Thursday, February 07, 2008

Sacramento Real Estate Prices: Cliff Diving

Some January price statistics for Sacramento County via the Sacramento Real Estate blog:

  • Median: -27.5% YoY
  • Average: -28.4% YoY
  • Price per square foot: -27% YoY
From the Stockton Record:
    A second major foreclosed-home auction will be coming to Stockton next week, with about 85 Stockton-area houses going up for sale at the San Joaquin County Fairgrounds.
    ...
    "The sellers are motivated, but they're not going to just dump the properties on the market," company spokesman Joe Joffrion said.
    ...
    Jerry Abbott, president and co-owner of Coldwell Banker Grupe, said the real estate community looks upon foreclosure auctions as a good way to help clear out some of the foreclosure properties that continue to dominate the sales market. About 70 percent of current sales are foreclosure properties, he said.
    Agent Bubble is reporting that 50% of Sacramento listings are either short sales or foreclosures. The Sacramento Real Estate blog says 67% of all sales in January fell into those two categories, compared to 7% a year ago.

    From the Wall Street Journal:
    Sales of large commercial buildings have dropped nationally, but the downswing in north-central New Jersey has been particularly chilly. In the fourth quarter, the region's overall sales of office, retail, warehouse and apartment properties valued at $5 million or more fell 75% from the year-earlier quarter to $811 million. The region tied with the metropolitan areas of Sacramento, Calif., and Kansas City, Mo., for the largest percentage drop of 50 major U.S. markets, according to Real Capital Analytics Inc., New York, a real-estate research firm.
    From the Modesto Bee:
    Knowing that Stanislaus County has one of the highest foreclosure rates in the country, I find it disturbing to read that Modesto planning commissioners voted 4-3 to approve the Tivoli project. I wonder if they are reading the same newspaper or watching the same TV reports on the housing market as I am. The proposal calls...[for] more than 1,300 new homes, 800 condos and duplexes, and 1,000 apartments.

    Granted, these proposed homes will not be completed for some time, as stated by the investors, but when hearing that the current market crisis is expected to last for at least another couple of years, I cannot help but ask: Who will buy all these new homes? Considering the market is not expected to bounce back for quite some time, I fear that just as we begin to see a light at the end of the tunnel and finally begin to clear a large inventory of existing homes, the emergence of so many new homes will cause us to backslide.
    From KCRA:
    The housing market may be in a freefall but that didn't stop Rocklin Voters from giving the green light to the [Clover Valley] development of more than 500 homes.

    26 comments:

    Cow_tipping said...

    When you find yourself in a hole ... stop digging ??? no ... OK. Then, rent a back hoe and dig faster and wider and deeper than ever. OK.
    Cool.
    Cow_tipping.

    HOUSE2008 said...

    Whoohoo? I was getting scared there for a sec. Thought there wouldn't be any more homes made. Nada, Zilch. Phew! All this talk of low inventory made me jittery. I was ready to go out & hug a home & claim it real fast like. Mine mine mine! ;)

    KEEEEEP BUILDING BABY!

    Sippn said...

    Call that hole a "canyon view"


    500 homes in Clover Valley - I hear its higher end. Probably be 1-2 years before finished homes available and it will still be here in the next cycle.

    Folks... its the 10,000 home projects that impact supply and demand. Nothing affordable gets built when your saving lots of trees and stuff....

    Sippn said...

    Heard a good rumor about investors in busses touring REOs.

    roger said...

    I thought the voters in Rocklin approved the Clover Valley development to stick it to the developer. I thought I heard that the developer was hoping it would fail so he could walk away.

    HOUSE2008 said...

    I thought I heard that the developer was hoping it would fail so he could walk away.
    So instead of throwing the developer a life jacket the people threw him an anchor? HA!

    alba said...

    The private owners of the Clover Valley land sold it, or got some cash from an Indian tribe. With that cash, they reduced the number of homes in the plan. The city council voted to greenlight the project, but the oldtimers near the entrance of the area protested. At this point, there is only one way into the area, but will probably include at least one additional route to Sierra College Road. Its a beautiful little valley; quite natural for housing. I'd want to live there, except for having to drive by the old farts on the way in. Anybody willing to build 500 higher-end homes, generating property tax, especially at this time, should have the locals bending over backwards.

    Sippn said...

    Maybe the developer was playing them for the contrarian vote! Ha.

    G Spot1 said...

    Anyone know how the bill passed by Congress is going to affect jumbo mortgages in this region? How is the new limit being set? Is it statewide, or regional, or something else? Thanks.

    Sippn said...

    loan limits max will be in the $700s, but set @ 125% of median price - when that is measured is key, but that should make investors less jittery.

    Hey Lander, I really expect the median to drop more as the market below the median is really heating up right now and most REOs are getting 97-100% of asking price, multiple offers, cash buyers as well as first time buyers with 100% financing.

    Even heard of investor buses moving through neighborhoods.

    Seeing some short sales that are priced below market (to generate multi offers) getting sold for more than asking.

    Are we at the bottom? Who knows, but we'll be close for the next year and the question is... will today's price with today's interest rate produce a smaller payment than a 2009 price with 2009 interest rates?

    Sac_Sol said...

    Sippn, you are smoking crack. Seriously.

    sacramentia said...

    I've been outbid on 2 homes since the beginning of the year, and I am offering breakeven at realistic rents. What sippn is saying is inline with what I'm seeing.

    Seriously, does anyone on this board actually go out and look at houses?

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

    Sippn

    "Are we at the bottom? Who knows, but we'll be close for the next year and the question is... will today's price with today's interest rate produce a smaller payment than a 2009 price with 2009 interest rates?"

    The interest rate question, as it relates to affordability has merit. Low rates alone will entice buying activity as more home for lower payments will be a key driver. Also watch the 1031 market as these investors have got to be thinking mana is dropping from heaven with rates where they are today. Many have long term profits, plenty of depreciation against older properties, and it makes sense to rollover into quality properties with distressed pricing.

    Jacob said...

    "Are we at the bottom? Who knows, but we'll be close for the next year and the question is... will today's price with today's interest rate produce a smaller payment than a 2009 price with 2009 interest rates?"

    I truly hope we get the the bottom sooner rather than later. Seeing some homes in Roseville around $250k that would have easily been $500k or more at the peak.

    Lots of foreclosures each month though and until that slows down we will be a ways off from the bottom. Lots of resets this year also.

    09 might be good, that is what I am hoping, if the resets and the bulk of the foreclosures can happen in 08 then second half of 09 might be the time for me.

    wrong moves said...

    "Seriously, does anyone on this board actually go out and look at houses?"

    Yes, and it is frustrating. There have only been 3 houses (out of hundreds) realistically in our reach and interesting to us. All 3 were foreclosures and all had "Pending" on them within 3 days.

    alba said...

    Today, we're at the bottom!
    Tomorrow we'll be at the bottom.
    Next week, Next month, and probably next year, we'll be at the bottom. It won't look like you're at the bottom of Half Dome; more like in the middle of a corn field in Iowa...flat as ever for as far as the eye can see, in all directions.

    Husmanen said...

    I have put two bids in on houses lately at market prices for an 'investor' note NOTE a 'speculator'. Neither were accepted and neither house has sold.

    Real Estate agents on both homes said they had multiple offers that were much higher than my bid. Still no pending sales though. I even called on one home and the Agent took the house inactive and then put it back out a week later.

    There are a lot of shady characters out there in the RE field and this market lends itself to their survival, caveat empor!

    Husmanen said...

    And market prices I mean as if you could rent out the home with zero profit, the minimum, cost to rent ratio.

    Market prices are not the current asking prices. A house sold today, actual market price that instant, is worth considerably less in 30 days.

    smf said...

    "Even heard of investor buses moving through neighborhoods."

    These investors are still part of the problem. You need actual end users of houses to remove inventory. A lot of the foreclosures buyers are expecting a fat return on their investments once prices come back up.

    What happens when these investors realize that prices are NOT coming back up? Then the inventory problem will get worse.

    "Seriously, does anyone on this board actually go out and look at houses?"

    All the time. And with the tools available now, it is really easy to figure out what is occurring.

    SacramentoCrash said...

    2010 - 2011

    Gotta burn through all the resets left on the market from 2007 and 2008.


    There is close to 1 1/2 - two years of inventory on market in bubble areas like FloodTomas (Del Paso Heights - West) and the lower end areas in The Grove (South Sacramento - South) and in the East Franklin area.

    Those areas are higher than 50% REO by the way. AgentBubble's 50% is an overall figure. Bubble areas are higher.

    SacramentoCrash said...

    welcome to the real world ..people just don't care who they screw...

    check this out.... I thought I heard it all until this.

    Jingle Mail and now "Becoming Illegal"

    http://money.cnn.com/2008/02/06/real_estate/walking_away/index.htm?postversion=2008020610

    Becoming Illegal

    (Actual letter from an Iowa resident and sent to his senator)
    The Honorable Tom Harkin
    731 Hart Senate Office Building
    Phone (202) 224 3254
    Washington DC 20510

    Dear Senator Harkin:

    As a native Iowan and excellent customer of the Internal Revenue
    Service, I am writing to ask for your assistance. I have contacted the Department of Homeland Security in an effort to determine the process for becoming an illegal alien and they referred me to you.

    My primary reason for wishing to change my status from US Citizen to
    illegal alien stems from the bill which was recently passed by the
    Senate and for which you voted. If my understanding of this bill's
    provisions is accurate, as an illegal alien who has been in the United States for five years, all I need to do to become a citizen is to pay a $2,000 fine and income taxes for three of the last five years. I know a good deal when I see one and I am anxious to get the process started
    before everyone figures it out.

    Simply put, those of us who have been here legally have had to pay taxes every year so I'm excited about the prospect of avoiding two years of
    taxes in return for paying a $2,000 fine. Is there any way that I can
    apply to be illegal retroactively?

    This would yield an excellent result for me and my family because we paid heavy taxes in 2004 and 2005.

    Additionally, as an illegal alien I could begin using the local emergency room as my primary health care provider. Once I have stopped
    paying premiums for medical insurance, my accountant figures I could save almost $10,000 a year.

    Another benefit in gaining illegal status would be that my daughter
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    If you would provide me with an outline of the process to become illegal retroactively if possible) and copies of the necessary forms, I would be most appreciative.

    Thank you for your assistance.
    Your Loyal Constituent,
    Donald Ruppert
    Burlington, IA

    Get your Forms (NOW)!! Call your Internal Revenue Service
    1-800-289-1040.

    Please pass this onto your friends so they can save on this great
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    smf said...

    "There is close to 1 1/2 - two years of inventory on market in bubble areas like FloodTomas (Del Paso Heights - West) and the lower end areas in The Grove (South Sacramento - South) and in the East Franklin area."

    ALL of Sacramento (basically the world) was/is a bubble area!!

    The low end starts the process, since these are the one that cannot hold on for longer. But it doesn't mean that the high end is immune.

    I have been checking out mansions throughout the entire area, and was surprised to find out the large quantity of speculative high end homes recently (after 2003) built.

    Sippn said...

    By mid p.m. Tom Sullivan was talking about the same - homes highly discounted from 2005/6 coupled with discounted loan rates coupled with masses running away from homes = deals.

    Beware of # months inventory calculations, part of the calculation is total inventory, but the other part is # monthly sales - if monthly sales pops up a little, # months drops several months overnight.

    SMF - the inner core of SAc has remained around 4-7 months inventory.

    With FED rates down almost 2% in the past month, resets will be a little milder - I noticed some of my interest bills(bus)are less by about 15-20%. That will buy a Big Mac or 2.

    Patient Renter said...

    sacramento crash: that letter is pretty interesting. to bad it's probably sitting in the "deleted items" of senator harkin's e-mailbox right now.

    "By mid p.m. Tom Sullivan was talking about the same"

    I can't listen to that guy. I remember crystal clear when in 2005/2006 he was shilling about it being a great time to buy. Someone I know who was a big Sullivan follower (a financial advisor no less) took him up on his advice to buy in early 2006.

    Thebigmook said...

    Sacramentia, and Sippin, I show homes every week that are 50% reduced from the 2005 sale prices.

    They get multiple offers and overbids. Houses that are only 20% discounted sit there for months on end. So, yes some of the ones that are only discounted by 20% do have another 30% to go. However you can't take 30% off after it has already been cut in half. The math on that is that some say it should be a 65% discount. Well many multiple offers on every half price house indicates that there is a bottom. Half off. YOU Can't have 2/3rds off except for a few marijuana houses.
    http://www.trulia.com/voices/profile/Real_Estate_Pro-Roseville_California_Placer_County_Sacramento_Metro_Zip_95747_Diamond_Creek_Neighborhood-67144/