Thursday, April 03, 2008

Radar Logic: Sacramento Home Prices Fall 28%

From Bloomberg:

Home prices declined in 21 U.S. cities in January, led by Sacramento and Las Vegas, as banks sold foreclosed homes at bargain prices. The price per square foot in Sacramento, the capital of California, dropped 28 percent to $166 from a year earlier, according to a report [pdf] released today by New York-based Radar Logic Inc., a real estate data company.
From the Central Valley Business Times:
One of the Central Valley’s largest community banks, Merced-based Capital Corp of the West, which operates as County Bank, saw its bottom line plunge along with housing values and foreclosed borrowers in 2007. The company says it had a net loss of $3.6 million for the year, compared to a profit of $22.6 million in 2006. It’s the first annual loss in the company’s 30-year history.
...
"The largest factor contributing to the increased provision was the rapid decline in real estate values in California's Central Valley in fourth quarter 2007...." the company says..."The scope and rate of the decline of the real estate market were completely unexpected," says Donald Briggs, Jr., a director of the bank. "No economic forecast predicted its rapid collapse during the fourth quarter of 2007."
From the LA Times:
Wachovia Corp. signaled that it may no longer offer some Californians the controversial "option ARM" mortgages that give borrowers the choice of paying so little that their balances actually rise. In a memo Monday, Wachovia's top California managers told employees that the loans would no longer be offered in 17 California counties where property values have declined the most, including Riverside, San Bernardino and San Diego, plus the Central Valley.
...
If Wachovia cuts back, it could further disrupt distressed housing markets where the recent tightening of credit has compounded the problems caused by easy-money lending earlier this decade. "This product was the last remaining hope for the sub-prime borrower," said broker John Diamond of Bancorp Funding in Chino.
From the Stockton Record:
Five Chinese real estate officials on a three-week, coast-to-coast tour of the United States spent nearly a week visiting Stockton, which they know is the top foreclosure area in this country...The Chinese officials said they were mostly curious about the subprime meltdown in the United States...More than anything else, he said, "they sounded like they wanted to buy some of these foreclosure homes. They thought they were good deals."
CNBC on Stockton's new home market here and here. (hat tip Jeff)

12 comments:

Patient Renter said...

"The scope and rate of the decline of the real estate market were completely unexpected," says Donald Briggs, Jr., a director of the bank. "No economic forecast predicted its rapid collapse during the fourth quarter of 2007."

What a fool. No wonder he lost a ton of money.

The housing bubble and subsequent crash were clearly seen and predicted by certain economists, several years ago. Educate yourself Donald Briggs, Jr.

http://www.cepr.net/index.php/publications/reports/is-there-a-housing-bubble/

Patient Renter said...

Here's another heads up about the housing bubble from the same economist, circa 2003!

http://www.cepr.net/index.php/op-eds-columns/op-eds-columns/who-to-blame-when-the-next-bubble-bursts/

Deflationary Jane said...

Shrinking Granite Bay district looks at opening charter school

'"We moved from (discussing) should we close schools to how will we close schools and make an effective and educationally sound decision," district Superintendent Bob Schultz said to a full house Wednesday at the Granite Bay High School theater.'

Jacob said...

28% yoy, so what does that put us at since peak? 40% off?

Husmanen said...

Jacob, great remark, I was just wondering that myself. Its got to be close to 40% by now.

Also, the market has to stop decreasing so rapidly, before it can decrease slowly, before it can flatten out, before it can increase slowly. The bottom is still not here yet.

bubblemachine said...

According to Sacramento Price Watch, at the end of February the Sacramento County median was down 37.7% from the peak.

What is really interesting is that the median has gone down about $10K per month for the last six months. I am waiting to see if the median lost another $10K in March. If it did, Sacramento County is still in free fall.

AgentBubble said...

I just ran stats comparing May 2005 to March 2008. Here's what I discovered:

May 2005
Avg $/SF - $252
Med $/SF - $244

March 2008
Avg $/SF - $154
Med $/SF - $144

The median $/SF is down 41% from May 2005.

Deflationary Jane said...

Wow - thanks Agent

Now about those March 80,000 lost jobs.....

Patient Renter said...

41%, jeez. Max is right about birfurcation setting in. Obviously 41% isn't reflected in many areas.

sacramentia said...

Gwynster Jane - have you seen the Sacramento jobs numbers yet? How bad are they locally?

AgentBubble said...

I made a mistake! I should have compared to September 2005...Here are the revised numbers:

September 2005
Avg $/SF - $271
Med $/SF - $252

March 2008
Avg $/SF - $154
Med $/SF - $144

The median $/SF is down 42.9% from peak.

Jacob said...

41%, jeez. Max is right about birfurcation setting in. Obviously 41% isn't reflected in many areas.

Makes sense, nice areas hold up better while the crap areas get destroyed. But the nice areas will not escape completely.

I see homes in Roseville / Rocklin that sold in the $400ks at peak and are getting no bites now around $250k.