No "Rush of Would-Be Buyers from San Jose or Los Angeles"
Monterey Village Getting Shredded - photos & video at the Sacramento Real Statistics blog
From the Sacramento Business Journal:
Sacramento County led Northern California counties in mortgage loan defaults in December, with 2,643 homes sliding into foreclosure, according to data released Friday [by Default Research Inc.]From the Sacramento Bee:
Not so long ago, Sacramento-area home prices were miracles to behold in the eyes of Bay Area and Los Angeles residents. Oh, the wonders here of a sprawling, three-bedroom home for the same price as a tiny, one-bedroom condo there. The allure of lower-priced homes drew plenty of transplants to the Sacramento region earlier this decade. But as housing values began soaring, that affordability began disappearing.From the Modesto Bee:
Well, look again. Those days are coming back. The price gap between the capital region and the Bay Area is widening fast. Ditto for Los Angeles...What's going on? Well, it's not rocket science. Prices here have fallen 25 percent since mid-2005 and are still heading down. Prices in the Bay Area and Los Angeles County have held steady until recently – and they're still rising in Santa Clara County.
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It's not yet clear what this recurring price gap means for the capital's housing market. Many real estate agents say they aren't seeing any rush of would-be buyers from San Jose or Los Angeles.
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It's going to become tougher in the capital region to qualify for most home loans. Effective Jan. 15, Fannie Mae, the government-sponsored entity that buys mortgages from lenders, wants bigger down payments on loans made in "declining markets" like Sacramento. It means even if a national lender can get you a loan with no money down, Fannie Mae is now demanding a 5 percent down payment for loans in this market. If your loan requires 10 percent down, Fannie Mae will wants 15 percent from the borrower.
The Northern San Joaquin Valley's housing market will be one of the very last to turn around in California, a building industry economist predicted Thursday..."It's going to take a very long time for builders to get the confidence to build again" in the Northern San Joaquin Valley, [CBIA's Alan] Nevin said during a telephone news conference.
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In the San Joaquin Valley, from Bakersfield to Stockton, he projects 17,000 homes will be built in 2008, compared with about 15,000 in 2007. That's less than half the 35,000 houses built in 2005 when the valley's building boom peaked. Joe Anfuso, president of Stockton-based Florsheim Homes, said he doubts San Joaquin Valley builders will sell more homes this year than last year. Anfuso listened in on Thursday's news conference, and he said he agreed with Nevin's verbal predictions about housing markets in Stanislaus, San Joaquin and Merced counties being among the last to recover.
6 comments:
What is taking SACBEE so long to post the recent sales data? I think the realtors are lobbying to prevent the info so we can't quanitfy the blood letting!
Yea never trust the bee. Reality is finally setting in, where did all the bulls go? LOL Hope they don't have any sharp objects around.
They're going to build 17,000 houses in the SJ Valley in 2008? Aren't there at least that many sitting around empty with brown lawns and green pools and holes in the kitchen where the dishwasher used to be?
These builders are an odd bunch.
No, Anon1137, builders are just doing what builders do. Some builders use their own cash to build, and can "mothball" a development where houses aren't going to sell for the desired sum. Other builders take construction loans to build the development, and have to build and sell in order to pay off the loans. And some builders who have land purchased a long time ago can still make a profit at reduced prices, since they didn't pay 2002 prices for the building sites.
What builders do:
borrow money - build - go bankrupt - change name
borrow money - build - go bankrupt - change name
borrow money - build - go bankrupt - change name
borrow money - build - go bankrupt - change name
As long as builders keep adding more inventory to what we presently have, we're not likely to come out of this hole anytime soon. Unless, of course, they start pricing these new homes at deep discounts that will support first timers and median income buyers at reasonable multiples to income.
We all know the move-up market is dead. The days of buying on contigency are over. Anyone who buys and then tries to sell their home runs a big time risk of going upsidedown on the transaction.
With the state in as deep a hole as it is, Sacramento faces a net decrease in government jobs in '08. If we go into recession (I believe we're there already) and main street job losses show up, Sacto, imho, will suffer dramatically.
This is a town of politicians, and they add nothing meaningful to our economic base. We're too far away to commute to business zones that are net plus producers of goods and services.
Frankly a pricing reversion to the mean would be a best case scenario if we cannot maintain some form of growth over the next few years.
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