fires won't be felt for a while but they are coming. Whatever floats your boat, babycakes.

alba said...

she,
Auctions at the county courthouses are not for amateurs. You need to know which loan is being auctioned off, and details of the home of interest being auctioned off. You also need a cashier's check, and there's no "take-backs." You bid highest, you buy. Sounds like you may want to visit the next homebuilder's closeout auction, for another "good deal."

SacramentoCrash said...

Remax executive, sales "professionals", new home consultants, mortgage strategists, what is next in the long line of self serving inflated titles for these SALESPEOPLE?

There is nothing wrong with saying you are in sales if you are honest, competent and truly represent your clients.

Those titles are up there with "carpet cleaning professionals", etc.

SheWrestles said...

It's you calling the housing bet with your money, which is ballsey. I'll give you that. But bragging here isn't going to get you the warm fuzzies I think you are looking for.

Anyone calling the bottom in this market, moi' included, is just stupid. Job declines and the after effects of the SD fires won't be felt for a while but they are coming. Whatever floats your boat, babycakes.


Look at the history of natural disasters - many lose, but many others gain as a result.

Who knows - the recent fires could result in 10,000 people moving from SoCal to the Sac region. We just moved up here ourselves and got twice as much house for half the price...and we're far from the only SoCal'ers who are discovering how far our money can go here.

Because we're a young family, our main concern is the schools - so long as Placer keeps doing a solid job in that department, we'll be happy.

There are many reasons to be nervous as the war continues to send the cost of living higher, but if homeowners will take a stand, we have the ability to force local governments to put the brakes on all new housing developments.

Gwynster said...

Ok you went from denial to NIMBY in a single leap. Your mother must be so proud.

Either that or you are really Sippin playing dress up >; )

SheWrestles said...

Ok you went from denial to NIMBY in a single leap. Your mother must be so proud.

I've always been the NIMBY type and have never liked tract housing, but my wife really wants to live here.

You're too hung up on the denial thing - the fact of the matter is that, as a new resident, it's in my best interests to do whatever possible to help stimulate the local economy. I've been saying that I'm overpaying by $20-25K based on current numbers and that could grow to $40K within the year. I won't be happy if we're talking $60K a year from now, there are other reasons why I wouldn't feel the full brunt of that.

My worst-case scenario isn't really that bad, even if it means having to sell and move away in a couple of years (but I don't see that happening).

I want people to keep buying homes, even if the sale prices aren't what some folks feel they should be.

alba said...

I just had a neighbor move in this past week in Placer County. The house was first sold by an employee to his employer at their estimate of a $300K "bonus," which was split by them as part of a transfer. Let's see, they estimated the value; added $300K; did the transaction, moved the employee east; then listed the house for over $100K of it's true value, but consistent to the houses still for sale in the neighborhood (but not the 2 REOs and 1 short-sale completing now on the same street). With no price drops in the listing, somebody bought it within a few weeks. Sounds like a deal to me.

alba said...

at their estimate of a $300K "bonus,"

Actually, this was derived between the price the employee paid less than a year prior, and the price the employer bought it from him. A shower helps to clarify my thoughts and facts.