Friday, March 14, 2008

"Approaching Bottom in Sacramento" or More "Wishful Thinking"?

From the Sacramento Bee:

[T]here's no doubt the steep drop in home values – median prices in Sacramento County are almost 28 percent below last year's figures – and relatively low interest rates have sparked interest. [DataQuick's Andrew] LePage said investor buys accounted for 18.6 percent of February closings in Sacramento County. That's up significantly from 12.7 percent in November and December. [The high for investor buys was May 2004 when they accounted for 25 percent of sales.]
...
Overall, sales remained weak, though real estate broker Tom Zipp of Citrus Heights said Thursday that rising investor activity "traditionally signals the bottom part of the market."
DQ stats by county (All Homes & Existing SFH/Condos/New Homes)
DQ stats by zip code

From the SacBee's Home Front blog:
I heard 17 months ago at a local builders conference that the eyes of the nation were on Sacramento and Washington D.C., seeking signs that the first markets into the tank would be the first to lead the way out. That turned out to be wishful thinking. Nine months ago again I heard Sacramento-area home builders say we were already scraping along the bottom. That, too, was a little premature. Now again there is a lot of buzz in the real estate industry that we're approaching bottom in Sacramento. Maybe we are.
From the Sacramento Bee:
If you see a stretch limousine cruising your Placer County neighborhood Saturday, it won't be for prom night. It will be one of the first limo foreclosure tours in the United States, prowling Rocklin, Roseville and Lincoln.
From the Sacramento Business Journal:
Two of Sacramento's top builders have unloaded 250 acres approved for new homes in Rancho Cordova for 16 cents on the dollar -- the first major land sell-off in the capital area since housing sales collapsed last year. The buyers are Ron Alvarado and Charles Somers, land developers themselves and partners in a large janitorial and building maintenance company. They bought the property last month from Pulte Homes and Centex Homes at a steeply discounted price of $8 million, according to multiple real estate sources who spoke about the deal on condition of anonymity.
...
At the height of the local housing boom, $8 million would have fetched less than 20 acres of land approved for new homes as prices had escalated to $600,000 an acre in some areas. Builders and developers are still waiting for a new benchmark on what land is worth in today's economy. The buyers in this deal, Alvarado and Somers, paid $32,000 an acre.
From the Sacramento Business Journal:
SAFE Credit Union has "assumed the worst" after enduring a horrible fourth quarter, moving a hefty $21 million to its reserves for loan losses this year with the dismal economy and the hard-hit housing market. The aggressive additions to reserves pushed the area's second-largest locally based credit union to a $5 million loss for 2007. And the credit union plans to add $1 million to its reserves every month of this year. The credit union experienced a rapid deterioration of consumer loans in the fourth quarter, said Henry Wirz, chief executive officer of SAFE. "It was a very sudden change."
...
What was surprising was how many of the borrowers had excellent credit when they applied for credit, he said. "They are prime borrowers, yet in our portfolio they are becoming a higher portion of delinquencies."

16 comments:

anon1137 said...

Did anyone find the Feb DQ stats by zip??

Tyrone said...

ncua.gov has Safe listed as 'Well Capitalized'. Perhaps not for long.

alba said...

I've got some acorns stashed in that SAFE! NCUA gaurantee or not, gotta go tell the cfo to move those acorns!

Perfect Storm said...

Bottom yeah right these losers realtors keep calling bottom faster than a fat guy can down a cheeseburger.

Were right on track for a 50% decline by 2009.

Perfect Storm said...

Nice 80% decline on what appears to be improved land in Rancho Cordova. If you invested in land in Rancho Cordova in the last few years you are screwed. If you bought trust deeds for land in Rancho, or through other investment vehicles you are screwed. You lost all your money.

Were are right on track for a 50% decline by 2009.

Jacob said...

more than 50%, hell we'll hit 50% by the end of this year.

Maybe 75% decline by 2011.

bubblemachine said...

The Sacramento median price has been falling at an almost constant rate of $10,000 per month for the last six months. If this trend were to continue for another 25 months, the Sacramento median price would be ZERO.

Obviously, at some point, the negative slope of the median price curve will start to flatten out, but it seems to me that a 50% loss from the peak is a real possibility.

And how about the economics guru who is predicting that the country will be in a DEPRESSION by the end of 2008? What will the median price be then? LOL

Sippn said...

PS - its approved, unimproved land ("acres approved")..still raw acreage. RC won't let them proceed w/o other improvements completed.... nice way to move the target RC, I'd guess 1/2 of the bath the builders took on the land sale was due to cost increases (increased requirements) by RC.

"Hey how about an interchange? how bout land for my new city hall?" Just like Elk Grove.

alba said...

Placer county has had a significant bump in NOD this month. New listings seem to be going up in Rocklin. The next wave of inventory is right around the corner.

watchingthebubble said...

Alba,

Say it ain't so! My husband and I have been eyeing Rocklin as our first preference, Roseville as our second. We're renting in Elk Grove now, but I'm concerned whether we'll just be buying into another Elk Grove if we buy in Rocklin or Roseville. Any bets/wisdom as to whether these areas will hold their value better than Elk Grove?

Wadin' In said...

Alba,

Where are you seeing a significant bump in NOD's for Placer County. I track this area closely and I am seeing significantly DECREASED NOD activity (compared to 3rd & 4th Qtr 2007). Short sales are increasing somewhat, though.

WtB,

South Placer County will hold up much better than anywhere in South Sacramento/Elk Grove. In 1990-1995, it was one of the few areas where the homebuilders saw continued sales strength. That being said, a lot of South Placer is way overbuilt. There are some pretty good deals there on FC's and SS's now.

The FB's from years past still don't get it though. They were all drunk with the funny money. Check out MLS # 70119904, listed for $739,000. Some poor FB paid $808,000 for it 12 months ago. Countrywide lent them 90% of the purchase price (more idiotic moves).

Guess what? That home sold for $568,000 in 2001. And today, I can find you the same model for $450,000 about 10 miles away....with better upgrades and an open space view! 21% BELOW the 2001 early bubblette price!

Which price would you pay today? $739,000, or $450,000 for a New Century foreclosure? For $289,000 in savings, you can do a lot of upgrades with this slow labor pool. It does not take a rocket scientist to see the opportunities in this market.

Sippn said...

Wadin - 10 miles? thats light years in real estate location.

Its a JTS home, a commmodity that varies in price significantly depending on where it is.

One just sold there last week for about the same price/size. Its one of the least expensive 4000 sf homes available in the region (east rsvl).

Of course you can buy it for less in Rancho Cordova or Elk Grove or Antelope, but its location driven by schools, local amenities, proximity to other higher end stuff (here, these homes are the bottom end, in the places mentioned above, the top end)

OH and it faces a large open space.

OH, just saw its Eureka School District... people pay premiums measured in 6 figures there.

alba said...

Value is a relative term. It just goes up and down with different timing (subprime versus prime; maybe not the same degree, but similar). There are plenty of folks waiting to sell, as well as buy in this area; some for looming omninous financial reasons. I just saw a house go on the market yesterday, where the owners delayed a year, hoping to rebound from a lost job in housing. Think that's a strategic sale?

wadin' - You may be correct, as I don't bother keeping track of big numbers. Although, March 13th was an epic day in NOD for Placer.

alba said...

Watching/Listening to Paulson is the key to the direction we are going. He made the rounds this morning on the talk shows.

"I've got great confidence in our financial market, our financial institutions. Our markets are resilient and flexible. Our institutions, our investment banks are strong," Paulson said in an interview on Fox News Sunday, the first of three scheduled interviews.

Later, in an interview on ABC's This Week program, Paulson said the financial system was more fragile than he would like.

"Can we outlaw the forces of gravity? How much can the government do?" he asked.

Later, in an interview on ABC's This Week program, Paulson said the financial system was more fragile than he would like.
But he quickly added: "I am convinced they [our financial institutions] are going to come out of this situation very strong."

By Greg Robb, MarketWatch
Last update: 11:41 a.m. EDT March 16, 2008

Brace yourself. Its going to be a wild ride this week.

alba said...

I don't how much better (if at all)Rocklin will hold up than anywhere else in this region. I've seen some disasters already, and some quick sells (very nice homes). I suggest not watching all of the homes as an indicator, just ones you're willing to buy. Location, location, location means something, especially at the bottom end of a cycle. Even in this area, there's some...homes you just can't give away! MLS #: 70117218 70112705

alba said...

Bear Stearns sells for $2. They closed at $30 on Friday! And were at $57 1 week ago. $8B down to $239M. Think that can't happen in RE? Asia tanking right now. Dollar dropping.