Monday, July 14, 2008

'Promises, Promises, Promises'

From the Sacramento Business Journal:

[Leslie] Appleton-Young’s job includes overseeing the association’s analysis of the statewide housing market and industry trends. Realtors want to know what’s ahead, so sometimes she has to make predictions. Usually, she’s right. [LOL!] Sometimes, she’s not.

Last fall, she estimated that median home prices in California would drop 4 percent in 2008. Recently, she revised her estimate to 8 percent to 10 percent. [The median has dropped 19.1% since December.]
...
[Appleton-Young:] What jumped out at me, in looking at the statistics, was that the percentage of first-time buyers was low, 26 percent of all home buyers. That’s the lowest number since 1979, and it’s a testament to the affordability hurdles that first-timers face.
Jim Wasserman has the latest TrendGraphix figures. The SAR numbers for June are available here.

From the Sacramento Bee:
The bailout of mortgage firms Freddie Mac and Fannie Mae will help stabilize the wobbly recovery in Sacramento's real estate market, analysts said Monday. But the collapse of big mortgage lender IndyMac Bancorp Inc. last week continued to shake Wall Street, depressing the prices of other bank stocks, and showed that many perils remain.
From the Sacramento Business Journal:
“The government sector seems to be strong when we need it to be and the private sector is strong when it needs to be,” said Bob Burris, deputy director at the Sacramento Area Commerce and Trade Organization. “It’s kind of a hedge in difficult times.”
...
Nobody is discounting the concern about 10 percent across-the-board cuts in state government, but there appears to be consensus that actual job losses will not be significant. “Our thought is the state employee reduction will largely be absorbed through elimination of vacant positions or retirements,” said Michael Cohen, director of state administration for the Legislative Analyst’s Office.
From the Sacramento Business Journal:
Steven Cochrane: Prices peaked in late ’05, though the plunge really started about a year ago. The trouble is there’s no end in sight yet. It’s going to get worse before it gets better.
...
I’m fairly certain when the budget is passed, we will start to see some cutbacks in state employment. Sacramento will be the hardest hit — Sacramento and any other area that has a high concentration of state government.
...
Suzanne O’Keefe: The market is maybe reaching a bottom.
...
Sanjay Varshney: The foreclosure rates are still high. Yes, there are a lot of foreclosures that have been picked up by buyers, but that certainly hasn’t had an impact on declining values of existing homes.
...
Sacramento is much more vulnerable. The reason is that Sacramento does not have the paychecks to support the housing market that evolved in the last five years...Really, we need to go back to ... when a good 3,000-square-foot home was only $250,000.
From the Appeal Democrat:
Patti Clary, director of YouthBuild for the Yuba County Office of Education, said the $165,000 three-bedroom, two-bath house on Pine Street — on the market for a year — would have been snapped up during the boom days of California home-buying. "These were a real deal," Clary said. "Now they're not."

The YouthBuild houses still represent a good buy, excellent construction and a program that provides 18-to-24- year-olds training in building and other skills, said board of education President Sidney Muck..."The question still looms whether it's overpriced," [Mercy Housing vice president Greg] Sparks said. "I don't think that they're way out there."
From the Sacramento Bee:
A number of small school districts in the foothills of Placer County are considering a merger to combat years of dwindling enrollment and shrinking funds from the state....Placer Union High School District initiated a preliminary study of district reorganization by the Placer County Office of Education to see how merging school districts would improve the schools' financing.
...
The additional cash flow might entice districts hit hard by a struggling housing market, an older population and fewer students to keep schools open.
From the Stockton Record:
The dramatic decrease in this area's population growth may be some of the best news possible for our cities. Census Bureau figures released last week show that from 2000 to 2007, Stockton's population grew roughly 17 percent, to 287,245. That makes Stockton the 62nd-largest U.S. city.

But much more interesting, perhaps, is that population growth slowed considerably starting in 2005, coinciding with the start of the real estate market meltdown. The collapse of the overheated housing market throughout California, but especially in San Joaquin County, with its proximity to the Bay Area, means this area has grown increasingly less attractive to Bay Area residents looking to escape stratospheric housing prices.
From the Modesto Bee:
When Joe Melendrez bought his home in Bridle Ridge, a master-planned community on Oakdale's southwest edge, the promise of a park and friendly neighbors were crucial. "I assumed I'd look out the window to a park and could cross the street to visit my neighbors," he said. "I'm still waiting for both."

Rather than a lush park, with kids playing and families enjoying picnics, Melendrez looks out over a field of knee-high dead weeds and construction debris..."Promises, promises, promises" Melendrez said. "The only activity around here is when they dump more concrete in the field that was supposed to be a park."
...
At least two builders in Bridle Ridge declared bankruptcy, city manager Steve Hallam said....
LA Land: Waiting in line: That was then... This is now.

10 comments:

Patient Renter said...

The government sector seems to be strong when we need it to be

Hmm, $14 billion deficit? I guess we don't need the government sector to be strong right now.

My translation: The government is as strong as the endless bond measures we attempt to float will allow it to be.

"It’s kind of a hedge in difficult times."

Yep, those bonds are similar to how a credit card or HELOC is a hedge on difficult times for a FB.

The reason is that Sacramento does not have the paychecks to support the housing market that evolved in the last five years...Really, we need to go back to ... when a good 3,000-square-foot home was only $250,000.

Whoa! I think someone has been reading the blog :) Victory?

Jacob said...

When we get to that price I will be buying.

Last fall, she estimated that median home prices in California would drop 4 percent in 2008. Recently, she revised her estimate to 8 percent to 10 percent. [The median has dropped 19.1% since December.]

Maybe I read this wrong. We are down 19.1% but this "expert" thinks we will be down 8-10%? So we reached the bottom and will start appreciating in value already? How else do we get from 19.1 to 10 by the end of the year.

norcaljeff said...

Maybe these market experts ought to just throw darts at a wall to come up with these numbers rather than try and use the glass is half full approach.

Diggin Deeper said...

"Mortgage bailout will help calm local housing market"

Ah...no it won't. No one on the street expected Fannie/Freddie to be so deep in trouble in the first place. If anything it will sharpen the focus of the public. They're beginning to ask some important questions about the health of their banks, brokerage houses, and the general health of the country.

This RE market goes nowhere if people lose confidence in the big picture. They stop buying (retail sales show a paltry .1 rise today), they start paying more to exist (today reported PPI up 9.2% YOY, the highest since 1981), and buying real estate becomes a discretionary item that has to be afforded taking everything else into consideration first.

David said...

"Rather than a lush park, with kids playing and families enjoying picnics, Melendrez looks out over a field of knee-high dead weeds and construction debris..."Promises, promises, promises"

I've said it before but the only way to know what you are buying into is to buy in an established neighborhood. You can't believe the fancy sign with the happy smiling people in it, until you actually see the smiling happy people in the neighborhood. So many people bought into this myth that new equaled better. Sad, but you don't buy a car without looking at it, why would you do that when buying into a neighborhood?

norcaljeff said...

Established neighborhoods can collapse as well. No market is immune. These are the same "experts" who said Bear Sterns would never fail.

Wadin' In said...

Sales up, inventory down??

Housing Tracker shows inventory up, prices down....

http://www.housingtracker.net/askingprices/metro/California/Sacramento-Arden-Arcade-Roseville/

Also, the Sac Bee article states"...The peak was Aug. 2007 at 16,262. (The peak during the '90s downtown was a little over 13,000 in April 1992)...."

The 1992 peak was inventory. Peak foreclosures did not occur until 1995, three years later. So can we expect peak foreclosures three years after Aug. 2007?

That makes it likely the best buys will be available in the fall or winter of 2010.

Lander said...

Wadin' in -

What is your source for the 1995 claim?

NODs (in Sac County) peaked in Q1 1997 and foreclosures peaked in Q2 1997, at least per DataQuick. That's also around the time prices bottomed out.

Wadin' In said...

Lander, I was going off memory. I stand corrected at 1997. That would be a full 7 years after the 1990 peak. Wow, this could take a decade to unwind this time....

Cow_tipping said...

Sanjay Varshney: ... when a good 3,000-square-foot home was only $250,000.


Oh yea Sanjay, you sure like 6% of that quarter mill dont ya ...
You do know that in most of the rest of the country a 3000 sqft home can be had for under 150K right, and guess what, the most of the rest of the country is doing better job wise, tax wise, quality of life wise and congestion wise than illegal immigrant riddled Central CA right. At 1/2 of your target price its will still be over priced, and at 6%, your commission is over a 1000% over priced. Idiot.
Cool.
Cow_tipping.