Thursday, October 18, 2007

Sacramento Home Sales At Record Low

Record inventory: check. Record foreclosures: check. Record price drop: check. Now record low home sales. From the Sacramento Bee:

The summer seizure that gripped the nation's mortgage markets and made it harder for buyers to find home loans delivered a nasty blow to Sacramento-area home sales during September....The 1,234 escrow closings for new and existing homes in Sacramento County were the lowest since DataQuick began keeping records in 1989.
...
Sacramento County's median price for existing homes was $310,000 in September, down 17 percent from an Aug. 2005 high of $374,000.
...
If you're a renter, there's no better place to be than in metropolitan Sacramento....Rents in July, August and September were up only about 1.4 percent over last year.
...
"People would like to raise their rents, but I see a lot of people playing these concession wars," says Joe Treat, who has long watched the region's apartment market at For Rent magazine. Treat's prediction: Renters are likely to have it good for the foreseeable future.

27 comments:

Diggin Deeper said...

That rent vs own equation is just getting more and more compelling

Patient Renter said...

"That rent vs own equation is just getting more and more compelling"

Yep. We win :)

Gwynster said...

I was looking up some prices on Sac Bee's sales database and I noticed they had the sale back to lender (REOs) are included with their other data.

I found a bunch of REOs on the market now listed as sales in the last few months using that DB. Not sure if anyone else knew that.

Diggin Deeper said...

Am I correctly getting what you're saying Gwyn...That sales include REO's that go back into the banks inventory?

Gwynster said...

Bingo

Use 1601 Archer in Woodland as an example. I know the story on this house well. The owners didn't even try to sell, just lived rent free and walked when the owner lost his construction job.

On the market now for $247 (needs major pool and structual repairs besides the agent hauling away 2 dumpster worth of rotten junk) but the bank took it back at 294k in mid-summer.

Diggin Deeper said...

Whoa....There could be hundreds of those counted over the last several months. I think I'm with anon1137 on this one...SAR is probably feeding the Bee some bogus dope here and they're not ferreting out the noise...This market is "circling the bowl"

Gwynster said...

There is a duplex down the street from me listed on the site as sold but there was never sign out and the place is vacant. Now I'm wondering

G Spot1 said...

Gwyn, that's insanity. I believe the price at auction would be the amount of the debt. So if someone bought w/ $0 down, the last sale price is more or less going to be what's listed as a sale in the Bee. If there is any negative amortization, it would be even higher. I suppose the auction price could also be lower than the current market if the owner put something down, but I would think most of the homes being foreclosed on had little if any downpayment. I also think the homes would get picked up at auction if there was any value there over and and above the debt level.

Do you know if Dataquick includes those homes in their stats? I would doubt it but you never know.

bubblemachine said...

Sacramento County's median price for existing homes was $310,000 in September...

With the median price in free fall, the October figure should break 300K.

Down, down, down we go. Where it stops, nobody knows. LOL

Gwynster said...

G spot,

The sale at the courthouse steps where the bank takes back the property is what is being recorded as the sale. The 247k REO listing is what the bank hopes to get.

Look at the Zillow info
Sale History
08/03/2007: $294,449
05/02/2003: $245,000

I believe both DQ and OFEHO record the transfer back to the bank as a sale as well.

Professor Shays said...

Characterizing a non-judicial foreclosure as a "sale" certainly seeds the database with questionable data. My experience over the years of crying a large number of sales is institutional lenders, particularly at this early stage of the cycle, and in recognition of their desire to turn a blind eye towards loss recognition, usually bid the entire indebtedness (including costs associated with foreclosure).

Of course, given loan to value ratios in excess of 100%, recording these transactions as sales may suggest the best comparable sales, thereby improving values in the neighborhood. (grin....)

Gwynster said...

"Characterizing a non-judicial foreclosure as a "sale" certainly seeds the database with questionable data."

Yep, it would make volume look better then the reality and would keep the prices inflated to the date of the original sale.

I know the OFEHO has this problem. I have a question about this on the HBB hoping someone can tell me if DQ is doing this as well.

Jacob said...

I don't get it, if it is sold at auction how does the bank take it back, isn't that when the bank sells them after they have foreclosed on the home?

anon1137 said...

RE: counting title xfers to the lender as a sale:

As long as they haven't changed their methods, the comparisons with previous years should be OK. I really don't pay much attention to the actual numbers, just to the % changes.

Does that make sense?

anon1137 said...

The Bee has the Sept data by zip code up at http://www.sacbee.com/static/live/business/real_estate/sept_2007_home_sales.html.

anon1137 said...

From DQ's web site (http://www.dqnews.com/RRStatChg0207.shtm)

To count as an "arm's-length" sale for our sales counts, the logic we've used insisted that there be a seller, a buyer, and that money changed hands. . . .

Intra-family transfers are not included, nor are foreclosures until a home is re-sold to a new buyer.

Diggin Deeper said...

Hmmmm....something definitely looks fishy here. DataQuick says they don't include the sale back numbers to the bank, Gwyn has come up with information that says those sales appear to be counted....It wouldn't seem to me that DQ would have any motive as they are basically a numbers service but they are serving the realty machine? In any event if Gwyn is on to something, which I believe she is, then the numbers we've been getting aren't telling the true story. However, adding these distressed properties in to the numbers would have a tendancy to show true real estate pricing for the region.

Sippn said...

The Bee is just doing what a lot of services do . . . letting their computer pull the data from the county recorders data pile - SAR has nothing to do with it. SARs data is only that which is input by agents . . things they are involved in.. .. not foreclosures, not deed in lieu, not most builder sales.

So, data quick and OFHEO's data and median price data likely different than SAR also.

No conspiresy, just nobody out there compiling the "whole" story of data. No financial reason to.

Gwynster said...

Yep, Zillow counts that deed back to the bank as a sale too apparently. That explains why their zestimates are wacked.

I did see a lot of really low value sales recorded and these could be intra-family deals. Or they could be the value at which the bank took the house back. I'm going to have to not dismiss those low numbers and give them a second look.

Diggin Deeper said...

Sippn...that's a reasonable explanation. If its that important, which it may not be, an average across the board might be sufficient to give a truer picture.

Any intra-family transfers should not be counted, as they are well skewed to the downside...

SheWrestles said...

I'm scheduled to close next week.

Paying $130/sf.

It's not the best deal, but I'm overpaying a little in order to get one that's never been lived in.

Fairly new to the area, another reason for moving now is to be able to get into something I own before getting too settled into the rental.

Gwynster said...

At 130 per, I'd be tempted but nothing in my area is there yet.

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

Found another one:
350 Bright Day MLS #: 70102002
Residential 2007-09-11 $237,867
List Price: $268,900

At least in this case, Zillow doesn't list the TD as a sale.

I'm not even looking for these. I run into them.

norcaljeff said...

Shew, that's still too high, this market is going no where but down. No need to panic, new homes will always be around.

SheWrestles said...

You're right - there will be better deals out there, even during the winter, I predict.

Unfortunately for me, I have to assign a dollar value to moving now (while much of our stuff is still boxed up) vs moving later when we're even more settled in the rental.

Also, because I work from home, I have to assign a cost to moving now (during a relative slow period) vs moving next year, when there are major projects on the calendar for most of the year.

I also wanted to lock in a decent interest rate, fearing that they might go up.

I'm overpaying by about $20,000 based on what today's market is, and expect to see an additional $20,000 in depression over the next year. Evaluating all the information I've got, I predict that the worst-case scenario has me overpaying by about $40,000 or so, and I'm comfortable with that.

norcaljeff said...

Shew, at least you know that you're losing money going into it. I'd hate to have to make up $40K out of the gate plus knowing I miss out on opportunity cost with the money and down payment going into your house.
Fear of higher rates shouldn't persuade you, since rates are headed down. On the 5 year bonds on Friday rates dropped just under a half point within a few hours. And Elliott homes is selling homes with no interest :)