Tuesday, May 20, 2008

'When you put on a super sale, people show up and buy'

From the Sacramento Bee:

[W]ith 12,000-plus "For Sale" signs in the region, the market hasn't yet reached bottom, said ReMax's [Randy] Dunham. At month's end there were 12,606 homes for sale in El Dorado, Placer, Sacramento and Yolo counties, according to Sacramento-based researcher TrendGraphix. The peak in August 2007 was 16,262.
"Borrowers are more cautious about what they can afford," said Michele Dillingham, a senior loan consultant at Sacramento-based Vitek Mortgage. "A lot of people are buying at below what they would qualify for. They saw what happened (with foreclosures) and don't want it to happen to them."
DataQuick stats by county
DataQuick stats by zip (or xls)

From Home Front:
Is this sustainable?

I asked veteran Sacramento real estate Carlos Kozlowski of Coldwell banker and his opinion was: yes. Kozlowski believes there is enough pent-up demand to absorb all the thousands of bank repos still to come on the market this year as rising numbers of people continue to lose their homes to foreclosure.

"Prices are not going up. Prices will stay somewhere about where they are until this inventory is absorbed," he said. Then will come the new wave of buyers: the foreclosure refugees allowed back in the market with new federally-backed mortgages. "People who lost homes a year or two ago will be able to buy in 18 months," he said.
From the Daily Democrat:
Yolo County home sales for April almost equaled those of a year earlier, although prices are still nearly 27 percent below last year's figures.
It's premature to say that April's numbers signaled a potential housing rebound in California, one of the nation's hottest markets during the boom, said DataQuick analyst Andrew LePage. Uncertainties include whether the economy gets stuck in a recession, whether the credit crunch persists, and if foreclosures continue to rise, he said. "I think we're a ways from seeing much of a rebound in home values," he said. "When you put on a super sale, people show up and buy."
From the Appeal Democrat:
Thousands of local residents will receive cuts to their property taxes this summer as a shrinking housing market pulls home prices far below the heights their owners paid in a once white-hot Central Valley market. Though the reductions will return more money to residents, assessors say it will chip away at already-thin police, fire and school budgets in the 2008-09 fiscal year, which starts July 1.
The heaviest blows in Yuba County will be felt in the communities that sprang up or grew quickly in the first half of the decade, according to Brown — especially Plumas Lake, East Linda, the eastern foothills and Wheatland. The Linda Rural Fire District, whose area includes the 5-year-old Plumas Lake, now relies on property taxes for 80 percent of its revenue, he said.

So abrupt is the rollback that Yuba County officials predict a decline in the total value of residential parcels — a county first.


Max said...

"People who lost homes a year or two ago will be able to buy in 18 months," he said.

I'd like to understand his reasoning here. I think 5-7 years is a more likely scenario.

Patient Renter said...

Is this sustainable?

I asked veteran Sacramento real estate Carlos Kozlowski of Coldwell banker

As Dean Baker would say, wouldn't it be nice if the media could find someone to quote who wasn't "surprised" by the "unexpected" housing downturn?

Of course, who can blame Wasserman's choice of "expert" when even the WSJ can't manage to find any experts who weren't "surprised" by the bursting of the housing bubble.

I'd like to understand his reasoning here.

He's counting on massive government loan subsidies via the GSEs. I've heard it's possible to get a GSE loan a mere 2 years after forclosure?

Jacob said...

How many people only qualified for neg am loan products and only with stated income.

If those people had to get a loan based on actual income and a mortgage where they had to pay all the interest and some principal each month, how many would qualify.

So unless banks start freely loaning out money to people that cant pay it back then I dont see how all these people that get foreclosed on will be able to buy again.

And who says they will even want to buy again?

paranoid renter said...

"People who lost homes a year or two ago will be able to buy in 18 months," he said.

Even if they could, would they buy after being burned so badly? Are people really that memoryless???

Diggin Deeper said...

"And who says they will even want to buy again?"

Good point. These people will be too busy financing a tank of gas and groceries for the family...Not long ago, pundits and talking heads believed that $100 oil was a fantasy...I wonder if they'll pull their heads out of their asses when it hits $150.
Frankly, at $100 per barrel, oil is a bargain from here.

Commodity inflation/asset deflation are the real worries. They will punish the RE market here for a long time to come unless fundamental changes occur to combat both at the same time...fat chance!

Imo, prices are going down until paying a mortgage makes more financial sense then paying rent. Once that level is acheived, prices should flatten out. Who knows when that will occur?

Deflationary Jane said...

You used to be able to get a FHA loan after 24 mo out of FC/BK if you had zero delinquencies on your credit report and met all the other criteria. They recently changed that to 3 or 5 yrs, I can't remember which. Calculated Risk covered it a while back.

The dot.com bubble produced a lot of liquidity. Salaries were going up and folks cashed out investments to buy.

The financial landscape now is very different. The markets are extracting that liquidity now - poof! gone! People wanting to jump back in are going to have to drastically pull back on spending for quite a while to save up for the upfront costs. I'm not sure a lot of people can do that now.

Jeremiah said...

From the Home Front article:

"blah blah blah blah, blah blah blah blah blah federally backed mortgages blah blah, blah blah blah."

If we're going to de-facto socialize the risk (taxpayer underwritten home loans), why don't we just call it that, and snip all these clueless, self-interested simians off the fruit tree of mortgage banking?