Tuesday, October 14, 2008

Perfect Storm - Sacramento Median 50% Off Peak, Drops Below 200K

We're right on track for a 50% decline by 2009 2008.




Source: Sacramento Association of Realtors

20 comments:

Lander said...

50% decline by 2009.
Perfect Storm

Monday, December 18, 2006 4:05:00 PM

Jacob said...

Who woulda thought that perfect storm was being overly optimistic...

I have been thinking 75% might be possible. though I think the median may actually level off or increase as the higher end starts to capitulate.

Still, 50%. Wow!

What I find even more amazing is that at $200k the homes are still historically over prices. I think the median income is around $50 and nobody has that 20% anymore so $200k is still about $50k too much.

Cmyst said...

Congrats, Perfect Storm. Your tagline, which has been mocked frequently, was spot on.

Max said...

Rock rock, on, PS!

When we cracked $200K on the way up, it was front page news. Not so on the way down.

Bakersfield Bubble said...

Perfect Storm - you were far too optomistic. :)

Diggin Deeper said...

A great call PS...you remained on message all the way to this point.

Median price falling, Treasury rates rising along with mortgage rates, recession winding down jobs in the area, state govt needs cash...This thing's far from over...I'd like to know what PS thinks we'll see beyond 2009..

Buying Time said...

Hey how bout that....crude oil is now 50% off as well.

According to Reuters:
"A $5 drop to $73.63 on Wednesday would put crude oil futures 50 percent below their record peak of $147.27 on July 11."

anon1137 said...

I thought PS was nuts back in 2006, but now I have a much different appreciation of the term median than I did back then. The median is meaningless unless you're interested in buying the median. What matters is prices in your neighborhood, or the neighborhood where you want to buy.

Case in point, The Midtown/East Sac report: as of August, prices are approx. 15% off the peak price, measured by either median or $/ft2. Prices have been nearly flat this year, except for a small bump up in the spring. A sale in 95819 in June for $2.45M nearly matched the previous high price - since I've been tracking this data, 2003 - of $2.5M set in April 2006. In other words, the bottom isn't even in sight yet.

Patient Renter said...

Congrats PS!

How is the avg. price per square foot doing?

mopar777 said...

Right on Perfect Storm!
I wish you could have seen Greg Paquin get red in the face when I told him we'd be off 30% in a couple years. That was at a party in Folsom in October 2006.
It was about that time that we were all being called "bedwetters" by the RE hacks commenting on Wasserman's stories.

Husmanen said...

Impressive. About two years ago I thought that 50% would be where we would end up. Not so now, too many bigger issues stemming from the same situation.

So what is the next prediction? Another 10%, 20% or 30% from current levels or 60%, 70% from peak? Love to hear your opinion.

blue horizon said...

Perfect Storm certainly wins the Crystal Ball award. What do you think will happen now, Perfect Storm? I'm another who'd like to hear your opinion.

Tyrone said...

Famous last lines...

March 2006: Prices rose again in February. Darn, aren’t they supposed to keep falling? Isn’t Sacramento Land(ing) begging for us to call them price drops instead of price corrections?
And come to think of it, even when dropping that was a pretty smooth curve compared to a bursting bubble, wasn’t it? And now it’s on the rise again. Awww… and just when Sacramento Landing was reporting Central Valley “Bubble Appears to be Bursting”, we had to go screw it up with a price increase.


Who is it???

Jacob said...

lol, and now they keep screwing up the bottom with more price declines, dang...

Perfect Storm said...

Thanks for all the nice comments. Please beware of realtors bearing gifts.

mopar777 said...

The realtor who lives across the street from me has been really friendly lately (compared to the mid 2000's.) She always sends letters and brings business cards, begging for referrals and now has neighborly get-togethers.
Her husband is a loan shark who hit the big time in the bubble years. He's been unemployed for about a year now. Remarkable behavior compared to how arrogant these folks were just three years ago.

Buying Time said...

I think my 401k is now 50% off too. Sigh.

Nice job PS....it's amazing how much things have changed in the last couple years. I remember making small talk with a guy at the airport last year. He insisted that RE would never go down....

smf said...

Where some prices may end at bottom is hard to say for a simple reason:

In many new developments, the amount of 'investors' was so high that virtual ghost towns were created. Would you want to live in a development where you have no idea how it would look like in 5 years?

Another one:

The more than idiotic location of many developments.

There are soooo many golf course communities around, in often terrible and far away locations.

Or you have a development located in the crappiest of areas with bad school districts.

To hard to predict where some will end up looking like.

At the end, some of these areas may become real ghost towns.

Cmyst said...

tyrone --

Your quote doesn't sound like Sippn'; there was another RE bull that used to aggravate me and it sounds like that one, but for the life of me I can't recall the name.

Prices up here in ED Co. have stayed up more than in Sac Co., but I suspect that is going to change dramatically in the next year, especially in more rural areas where the median income does not warrant the price tag. Ultimately, we probably need to view each neighborhood as a little microcosm and weigh the median's accordingly. I don't know where you can get neighborhood data on such things, as I don't trust Zillow on that scale, but obviously the "median" in Land Park or East Sac is going to be a lot higher than most of South Sac and Natomas. The sheer volume of new construction in areas like Roseville, Lincoln and Elk Grove will tend to drive house prices down there even if the median incomes are higher there.
You have to weight it all with your criteria, whatever it might be. But it's still helpful in knowing where we're at in the curve to have a good idea what the median income is for the neighborhood you're interested in.

Lander said...

How is the avg. price per square foot doing?

-48.4% from peak per TrendGraphix.