Tuesday, August 26, 2008

"Fear Is In The Air"

From the Associated Press via Forbes:

U.S. home prices fell 4.8 percent in the second quarter compared with a year ago, easily a new record low, according to a government report.
...
Prices in the weakest markets, he said, have receded to late-2005 levels, plummeting by more than 30 percent in two cities: Merced and Stockton, Calif.
According to the government, Sacramento home prices dropped 17.7% over the last year. That compares to a decline of 14.6% during the entire 1990s housing bust.

From Home Front:
I called Kathryn Boyce of Hanley Wood Market Intelligence, who said [Beezer]...has moved to smaller space on Roseville Parkway. With so many fewer staffers in this greatly-cooled market they didn't need the big building anymore. The office is being run now out of Southern California, she said.
From the SF Chronicle (hat tip Anon1137):
Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley, had a more bearish take on Monday's numbers. "It doesn't reflect a recovering housing market; it reflects a broken housing market," he said. "It's a reflection of the fact that foreclosed homes are being liquidated at very low prices."
...
Rosen believes that investors, not actual intended occupants, are buying up many if not most of the distressed properties in the hardest hit areas. That will do little to stabilize the markets in those areas, especially if prices fall further and foreclosures continue to climb, he said.
From the LA Times:
State and federal officials are unable to say how many Section 8 renters have been affected by the wave of foreclosures sweeping the country, but local housing authorities say the number is significant -- and growing. Sacramento County had fewer than a dozen people seeking new Section 8 homes in June because of foreclosures. In July, the number was 100.
From the Sacramento Bee:
Not to be too dramatic about it, but fear is in the air. You don't have to lose your home to understand the woes of the housing market. You don't have to get laid off to see the effects of downsizing on your neighbors and friends. In a country busy doing the fear dance, it can be hard not to wallow in worries yourself. So maybe smart folks stay home, conserve gasoline and make do with leftovers and hand-me-downs. They take care of their families and pinch pennies.

In short, they channel our Depression-era forebears – who, it must be noted, are not shopping at the Roseville Hospice Thrift Store in the numbers they used to, either. "A lot of our customer base are people who don't need anything, but they like to come and browse," says Watson. "A lot of them are Depression generation. They've stopped coming in because they don't yet see an end in sight to our economic problems."

5 comments:

Jacob said...

More of the same, prices in freefall, sales leveling off and holding for now, but 50% or more of those sales are to specuvestors.

Sales may have bottomed, but they are still low when compared to the rapid pace (that we overbuilt to satisfy) of a few years ago. Also if the majority of the investors who are just trying to flip leave the market, sales will drop off even more.

Price declines accellerating. All the places that were "immune" to the housing bust are starting to give.

Alt-A Tsunami still inbound.

Yea, I think now is a good time for non-renters to be afraid.

The banks are starting to realize that their chance to sell these foreclosures at any price is dimishing. So now we see them bidding less than the amount owed at auction, and listing homes well below market to get them off the books.

But the fundamental problem of there not being enough buyers out there to buy all the homes at any price still remains.

smf said...

"Rosen believes that investors, not actual intended occupants, are buying up many if not most of the distressed properties in the hardest hit areas."

'Deja vu all over again'

The inventory problem will not go away till actual occupants go into these homes...

...and since there are more houses than actual living occupants...

'Houston, we have a problem'.

Plus there sales are still distorting the market. How much lower to the bottom would we be if these speculators hadn't purchased?

luca said...

According to the government, Sacramento home prices dropped 17.7% over the last year. That compares to a decline of 14.6% during the entire 1990s housing bust.

Prices dropped 30% since last year and the government thinks we are only down 17.7%

THE GOVERNMENT KNOWS NOTHING - this crisis in the Central Valley is so much worse than the government thinks,,.,.,.UH OH!?

I have 3 familes on my 10 house cul de sac that have alt-a mortgages and are way underwater- I'm sure theres thousands in sac with this problem-

This is a crisis to the highest degree!

ZCqW2Q8doszPMvuXcChpx5Ooj5Hd4BLGryU9g6E- said...

July 2008 year-over-year searches for Sacramento property on Realtor.com jumped up by 65 percent.  Here’s the link that shows that Sacramento ranks higher in comparison to other US metro areas: http://marketing.realtor.com/julysearch/.

Diggin Deeper said...

If we're not there yet, we're getting close to the "blood in the streets" phase of this market. Plenty of vulchers circling the rubble to find the best possible buys. Usually a sign that a bottom is near. We'll see as this market has defied all all logic up to this point.

Talking heads spinning how resilient the economy is right now. Most people will deny that enthusisam as they are being waxed by inflation and a sour job picture locally.

Got to get through the spin to get to the real story...

Neighbors across the street pulled out late last night. Left a house full of furniture, etc. Told the rest of the neighborhood they could have what was left behind. What a mess!