Monday, May 19, 2008

DataQuick: Sacramento Home Sales Up YoY as Price Decline Hits New Record

From the Sacramento Bee:

In Sacramento County, sales of new and existing homes totaled 1,961 in April, the highest since Sept. 2006, according to DataQuick. The April sales tally was 26.3 percent higher than April 2007 -- the first time that year-over-year sales in the county have posted a gain since March 2005, DataQuick reported.
...
Prices have rapidly dropped with heavily discounted, bank-owned homes accounting for a majority of purchases in the eight-county capital region. That means the lower end of the housing market is fueling much of the surge. Median sales prices -- where half the homes sell for more and half for less -- are down to Feb. 2003 levels in Sacramento County. The county's median sales price in April fell to $232,000 -- down 32 percent from a year ago [the steepest decline yet] and 40 percent off its Aug. 2005, high of $387,000.
Jim Wasserman has the breakdown by county here [xls].

From the Sacramento Business Journal:
After failing to reach an agreement with Umpqua Bank on a delinquent $26.9 million loan, Stephen Des Jardins' Diamond Creek Partners Ltd. has filed for bankruptcy reorganization to avoid foreclosure, becoming the third large developer in the region to take that step.
From the Sacramento Business Journal:
D.R. Horton Inc., Greater Sacramento's biggest homebuilder just two years ago, this week abruptly scaled back staffing in its Rancho Cordova office that serves as the Sacramento division headquarters. A three-person crew will run the office that once housed dozens of workers, according to several industry sources.
...
The move caught the industry off guard. "To lose them, it's a blow to the industry here," said Lori McGuire, founder of McGuire Research Inc. of Sacramento. "No one was expecting this, but I don't believe anyone is surprised by it."

23 comments:

paranoid renter said...

>>>>>
A three-person crew will run the office that once housed dozens of workers, according to several industry sources.
>>>>>

Wow. Just like the good old days of the tech bust!

BTW, I am on zip realty and have put an alert for homes/condos that fall within the specs of what I'm looking for. Almost nothing has come on the market in the last few weeks, and almost all of the inventory is REO. This really is one weird market.

The tech bust was swift and the cleanup took a good 2-3 years before we hit bottom in 2003. With real estate it looks like the cycle is going to be much longer. 3 years and we are still seeing sudden deaths.

Patient Renter said...

40% eh? I'll drink to that.

Diggin Deeper said...

Dead cat bounce or are we begining to put in a sustainable bottom? For me it would take another three months of confirmation that sales are rising along with prices that are at least leveling off. Given that there's another wave of foreclosures coming in the 3rd/4th Qtr, maybe there's another leg down and then again, maybe not. The numbers driving the median down are all the homes that have taken significant price hits already. As someone put it earlier, you've got to close on a home before you can register a median price increase/decline.

Sales are up today as median prices continue to fall...but for how long is real question? The lower end of appears to have taken most of the damage and I question how much more that segment will absorb. Imho, the higher end will have to make a significant contribution pricewise from here, to move the median all that much.

We'll soon see.....

Buying Time said...

I'm with you DD....I think we are getting close to fundamentals for many of the lower price ranges....the REO we have an offer on would be cheaper than rent on a monthly payment basis.

The big question in my mind....how far will we overshoot with all the distressed inventory still in the pipeline?

In terms of dead cat bounce, I'm a little nervous demand may dry up again...almost everyone I know who wanted to buy a home, is doing so this month it seems.

Diggin Deeper said...

Buying Time....

Overshooting the market is a real possibility, but usually those are panic stricken events that provide a short window of opportunity that quickly corrects to the current market. There are buyers and sellers destined to buy at the top and sell at the bottom...I don't even believe that it creates enough volume to make much difference.

My wife showed me a nice home in Natomas that returned the market over the weekend. It was bankowned, had been the market for nearly a year, and the bank relisted at about $98 per sq ft, a huge discount off its high. My wife called on it to find that it already had three offers....Was it a good deal?

We're beginning to see the banks really get down in the dirt on their pricing...only to have buyers mark these homes up to what is perceived as today's true value...We'll see if that home sells at or below $100 per sq ft. I kind of doubt it...I'm thinking more in the $112 to $115 range...

norcaljeff said...

If things are so good, why are builders and lenders backing out of the market and laying off people?

Let's talk apples and oranges folks. Last year there weren't really any short sales, foreclosures, or repos. This year there are a ton now and things look better now, on paper, than last April. People were buying Enron and Bear Sterns at 50% off, what happened to those people after getting in at a "bargain price?" Don't get suckered in.

Perfect Storm said...

If things are so good, why are builders and lenders backing out of the market and laying off people?

Exactly and why does Congress want a $300 billion bailout if the market is making a rebound, because it is just a bunch of bullshxx, this market is going to keep on tanking.

Lots of people are moving away from Sacramento.

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

paranoid renter said...

>>>>>
Lots of people are moving away from Sacramento.
>>>>>

Would appreciate any pointers to data on that. Around Roseville/Rocklin things look like they're still going strong. Lots of traffic, fancy new cars, etc. One wouldn't think we were in a slowdown yet. Perhaps it's an affluent community so there may be people moving in with mom & dad which actually increases the population!

Diggin Deeper said...

I really believe the 50% is possible having breached 40% up to this point. Where I deviate is where the rest of the mark down will come from.
The addtitional 10% from here is a bit deceiving in that it would require the current median price of $232,000 to fall an addtional 18% from here to bring it in at about $190K. Just an opinion ...while the $500-750K homes have been dropping fast, it will take more from this segment and then a big fallout of the higher end to bring the median down to 50% off level. There may be a slight mark down left in today's sub $300K segment but I doubt it will be enough to make much difference from here...unless the economy really goes into the dumpster.

I'm keying on pricing during the 3rd and 4th qtr of this year. We'll have seen two foreclosure waves hit and this third wave will land during a time we should get a true picture on the overall economy...

Perfect Storm said...

Sacramento unemployment rose to 6.5%, a year ago it was 5%. My work had 40 applicants for one crappy $14 hour admin job, we used to get five.

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

smf said...

The low end is doing relatively well...but appearances can be misleading.

As noted on this blog before, we have about the same percentage of speculative buyers now as during the height of the bubble.

These people are not willing landlords, since they expect appreciation to give them a hefty return in but a few years.

I still meet plenty of people who believe that 2005 prices will be here soon.

Couple that with the well known excess rental supply and you see that many of these current buyers are setting themselves up for near future trouble.

head.attached said...

I don't really find YoY helpful. Where can I get the latest sales volumes and prices, comparing them to peak?

Patient Renter said...

Exactly and why does Congress want a $300 billion bailout if the market is making a rebound

Preach!

No offense guys, but I don't think we're quite there (bottom) yet. It's funny to me that some long time "bubbleheads" are seeing a bottom around the corner, while at the same time many of the mainstream analysts who ignored the bubble are now estimating that the trouble is only halfway over. Quite the role reversal.

As noted on this blog before, we have about the same percentage of speculative buyers now as during the height of the bubble.

This statement alone should be enough for us to all know that we're nowhere close to the bottom. Market tops and bottoms are made by sentiment. A bottom cannot occur until everyone thinks that real estate is cursed, including investors. Obviously we're not there yet.

I know that the median is already off 40%+, but as we've talked about, certain areas are only down 20% or so. I really do expect losses across the board (in desirable and undesirable areas) to level out.

HOUSE2008 said...

My 2 cents. HEY. What happend to the cent key on the keyboard? I swear that I used to see one. Am I dating myself :) Eh, kinda like the 13 channels on a T.V.

Annnnnyhow, I've cautioned my friends to wait till Jan/Feb to buy a new home. But a n exception to that are the forclosed homes that are coming on the market. Bottom? Eh. I'm submitting offers now for the REO's in the Brideway Lakes development of West Sacramento as some of them are in the $110 sq ft range & one in particular had many upgrade to boot. IMHO one shouldn't get to greedy waiting for the bottom.

When looking at a home that's 3150 sq ft, Berber carpets, Tile entry/hall & in kitchen, Bosch stainless appliances, shutters/blinds ect, you have to ask yourself ok, let's wait for the bottom but by the time you put all those upgrades into a new home your now surpassing the forclosed price! Use your head. You'll know a good deal when you see one. Don't get greedy.
Also the GOOD homes are getting multiple offers. The junks stay on the markets forever.

Sold in '05 said...

It seems that the banks are listing the properties well below market to draw in multiple offers. Even so, $10-20k over asking seems to be enough to get the contract. So if it was listed 20% below market and then ultimately sells for 10% below market, it is still a major hit to the overall value all surrounding houses. Let's not forget that the entire inventory that is now changing hands is causing the comparables to be hammered. The next time the bank has a house it needs to move it will check the comps, see that other banks have dumped invenotry in the area and then have to price it even lower to get it to go. That's why larger and nicer homes are coming on the market at ever lower prices. Yes things are selling but each transaction sets firm comps that will make every subsequent appraisal trend downward. Soon the memories of high flying days of 2005 will be buried under a mountain of new comps. Go dead cat! Go!

As for Mr. Paranoid... If you don't think things are getting bad in Roseville, here are a couple of ugly spots for you to look at and feel better.

Start your tour by checking out the Morgan Greens and Morgan Creek Country Club developments, especially the south end of the development (north of PFE and between Walerga and Cook Riolo). Drive in through the always unmanned guard shack on Cook Riolo and look at the high priced homes that are decaying away as their neighbors watch in horror, hoping they can sell before someone takes a match to the dry landscaping. The ugliest areas are in the older west side overlooking the golf course. This is actually unincorporated Roseville and the Mello Roos and bond taxes area VERY VERY high PLUS HOA of over $150/month. JMC is actually hawking the last of its new inventory on the Morgan Greens side with asking prices between $600k and $700k, while foreclosed versions of the exact same models are selling for $400k just around the corner from the sales office.

The other interesting spot is commercial. On Pleasant Grove, just south of Hwy 65 there is a newish open air mall. It shares its corner with a new Taco Bell, Sonic and Etrade.
At Christmas the little shopping center was pretty much fully occupied with Starbucks as the lead store and at least four other small eateries and even a little pub plus some boutique retail. There was also a wine store and some type of beauty store. This weekend we were in the mood for hot wings and remembered a little place in there called Wing Stop was pretty good. We pulled in and it was gone. Along with every other small store in the place! Starbucks, The Habit (burgers) and a dental office are all that is left. While there check out the shiny new office buildings across the street that are also empty. Roseville residents just have bigger credit limits than some areas, but the strain is starting to show.

Bob said...

@sold in 05: lmao @ your Wing Stop story! I did the same thing a few weeks back. I was also late getting some Kinder's BBQ across the street. AFAIK that's gone too. I guess if I see a restaurant I want to try out in that area of Roseville, I better do it while I know it's still open!

Buying Time said...

We tried to go to the La Dip Fondue restaraunt in Folsom this weekend for date night (a little splurge, since I have heard its rather pricey)...it was closed up too.

EHD had crazy amounts of commercial retail come online in the last year. Very few of the smaller stores are able to make it.

Diggin Deeper said...

I think it's all part of the phantom infrastructure that was required to meet the phantom demand for phantom growth we were seeing...

House2008...I think you're comments are spot on! While banks are getting multiple bids on homes they're dumping onto the market, buyers are only getting today's best price...tomorrow's might or might not be better. It will be interesting to watch the price per sq ft as the banks compete for buyers...

Jennifer said...

Do you all think the April sales numbers are padded? I just saw the Sacbee home sales. It seems as though some homes which have "sold" must be repos because the same ones were never on the MLS and shortly after are listed as bank owned.


Some of the houses I noticed on MLS 6 months to a year ago, they disappeared, came up as sold then back on MLS for a lot less as bank owned.


Thanks in advance for insight!

Jennifer

paranoid renter said...

>>>>
Roseville residents just have bigger credit limits than some areas, but the strain is starting to show.
>>>>

Actually someone who works at a brokerage in Roseville told me they have a huge number of clients with a ton of cash (~500K) just sitting in their accounts. I can't imagine such folks would start to hurt even if we enter a severe recession, for at least 5 years.

I do know that West Roseville (especially the new westpark area) isn't doing all that great, but the area around Galleria is still just rocking, and I hear the city is spending money on improving the downtown area as well.

Patient Renter said...

IMHO one shouldn't get to greedy waiting for the bottom.

I don't agree with your usage of greedy. Wanting to avoid losing money you already posess is not greedy - it's smart.

Do you all think the April sales numbers are padded?

IMO - Not necessarily, but I don't think they're significant either. As far as which metrics will signal a bottom or a turnaround (in prices), sales, believe it or not, are not one of them. It is possible to have massive sales volume while prices are still declining due to other factors, though I don't see massive sales volume (placed in historical context) anytime soon.

norcaljeff said...

Around Roseville/Rocklin things look like they're still going strong. Lots of traffic, fancy new cars, etc.

PR, it's 2008 not 2005, have you stepped outside of your house and looked around in the past 3 years??? Things are way different these days. I don't see waiting lines are Carvers or Ruth's Chris anymore. I don't see as many cars at the mall. Getting a drink at Starbuck's is a piece of cake. The gym is a lot easier to get around in now. What I also see is SUVs, boats, trucks, BMWs and Lexus parked on the sides of roads with for sale signs. I also see empty homes with 2 foot high weeds growing and eviction letters from lawyers posted in the windows. I do see entire neighborhoods like JTS in Lincoln Crossing that are completely abandoned, that's what I see PR so I really don't know what you're talking about. Things ARE different.

Actually someone who works at a brokerage in Roseville told me they have a huge number of clients with a ton of cash (~500K) just sitting in their accounts. I can't imagine such folks would start to hurt even if we enter a severe recession, for at least 5 years.

Rich people aren't stupid, when the economy goes to sh$t they also stop spending. They didn't get rich by spending their money. Look at Toll Brothers, builders of large, high end expensive homes. My buddy bought a ton of their stock for the same reason, "rich people aren't affected and will always buy homes." If you dispute that fact check out their stock chart.

HOUSE2008 said...

I don't agree with your usage of greedy. Wanting to avoid losing money you already posess is not greedy - it's smart

Very true also very subjective. You know greedy & smart when you are near it. I don't have to explain it. Many people talk in terms of dollars here on this blog without much detail. Take for example a house I just bid on & had the bank accepted.

2788 sq ft. Nickle handles t/o, crown moldings everywhere, stone tile, wood floors, moen faucets, Beam central vaccume, GE Gold appliances, Puron A/C, Two tone paint, surround sound t/o, ect. For the most part loaded. For 310K. Now if one were to look at JUST the sq ft I would even expect this home to drop another maybe 35K. From my perspective the "hard landing" it took from it's original sale price of 586K is done. If my math is right a near 45% drop. The 35K drop is relativly a "soft" landing. Do I wait for another 5-10 more drop in price? NO! I suspect within 5-7 years I'll recover or even maybe surpass the price I'll have paid for it. But after looking at MANY, MANY, MANY, foreclosed homes I'll tell you I've only found two worthy of a bid.

There's many homes in the neighboorhood that are plain vanilla w/o any upgrades going for 40K more! Just trying to keep it all in perspective.