Thursday, March 13, 2008

DataQuick: Sacramento's Median Falls 27.7%; Sales Down 7.7%

From the Sacramento Bee:

It's only one month's data, and it came from a winter month that's considered unreliable for trend spotting. But February sales of new and existing homes in Sacramento County -- the largest sector of the region's real estate market -- were just 7.7 percent fewer than in February 2007.
...
Sacramento County had a median sales price of $257,000 in February. That was down 27.7 percent from a year ago.
From the Sacramento Bee:
Attorneys Wendy Dezzani and Anthony Asebedo have noticed the number of inquiries rise. The two bankruptcy lawyers, who practice at Sacramento's Meegan, Hanschu & Kassenbrock, said real estate and construction-related small businesses are among the hardest hit. "We're seeing the ripple effect from the (housing) downturn, but I think it's broader than that," said Dezzani, a past bankruptcy section president at the Sacramento County Bar Association. "With discretionary income down, you're seeing business decline."
From the Central Valley Business Times:
The Stockton metro area in the Central Valley has the second highest metro foreclosure rate in the nation, with one in every 87 households receiving a foreclosure filing in February. Other California metro areas in the top 10 are Modesto at No. 3, Merced at No. 4, Riverside-San Bernardino at No. 5, Bakersfield at No. 7, Vallejo-Fairfield at No. 8 and Sacramento at No. 9.

20 comments:

Diggin Deeper said...

After sitting at a quite a few open houses with my wife recently, I was quite surprised to see as much buyer activity as I have. That doesn't mean people are buying but they are looking.

A recent development in bank owned property strategy appears to be putting homes on the market at "below" market value and having the buying public bid it up to higher levels. My wife is seeing this occur at several properties of late.

One example....a 3000+ sq ft home in Lincoln hit the market at about $315,000 (owned by Wells Fargo)and buyers lined up placing 16 bids against it. Last I heard the highest bid was in the $370,000 range, and it was probably going into escrow.

Interesting approach as it creates an auction atomosphere with multiple bids coming in. Anyone else out there seeing this type of an approach.

Buying Time said...

If a home is "priced right" I still see them go pending in a matter of days.

Last week I saw one go pending before the agent even had the pictures online.

Typically I see this if they are priced around 15% below other comps. In Serrano, and Stonbriar, I have noticed that once one goes pending at this level, others quickly follow suit listing at this price.

Diggin Deeper said...

Apprarently the banks will only negotiate with the two highest bids and in effect give them a "best and final" bidding oppty before they settle on a potential buyer.

If this type of activity continues and becomes widespread, we could shortly see a bottom in pricing albeit maybe a temporary one. It's a bottom's up approach that really does attemp to find a buying threshold.

This could be exactly what today's buyers have been looking for...a "name your price" market that sets pricing based on buyer dictated levels.

I like the concept!!

siflsockpuppet said...

I looked at a "pot house" in Laguna West. It needed new carpet, vinyl, appliances, paint, landscaping, and a few other repairs. According to my agent, it was very clean for a pot house, but overpriced. It went to pending sale within a couple of days of coming on the market.

I wonder how much pent up demand there is, and if that will be exhausted while the foreclosure rate is still accelerating? Is this the dead cat bounce?

Gwynster said...

Blessed are the knife catchers.....

Sippn said...

Considering how many pot house busts there have been lately, there is probably lots of demand for new pot houses....

Ya know, one thing about the REOs coming on the market, most, at least over 1/2 had someone living in them, so REOs are not creating new housing supply, and on the other hand, builders have cut their supply by over 50% in the past 2 years...

If growth returns, and it should now that housing is cheap again, the current supply will get absorbed easily within a year or 2.

Gwynster said...

Sippin, that is a mighty big IF you are clinging to.

Gordon Gekko said...

This activity reminds me of the NASDAQ early in 2001. The market had dropped 30%, but everyone was still talking about stocks. There was still talk of a "rebound" every week. We'll know we are at a bottom when RE news falls off the front page. Until then, stay away from the knife.

smf said...

the current supply will get absorbed easily within a year or 2.

*chuckle*

Last time Miami had a condo boom, it took 6 years to clear out the excess inventory.

And with housing having been overbuilt by anywhere (depending on location) from 30-70%, it will take years, if not more, to clear it all up.

Remember, no home builder makes money by NOT building. They will continue building at a lower pace for a while.

The market had dropped 30%, but everyone was still talking about stocks. There was still talk of a "rebound" every week.

And by the time the 'true' bottom was reached, the market was down 75%. And almost 8 years later, it is still only halfway to its high mark.

wrong moves said...

I also saw the low list price bit out in 12 Bridges. 304 Gannet Ct listed for 369.9K. My agent said there were multiple bids well above 400 the second day on the market.

Additionally, in the past two weeks we have looked at about 15 properties and at 6 of them, other agents with buyers showed up before we left. I have not experienced that before now.

wrong moves said...

Sippn said "one thing about the REOs coming on the market, most, at least over 1/2 had someone living in them".

I've not seen even one Repo occupied. Anybody else?

Sippn said...

I'm sorry, I meant someone formerly lived in them. So that means they are increasing demand on rentals or other empty homes as they get move out.... they are not dissapearing.

Dot the "I"s and cross the "T"s

Comparing this to 3rd tier equity market - NASDAQ is a reach - investment money moves from less risky investments, located in NASDAQ to maybe, the S&P 500, DJI, Treasuries, something more solid, but its still in the market pushing up treasuries and bluechips.

In housing, its 1st a basic need, so there is a base level of investment that is required.

Regarding Miami - really? you want to compare a vacation/retirement market with little growth controls to here? Miami has nearly 120,000 homes and condos for sale there, about 8 times Sacramento. THeir inventory has climbed from a little over 80,000 units every month for the past 24 months, likely due to started condo towers that you can't stop once started. Hmmm. Whats that, about 200 Saca towers? And we were whining about 1 or 2? SO visionary.

Hey KJ, where do I send my donation?

Diggin Deeper said...

Anytime a home in a good neighborhood, drops into the $100 per sq ft price range, I'm willing to look...even if those cases are isolated and only show up briefly. Some of those same properties were selling at $220 and above at the high. I guess the words descriptions are desperation, capitulation, and maybe even panic...all signs that a contrarian buyer is looking for.

If a seller or bank wants to break the market at 15%-20% below current levels, it's no wonder there are multiple offers coming in on a property.

Does anyone really believe that we're going to see 70-80% price reductions from the peak?. Let's see, using 75% off the median high at $389,000 will get you the keys for $97,250. Or you can move up into a McMansion that once sold for $750,000 and pick that one up for a mere $187,500.

It's kind of hard for me to buy those numbers...

smf said...

Sippn:

The issue still remains, you have a lot of inventory for sale. And there was more housing growth than population growth in the metro area. Housing excess does not get absorbed very quickly.

And from what I am told by realtors, about 50% of the houses that are selling are to 'investors' still. We have ways to go.

DD -

Using the .com bubble, I was more inferring that those who thought 30% was 'cheap' lost out big time when the downside was 75%. Of course, a lot lost everything when companies went bankrupt.

As to mansions going for cheap, I don't really know. All I have seen is that the inventory of expensive homes seems to be full of speculators. Including my uncle. And...he tells me that the bank will only do 65% LTV on his spec mansion. And he IS bonafide millionaire who built it with cash on hand.

There are just waaaay to many expensive and large homes out there.

Diggin Deeper said...

smf...

Since you're in the market and trying to put together a deal on your new found home, you've got an immediate stake in where market pricing ends up. If it goes down to some ridiculous level it won't matter how long you live in the home, it will never likely pencil out.

I'm using price per sq ft because it's fairly easy to do the math when a seller dumps onto the market at a very saleable level (15-20% below current). Doesn't mean that buyer's won't emotionally bid up beyond today's price nor does it mean that today's price won't deteriorate a bit further. Just that it doesn't appear reasonable to think that we're all going to get the keys handed to us at some "blue light" special deep discount that really doesn't add up. I've said before, if prices do drop to those levels, then something serious has happened to the overall economy.

As hard as I try I can't see those numbers happening....

alba said...

Watch Bear Stearns go to $0 over the weekend. Then watch Lehman Bros. Look back a few days ago when the Carlyle Capitol Group imploded while being over 30 to 1 leveraged. The margin calls have just begun.

There's a legitimate pent-up demand for buying. And there's a legitimate need for many additional homeowners to sell, sell, sell. The balance has not started to even out. We have just begun to cycle downward as a US economy. The drop in housing was a smaller part of the cause, and will end up being the last part to heal, along with the descretionary spending of the consumer. Hang on!

siflsockpuppet said...

4519 Stuben Way in EG is a 4/2 1910sf REO offered for $199,900 ($104.66 per sf). Pictures from the previous sale ($435k in 7/05) show a number of upgrades. I wonder if this one will get multiple bids, or if it's been trashed enough to deserve that low price?

Diggin Deeper said...

"I wonder if this one will get multiple bids, or if it's been trashed enough to deserve that low price?"

That's exactly the tactics banks are using to pump up offers. If it's half way decent it probably goes higher. If not, there's apparently financing programs on the market that allow new homeowners money to fix the problems on REO's. From what I'm gettin you can finance up to $35K for fixit problems.

And I'm also hearing that FHA is lowering their credit qualifying standards for obtaining new loans.

One way or the other banks are going to entice people to buy...right or wrong, future prices notwithstanding.

watchingthebubble said...

Lander,

To paraphrase Bill Withers, "Ain't no sunshine when you're gone . . . only darkness every day . . . " Glad you're back.

You know, I can't seem to get beyond the fact that salaries in the Sac metro area just don't seem to justify $400,000 houses. And I've been to real estate auctions where the auction company prices the homes at ridiculous prices, only to have some shills bid them up by $100K in one fell swoop. And then the knifecatchers pile on, bidding the houses up even higher.

Nah, as much as I'd love to be settled in a home of my own, I think I'll stick to my 4 bd/3 bath 2000+ sq ft rental for awhile. Sorry, but I don't think we've reached the bottom yet (and don't let area teachers get laid off -- then it's really going to get ugly), and I just refuse to be the real estate industry's b****. I'd rather pay a premium over the real bottom than pay a higher premium off of a dead cat bounce.

smf said...

Just that it doesn't appear reasonable to think that we're all going to get the keys handed to us at some "blue light" special deep discount that really doesn't add up.

I never said that all houses would be relatively cheap again. The median home price is still past $200K, and that $200K is still NOT affordable to the median household. That is the only metric in this whacked out market that we can still rely on.

Again, regardless of price, the issue is oversupply. Even in our search, in the $500-600K range, I was surprised and shocked to see how many of these houses we are looking at are already upside down. And this is in a good area. How much longer can some of these people hang on?

After all, with large homes come large monthly maintenance costs besides the mortgage payment. Even those large homes that we can now afford are off our list, as we don't want to incur the large maintenance expense that comes with them.

And still the question begs. If you overbuilt by such a large percentage, how do you manufacture the people required to buy those homes?

If you have 20 mansions for 10 wealthy individuals, what happens then?

No one has yet to answer that question.