"Another Dubious Honor" - DataQuick: Sacramento Median Falls Below $200,000
From the Sacramento Bee:
October brought another dubious honor to the Sacramento County real estate market, as median home prices for new and existing homes combined dipped below $200,000 for the first time since April 2002. The symbolic drop -- to $195,000 -- came exactly one year after the county's median sales price for the same category fell below $300,000, according to MDA DataQuick statistics released today...[The] median price is 34.9 percent below Oct. 2007 and 49.6 percent below its Aug. 2005 high of $387,000.From News10:
...
The Sacramento Association of Realtors reported that 73 percent of October sales in Sacramento County and the city of West Sacramento involved bank repos. Alan Wagner, SAR president said the pattern will last "well into the future" because many vacant bank-owned homes have yet to come to market.
Many leasing agents can't understand why there are so many apartment units for rent across Solano County. "We expected to see a high occupancy rate due to the foreclosure crisis, but it never happened," said Katie Evans, a leasing agent at Riverstone Apartments in Suisun City.From the AP (via News10):
...
"Many people might be moving away or losing jobs or moving in with friends or family membvers to save cash," said Gloria Daskalakis at Dover Park Apartments in Fairfield.
High foreclosure rates and employee costs are forcing the Northern California city of Rio Vista to consider bankruptcy...[City Manager Hector] De La Rosa says Rio Vista could shut down within the next week....
17 comments:
Yesterday I saw the median priced home in the US was just at $200,000. Sacramento is below that??? Amazing!!! I never would have thought that US median prices would ever drop below California median prices in highly poplulated areas...
Reminds me of that old Bob Dylan Song....
"The times they are a changin"
In more ways than real estate....
median home prices for new and existing homes combined dipped below $200,000
I'll drink to that. Hopefully the suburbs all get hit soon too. I really do want to buy, honest!
Just like I said - the rental market is flooded and people are doubling up and tripling up to keep expenses as low as possible.
It's a great time to be a renter with a pristine record and cash >; )
Again, people were building rentals for those that were 'priced out' of the market.
Couple that with 40% speculation rate, and too many wrongly figured population growth.
And add the excess housing being bought as 'investments' for renting out, or those waiting for the market to recover, and you get...
...a perfect storm!
DD, the world has already changed, just too few know it yet.
Smf...hopefully, these future lifestyle changes won't be too abrupt...with so many having lost 50% of their lifetime savings, the shift has been pretty dramatic so far. That will affect prices and the overall RE market here. Less money, lower price, more inventory, lower price, job losses, lower price...a spiral that continues to feed on itself and deliver lower prices to a public that now needs it...as one author I've read coined it..."a negative feedback loop"
The interesting thing to note is that redemption requests for hedge funds in the 4th qtr are now in. This will shake out many of these funds by the end of the year. It ought to at least begin to level the playing field in equities as forced redemptions begin to subside. I can't imagine there are that many holdouts, who've already lost so much money, hanging on to these funds...but that's only a guess at best.
Getting a kick out of Congress trying to rein in King Henry. He's just not going to move on the automaker bailout debacle.
We're really getting to see the mettle of our leadership right now. It's rather comical to watch them play catch-up, always seeming to be a step too slow in reacting to what's needed today.
No worries...we are madly trying to put deflation back in the bottle...And given the rise in money supply over just the last 3 months, that's probably will happen...at a cost.
DD, that Dylan song has a permentant spot on my ipod along with Ohio, For What It's Worth, Backlash Blues, What's Going On, For What It's Worth, etc.
IMO, nothing they try is going to work without wage inflation.
This is because without an increase in money coming into households, either through significant wage increases or more individuals working per household, there is just nothing more that can be spent. They may still try to inflate out of the downturn but the best they can achieve is stagflation at this point and that a pretty dubious best.
Time to go find my old Joe Hill playlist >; )
Yea, w/o more wages how can you get inflation. Some things may go up, like food, but that just takes more money from families and they have less to spend on homes and cars.
Gravity has a firm grip on the housing market and there isn't anything that the government can do to keep prices high. Oh, they want to cause that is their tax revenue, but it won't happen.
And who says someone that got a $500k 100% loan for a home that is now woth $250k wants to be "saved".
"but the best they can achieve is stagflation at this point and that a pretty dubious best."
I'm with you DJ...here's why I think that stagflation is quite possible.
The Federal Reserve was created in 1913. It took the Fed from 1913to September 2008 (95 years) for the Fed to increase its capital assets to $1 Trillion. It took less than 2 months, from September '08 to November '08, for those assets to double to over $2 Trillion. And we're not done yet. Some are projecting we'll reach $3 Trillion by yearend...
I doubt my wages will be able to afford the same goods and services when there's two or three times the dollars competing for those goods and services.
I could be wrong but I think we're on the wrong side of the money equation...
What am I missing?
"w/o more wages how can you get inflation."
Good question...if purchasing power declines will people demand higher wages?...will they get them in today's environment??? They did in the early 80's when there was a fairly significant recession. It wasn't uncommon to see increases of 7-10% per year during that high inflation period.
Businesses operate with a core employee base that cannot be breached beyond certain levels. If you get to keep your job, and you are part of this core group, my guess is you'll paid fairly well with increases each year. Remember these businesses will have pared the dead weight costs out of the overhead...the highest of those costs will have been salaries...If the core group is doing more with less, companies will be more inclined to raise their wages...if for no other reason than to keep the core group intact.
However, Sacramento with it's reliance on government really doesn't apply. With government dependent on public revenues and supporting businesses dependent upon government revenue, I can't imagine there'll be wage increases here in the near future...
"However, Sacramento with it's reliance on government really doesn't apply. With government dependent on public revenues and supporting businesses dependent upon government revenue, I can't imagine there'll be wage increases here in the near future..."
Government is not as large a part of Sacramento as people make it out to be. In terms of employment per capita, it is smaller than it has been in many decades. Many government workers are also getting raises. Firefighters, law enforcement/corrections, education, ect all have nice contractual raises coming to them.
Heath care is booming and getting larger every day. Wages in that industry are rocketing higher.
"I could be wrong but I think we're on the wrong side of the money equation...
What am I missing?"
I think you are missing the fact that the increase in money supply is not hitting the streets. With a strong dollar and declining asset/commodity prices, inflation is out of the picture. Also, M1 may be increasing, but banks are not loaning out the money, so no multiplier effect.
In 2010 when the world starts to come out of this recession, look out. Rates will be going sky high to combat inflation.
Ten year treasuries broke 3% last night, the 30 year was at 3.46%. This was for a variety of reasons, but it sure don't point to inflation. 2.75% on the 10's by Martin Luther King day, then short the heck out it.
"I think you are missing the fact that the increase in money supply is not hitting the streets."
The rank and file have seen very little while the managerial level and above have received some very nice increases. There is a difference between gov workers and GOV staffers and local muni workers. The teachers, police, and especially firefighters were given huge COLA increases beginning in 2000 when the state and munis were fat on tax income from the tech boom. This mirrors what has been happening in the private sector since 2000.
Now those cola agreements are bankrupting local govs and there is lots of push back to either reduce headcounts or wipe out those agreements. The other option which is getting a lot of discussion is to "temporarily" adjust back those raises until things improve. Add required days off into the mix and you have declining wages.
So when you say the money isn't hitting the street, you are on the money.
Firefighters, law enforcement/corrections, education, ect all have nice contractual raises coming to them.
What's a raise when you're laid off/
"With a strong dollar and declining asset/commodity prices, inflation is out of the picture."
Here and now...that appears to be the case. As long as we are deflating, you're point is well taken.
The dollar has been propped up by safe haven buying...and when the liquidation of assets is complete, or when the risk of buying our debt is not worth the interest we're paying, the dollar then trades on fundamentals rather than emotions. How far off that occurs is anybody's guess. Mine would be that it's within 6 months.
Imo, dollar stoking does not support a stronger currency...short, mid, or long term. Nor does the currency strengthen through expanding long term govt debt, a consumer on the ropes, negative balance of trade, or unfunded liabilities...those problems are being added to rather than subtracted from on a daily basis...The dollar must eventually answer to these problems...Who knows .88-.89 on the DXY might be the top...
I agree, commodity prices are coming down because of dollar strength, but again emotions are the weakest of market factors. They're violent but exhaust fairly quickly while cooler heads prevail.
Suggest you try shadowstats.com for M2, M3 data. M1, while a decent guide, doesn't really tell the whole story...
Word PR >; )
PR, I also think dollar strength comes from weakness in other economies. Euro, Pound, Aussie $, ect are dropping faster than our dollar due to even more rapidly lowering of interest rates and faster slowing of their economies. Doesn't mean our dollar is stronger, just that it is not falling as fast, which makes it appear to be strong.
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