Sunday, August 03, 2008

Rejected Transplants

From the Sacramento Bee:

Three years ago this month, median sales prices peaked in Sacramento County. The result: The end of the housing boom. Across three years, the damage has piled up. In 2006, the spring rebound that area real estate agents were predicting failed to materialize...A discussion at year's end with some real estate professionals had a common thread: Foreclosures probably wouldn't get out of control.
Attached to this article is a nice chart showing the decline from peak in eight area counties.

From Bloomberg:
Home prices fell in 23 of 25 U.S. metropolitan areas in May from a year earlier [according to Radar Logic]...Sacramento had the biggest price drop, falling 31 percent from May 2007....The number of transactions rose 27.7 percent in Sacramento and 13 percent in San Diego from a year earlier and fell in the 23 other areas surveyed.
From the Sacramento Business Journal:
National homebuilder Ryland Homes will end more than 20 years of building in Northern California and gradually wind down operations in the region, including Sacramento.
From the Modesto Bee:
Could real estate woes persuade residents to abandon the Northern San Joaquin Valley? Bay Area transplants -- nicknamed BATs -- swooped into the valley en masse during the 2000-to-2005 building boom...At least one industry analyst suspects the valley's foreclosed families are headed back to the Bay Area, especially those who had been commuters.
...
"We saw similar (population shifts) happen in the 1990s, but nothing close to this level," [Steve] Dutra [VP for John Burns Real Estate Consulting based in Sacramento] said...."The data won't show it yet, but we know (the population is shifting) from our clients' reports," Dutra said. He noted that his clients are builders who monitor where people who are shopping for housing are coming from.
...
Another indicator of population movement is public school enrollment. This is summer vacation for most schools, but some Stanislaus County districts already are noticing shrinking enrollments.
From the Sacramento Bee
28 percent of Sacramento households earn more than $75,000 (the higher income range); 54 percent earn less than $50,000 a year (the lower income range); and 18 percent earn $50,000 to $74,999 (the middle income range).

The market is not providing housing affordable to folks in the lower and middle income ranges. The city's most recent housing update estimates that only 15 percent of households in 2007 could afford the median-priced home of $300,000. Home prices are dropping as the real estate bubble has burst, but even home prices of $220,000 remain unaffordable for the bulk of Sacramento households.

This mismatch between housing prices and incomes is a relatively new development for the Sacramento market. In 1997, 65 percent of Sacramento area households could afford a median-priced home.
From the Sacramento Bee
In another marker on the economic misery scale, a 1.1 million-square-foot mall on tap for southern Sacramento County has stalled, officials confirmed Thursday. The Elk Grove Promenade, an open-air regional mall that repeatedly has pushed back an opening date, is among a number of retail projects nationally that General Growth Properties Inc. of Chicago will delay, several City Council members said.
...
City Councilwoman Sophia Scherman...expressed fear that conditions would deteriorate at the mall, where parking lots are poured and future retail spaces are rising. "I don't care how it's done," Scherman said. "I want security there. I don't want it to become a blight."
...
Mayor Gary Davis...said, Elk Grove's economic climate will rally. "It's just a matter of timing. It's going to turn back around," Davis said. "It's not like in this downturn the place is going to hell in a handbasket. … That's not happening."
From Sacramento Bee:
Already burdened with its worst unemployment in 12 years, the Sacramento area figures to suffer even more following Gov. Arnold Schwarzenegger's decision Thursday to lay off 10,300 temporary and part-time employees and cut most full-time workers' salaries to minimum wage. Though the cutbacks are expected to be temporary, the news sent a chill through a metro area that has one of the worst foreclosure rates in the country.
...
With the real estate market just starting to get healthy, John Arvanitis, president of Sunrise Vista Mortgage Corp. in Citrus Heights, said lenders may think twice about approving a mortgage for a state worker affected by the governor's order. "If you're an underwriter and you see someone who's listed as one of those casualties who's gotten laid off or had their salary reduced indefinitely, that's going to be significant," Arvanitis said.

2 comments:

norcaljeff said...

I think the Bee stole your chart idea :)

sacramentia said...

"28 percent of Sacramento households earn more than $75,000 (the higher income range); 54 percent earn less than $50,000 a year (the lower income range); and 18 percent earn $50,000 to $74,999 (the middle income range)."

The large tract homes with high taxes, utilities, small lots, and a long commute are just screwed until the bay area equity migration resumes.