Thursday, October 18, 2007

Sacramento Real Estate Market Charts - September 2007







Data source: Sacramento Association of Realtors

27 comments:

anon1137 said...

Very nice charts, Lander.

I updated my charts tonight also. I chart the DQ data for 95814 + 95816 + 95819 (midtown and east sac) as an aggregate.

The peak median price for this area was about $461K, reached in Nov 2005 (it also got close in Sept 2005 and Jan 2006, it was a broad peak). Then I look at the rolling 3-month average of the median as a % of the peak. It has definitely been trending down, in spite of a blip to the upside in April. As recently as last summer, it was at 98% of peak, but in June and July of this year it was 93%, and for Aug and Sept it was 90% of peak.

So I have to conclude that the bubble is finally beginning to deflate in midtown/east sac. Another 25% off the peak would be quite satisfying!

Diggin Deeper said...

anon1137...

"So I have to conclude that the bubble is finally beginning to deflate in midtown/east sac."

Yup, to think that some of these "ironclad" zips would sidestep this market is foolish at best. We're beginning to see momentum building as prices accelerate downward due to oversupply. It happened in the early 90's and it happened in the 70's.

Maybe it's collateral damage or just overpriced merchandise. But I highly suspect that it really doesn't matter if a buyer is looking in Meadowview or the fab 40's. The market's momentum will move prices in the direction its going regardless of the address. It took prices to the peak over a 5 year period and it will take prices to the trough as we move through this.

This is not a market to step in front of.

HOUSE2008 said...

anon1137...
"Another 25% off the peak would be quite satisfying"

diggin deeper..
"But I highly suspect that it really doesn't matter if a buyer is looking in Meadowview or the fab 40's."

It's all I want to hear. Good news all. Nice charts. As much as I like midtown (I rented there for 6mo just get a feel for it.) Some of those homes & their asking price is crazy. 700K is not unusuall & you know something is wrong when a vaccume cleaner can reach around the house w/o having to unplug it. The p/v (price/value)ratio is out of wack there. Don't get me wrong, beautiful neighborhood, but I know my first home the garage was bigger than many of those in midtown...

anon1137 said...

DD - it makes sense that these neighborhoods will fall too since the same factors, easy money, etc., made them inflate. But I think the relatively higher demand there will keep them from falling as far as areas with new construction.

From the Bee's updated story on the DQ data: Sac County, Sept sales down 41%, median price down 13.5% yoy. Wow.

Gwynster said...

2 more years like that and we may have something >; )

Diggin Deeper said...

anon1137...

Wow is right!

There won't be a neigborhood untouched by this market. I've argued with most about what location really has to do with the overall direction of a market. While I tend to agree, thanks to Sippn, that the upper crust neighborhoods will fair better, it will only be by a matter of degree. If overall market prices crash, then I would expect to see prices in the top zips "plummet", thus the difference in the main market vs. the submarket. But that price difference should be significant enough to make the wait worthwhile.

I'm betting that the same exhuberance exhibited during the manic upswing of this market will be met by an equal "negative force" exhibited during its fall. Markets tend to over react...not only up but down as well and I'm banking on an over reaction to the downside.

We're beginning to see an acceleration of price cuts. There's no telling where we end up and the only thing that's clear to me is that the numbers are not getting any better. The longer this game plays, the more the "pain factor" is interjected into this pricing momentum. We're already seeing this intially MoM in price declines. I don't believe its over, but rather just getting started.

I don't care if we miss the first 5% appreciation off the bottom. I'd chalk that up to over reaction as noted above. I'd much rather have a clearer picture of Sacramento real estate for where it truly is then to get caught up in making an emotional decision that I'd regret.

Patient Renter said...

"I don't care if we miss the first 5% appreciation off the bottom. I'd chalk that up to over reaction as noted above."

Don't worry, you won't. I like to remind people that while real estate peaks are sharp and pointy (on a graph), bottoms are nice and wide and flat (check the Shiller graph). We'll all have plenty of time to react. No worries.

Professor Shays said...

Funny, I was at a meeting at the College earlier this week and was reminded by another instructor that in 2004, when I ran my foreclosure class through the curriculum committee for approval, that when asked I said things like "this round is going to substantially worse than the two previous rounds ('79-'83 & '90-'94)" and "count out 5 years after the peak before it bottoms."

Truth is you didn't need to be very smart to make those sort of comments. Just experienced enough to recognize the cyclic nature of the business and know foolish lending practices will come back to haunt the market.

Five years from 8/05 puts us at August 2010. Because the boom lasted a bit longer than I anticipated, I'm thinking we will hit the bottom sometime in 2011.

Diggin Deeper said...

I've made this comment before so forgive me if this appears redundant...People seem to think that just because someone secures a jumbo loan they automatically get a pass when it comes to affording that loan. They don't!... and were just as susceptible to accepting these toxic bombs as anyone else.

I suspect that the top zips in Sacramento will have their significant share of foreclosures that will adversely affect the pricing in these neighborhoods.

Cheap money brought out the most unworthy credit risks out there. And while Jumbos were supposed to be better scrutinzed, I remember hearing about "no doc, no income" jumbos during the boom.

Those who had no chance, and were doomed to fail, are doing just that...regardless if the home cost $300,000 or $3,000,000. While most of this was focussed on the lower priced neighborhoods, we can't forget that "brown lawn" syndrome doesn't care about zip codes, supposed wealth, or neighboodhood fences.

As we move into the unknown season of mortgage resets, if you look closely at the charts, you'd find that prime and jumbo resetting loans are in the same mix as subprime, Alt-A, ect. And for the most part, the increase in payments are relatively the same. If jumbo at $4000 per month doubles to $8000, that puts a little more strain on the mortgagee. Will it matter? We'll see.

smf said...

The bubble will not leave a neighborhood untouched.

The nicer areas like 95816 and 95819 were expensive (relatively speaking) before the bubble started, and will remain more expensive when the bottom is reached.

Some of these areas did not have speculation reach a fever pitch, since frankly speaking, they don't have that much land to build on.

But these areas are move-up, which means that the people hoping to live there have to sell their house first. And if their prior homes sell for less, well, you know what happens to how much they will be able to pay for their move-up home.

To me, these areas will do a nice job of returning to the mean. The other areas where rampart speculation occurred may do a nice job of undershooting that mean.

Diggin Deeper said...

Living paycheck to paycheck gets harder:

http://news.yahoo.com/s/ap/20071019/ap_on_bi_ge/stretching_paychecks_2

An exerpt taken out of context:

"In the meantime, rising costs show no signs of abating.

Gas prices hit a record nationwide average of $3.23 per gallon in late May before receding a little, though prices are expected to soar again later this year. Food costs have increased 4.5 percent over the past 12 months, partly because of higher fuel costs. Egg prices were 44 percent higher, while milk was up 21.3 percent over the past 12 months to nearly $4 a gallon, according to the Bureau of Labor Statistics."

This article basically affects the lower end of wage scale, now, but soft commodity increases and energy continue to rise unabated. $90 oil will be processed into the economy by Christmas.

In the late 70's and early 80's the entire spectrum of wage classes were affected by cost increases such as these. Thankfully wages were rising fast enough to take most of those increases in stride. Today, it's a whole lot different as wages have basically remained stagnant for all but the higher end of the wage scale.

I've been hammering on this for months now and really believe it is the lynchpin that either holds this real estate market together, in an orderly regression to the mean, or shears off and sends it into a tailspin. I'm not the smartest guy on these blogs, but having been through that hyperinflation period, the resemblence is beginning to look exactly as it did 30 years ago.

This real estate market cannot afford to enter a recession with the fundamentals the way they are today...

Gwynster said...

Shays,

For me, it's affordability that I peg the return on. The piper of of microecon must be paid and he has a way of banging down the door even if you don't hear him knocking.

HappyinSF said...

I fear Sippn has fallen and he can't get up! Hopefully he is o.k.

Remember when Sippn was the first, maybe second commenter on EVERY story, trying to debunk everything regardless of its merits? If the story said 2+2=4 he'd be on here saying it's 5 people!

What happened? We need our whipping boy!

patrick said...

17' Macbook Pro 2.16 duo core processor, 2 gb ram - $1500
Reply to: sale-452721949@craigslist.org
Date: 2007-10-18, 10:49AM PDT


1500.00 obo gets you all of this, best apple laptop made
17 inch Macbook Pro

2.16 intel core duo processor
2 Gb 667 Mhz ram
Mac OS X version 10.4.10
plus tons of macbook pro features like garage band, photobooth, the isight camera, all standard with the macbook pro

had this pc for 8 months, times are getting tough, selling to pay my house payment, i'm asking 1500.00 or best offer, serious buyers only contact me 916 - 225 - 6973 -Anthony

Gwynster said...

Let's hope Anthony wasn't holding any financials today - ouch!

The Dow was looking like that sales volume graph.

Gwynster said...

This a must read of us in the central Valley
http://calculatedrisk.blogspot.com/2007/10/wachovia-conference-call-comments.html

"Much of the increase in non-performing loans and the losses are on loans in certain California markets that have experienced fairly steep declines in prices. Our delinquency call centers report that the primary reasons for borrowers struggling to pay are three fold. First is reduction of income or underemployment. Second is the assumption of additional debt from lenders other than Wachovia and thereby changing the credit profile from the origination of the loan. And third unemployment."

Diggin Deeper said...

Dollar index dropped to 77.5 overnight. 2 years ago it was at 120. 80 was resistance for the longest time. Where's "Easy Al" when you need him most...(sarcasm off)

Diggin Deeper said...
This comment has been removed by the author.
Diggin Deeper said...

I read the Wachovia report and it was quite revealing about their CDO losses. One day you've got moody rated AAA subprime paper and within 30 days you've lost close to $300 Million. I'll bet the search is on for the kid who did the calculus on that bond series. There's not one bank that's reported to date that hasn't had a problem with this junk. And we're only getting what they're willing to report this quarter.

Gwynster said...

For me, it was the underemployment and unemployment ratings coming out of the call centers. Those numbers are showing in our gov-released data. yet.

sf jack said...

Great charts - showing 2004 prices, today, for everyone!

Affordability... a look back at what happened "last time" as the mortgage payments changed over time for a median priced house:

1990-1995

Sacramento $1,031 $665 -35.5
All California $1,308 $942 -28.0

35% lower in Sacramento as a result of Fed rate lowering plus house price depreciation!

See:

http://www.karevoll.com/AA1996MOR01.shtm

Or:

http://tinyurl.com/3xzdkb

Diggin Deeper said...

I've got a question. If you default on your mortgage and it forecloses, are you still on the hook for the debt under some structured repayment plan? If you bankrupt does that change anything?

Gwynster said...

BK does not dismiss tax, alimony, or student loan commitments.

Foreclose or S/S, you are still on the hook for the 1099 "windfall".

In my opinion, foreclosure just gets you pick when you want to loose the house and allows to get on this your life faster.

Jacob said...

I am definitely starting to see some big drops now in Lincoln.

I have been watching 70087540 and over the past 2 weeks it has dropped $100k. Now it is $275k and comes out to $96 sq. ft.

If it only had a bigger yard I would seriously be considering buying right now.

norcaljeff said...

happy, finally some of you are seeing the light, i've been saying this since day one and no one has backed me til now, welcome to the reality club :)

Cmyst said...

Jacob-
Have you seen the lot on 70087540? Is there any lot at all?
Cause that is unbelievable. They have dropped that house like it's HOT from 450k in August to 275k now. Almost a 3000 sq/ft house, 3 car+ garage, 5 bed/3 bath. Un-frakking-believable.

Jacob said...

Yea, if you look at the satelite view you can see there isn't much of a lot. The house size is great, it where was more room in the lot I would actually be taking a tour.

Fortunately there isn't so I have an excuse not to look.

I have my settings at ziprealty for 200k-375k. About 6 months ago I had it set to 450k (out of the range I want to spend, but there wasnt much in my range). Now there are close to 100 in my range.

Anyway I saw this one at $375k at the top of my range, then bang, bang $100k drop in 9 days.

When some of these no yard homes drop to $250 then I think the ones I want will be in my range. Right now they are still hanging out around $450k.

I want at least .2 acres, .25 would be better. If I am going to take on years of debt I'm gonna get what I want so I can be happy with it for years to come.

But the price drop is really encouraging. :)