Friday, December 19, 2008

Ding Dong - DataQuick: Price Drop Exceeds 50% Off Peak; Unemployment Tops 8%



From the Sacramento Bee:

MDA DataQuick said Thursday, the median sale price for a home in Sacramento County dropped to $185,000 last month. That was the lowest level since September 2001 and represented a $10,000 drop in one month. Prices have fallen $105,000, or 36 percent, in a year...The DataQuick numbers show that the median sale price in Sacramento County has fallen by 52 percent from the August 2005 peak of $387,000.
...
In a normal market, when sales are hot at the low end, it filters up to more expensive homes. Someone sells a starter home and then moves up to fancier digs, raising the prices for expensive properties. But when the sellers of low-end homes are mainly banks, there's no such upward pressure on the pricier homes, [DataQuick's Andrew] LePage said.
...
"There's really no better time to buy than right now," [John] Arvanitis...of Sunshine Vista Mortgage Co. in Citrus Heights...said.
Data by county
Data by zip

Related post: Ding Dong - YOY Price Declines Arrive in Sacramento

From the Sacramento Business Journal:
The Sacramento-area’s jobless rate increased to the highest level in almost 15 years, as construction companies continued to cut payroll and a less-than-cheery holiday season created fewer temporary positions in November, according to a report released Friday. The four-county region’s jobless rate increased to 8.1 percent last month, compared to 7.9 percent in October and 5.6 percent in November 2007, according to the state Employment Development Department. It’s the highest rate since 8.4 percent in February 1994.
SacBee: Unemployment by county

More waves...From the Sacramento Bee:
Gov. Arnold Schwarzenegger's administration is telling labor unions that it will order two-day-a-month unpaid furloughs for state employees beginning in February to help the state save cash amid its budget crisis. Bruce Blanning, executive director of the Professional Engineers in California Government, said he received a call this morning from Department of Personnel Administration officials informing the union of the impending executive order...The furloughs would apply to all general fund and special fund employees and amount to about a 10 percent pay cut....The unpaid furloughs would begin in February and continue through June 2010....

DPA officials told Blanning the governor would seek a 10 percent elimination of jobs in the state workforce, which could result in thousands of layoffs.
From the Sacramento Bee:
When the housing market soared in Sacramento a few years ago, many cities, counties and school districts hiked fees for a new house, with some soaring into the $80,000s and $90,000s...What did $90,000 matter if a house sold for $470,000 or more to a buyer using exotic financing?...[M]uch of the new home market is [now] back in the $200,000s. At those prices, builders say, the fees make it hard to break even.
...
On Tuesday, Woodland became the first city in the region – and possibly first in the state, according to the California Building Industry Association – to...rethink impact fees in light of a devalued housing market. Typically, builders pay about $90,000 in city, county and school fees to build a house in Woodland. But with a 4-0 vote, the City Council cut its $69,000 fee to $54,000 – a 20 percent discount of $15,000 per house.
From the Sacramento Bee:
The Sacramento region's population growth rate continued to drop during 2008, falling to its lowest level in more than a decade, according to state figures released Wednesday.
...
People tend to move when they see opportunities. At the beginning of the decade, many looked to California and thought they had a better shot here than elsewhere, said Howard Roth, the state's chief economist. Now, they may compare California to their home state and think, "Why bother?" That trend occurred in Sacramento County, too, where about 3,000 more people left for other areas than arrived from them, state figures show.
...
[A]long with the rash of foreclosed homes, low growth eases demands on the housing market, bad news for homeowners but good news for home buyers.
From the Sacramento Business Journal:
The real estate decline that has hurt homebuilders is also punishing nurseries that grow plants for the new yards...Several growers in Southern California have talked about grinding up plants and using them for potting soil, he said. One large grower, who has more than 200 acres of plants, might grind up 15 acres.
From the Wall Street Journal:
Rio Vista began to see the trouble last year, when property-tax revenue began to falter...Rio Vista has cut a third of its city workers and slashed its recreation budget to $29,000 from about $250,000. The city is looking into selling more than 100 acres of its land for revenue.
...
Isleton's city manager, Bruce Pope, says the town owes $950,000 for an assortment of services including trash pickup and electricity. With Isleton's operating budget of about $1 million, interest on unpaid bills could overpower the city's budget, he says. Some county leaders are pressuring Mr. Pope to dissolve Isleton. But the town, with about 1,000 residents, doesn't have the money to cover the fees to do so, he says.
Weekend reading [pdf] (with lots of fun data) via Calculated Risk.

36 comments:

paranoid renter said...

2 bed/2 bath condo built in 2006 going for 100K in Rocklin. Is this a good buy? If not, how low can it go? It's currently at $90 sq/ft. HOA dues are 222.

patient renter said...

Lander: I still remember that Summer 2006 post like it was yesterday:

Ding Dong: YOY price declines have arrived in Sacramento :)

The posts and comments back then were largely dead on.

paranoid: Who knows with condos. With all of the overbuilding, over time they're less likely to hold up compared to houses.

RV6Flyer said...

"Is this a good buy?"

At some point it become just a cash flow decision--like buying a CD. Even if you break even after 10 years on the principal, the cash on cash return could make it worth the risk.

STOP ROSEVILLE CRIME said...

PR, that condo will fall below $80K, it's been in a freefall for a while. Lots of repos.

Tyrone said...

"There's really no better time to buy than right now," [John] Arvanitis...of Sunshine Vista Mortgage Co. in Citrus Heights...said.

When will they shut up?!

Jacob said...

"There's really no better time to buy than right now," [John] Arvanitis...of Sunshine Vista Mortgage Co. in Citrus Heights...said.

Must be Friday...

Today IS the best time to buy in years, but tomorrow will be better, and it will get better every day for many more months. Probably 18 more months at least.

If you bought last month you would already by 16% underwater. 10% depreciation and 6% you get to pay to sell it. That 10% in one month is a lot.

50% off peak is a lot, but I think the most telling part is the 36% drop this year.

The yoy drops are still increasing, so even it 2009 is less of a decline it could still be another 20% easily. and what if it is worse?...

I am firmly in wait and see mode.

Curious said...

Paranoid,

Condos are rarely, if ever, a good buy.

Wait for a SFH in your price range to show up, make sure it doesn't have HOA dues (unless you like forever escalating dues, ditto for taxes).

HOA is a deal killer for me, as well as Mello-Roos bonds, unless you personally benefit from them.

Unless your work life requires you to live in the Rocklin area, I wouldn't buy there now.

In my 20 years of adulthood, I've never met a happy condo seller...in fact, I don't think I've ever met a happy condo owner.

Even East Sac condos (5200 Folsom Blvd) are being heavily discounted and I never thought I'd see that neighborhood start to fade. (Plus, they have weird Austin Powers kinda groovy-baby kitchens that I've never understood). Digression over.

In some markets (SF, NYC) condos might make sense. I've never understood the condo market in the Sacramento region...especially in the 'burbs.

Anywayz. Free advice, make of it what you will.

Deflationary Jane said...

I'm with Curious- condos are a no starter for me. My now ex husband had one in Chicago he bought in 93. The HOA on it was 135. By the time he sold in 99, the HOA was 505. That does include the two special assesments (3k & 6k) he was nailed with for a new roof and something else to go with roads and water lines.

Honestly, HOAs and MRs are something that could have been dreamed up by BT Barnum.

Cow_tipping said...

Condo's are worth 30 bucks a sqft.
Heck even that they aren't. But ... well people buy them ar 30 a sqft. Apartments, where your neighbor leaves his stove on and your insurance rates increase, and in many cases your insurance company will try to get it claimed from his insurance ... even if its the same company. Too many problems.
Cool.
Cow_tipping.

paranoid renter said...

Thanks for all the responses. I think I will go and look at the condo. If it's in decent shape, I'll bid $80K for it...I figure I'll save in rent (my rent is 1100 now for a similar, slightly smaller, unit).

RV6Flyer said...

"Even East Sac condos (5200 Folsom Blvd) are being heavily discounted and I never thought I'd see that neighborhood start to fade."

There are condos at 5200 Folsom Blvd?

I honestly can't think of them. Are you sure you don't mean 4300 Folsom, the ones next to the cemetery?

paranoid renter said...

Single family homes are still quite a bit more expensive. As of now I don't need the space. And most of the newish homes have HOA dues and most certainly have Mello Roos.

But I agree condo market will be in free fall by early next year. Already I am seeing very low prices, not just in the Sac area, but also in the Bay Area...several newer condos in Santa Clara are on the market as short sales/foreclosures. You can get a 1 bed/1 bath there for about 300K now. Should be mid-200's by March.

Tyrone said...

1 bed/1 bath there for about 300K now. Should be mid-200's by March.

I'm shaking my Gold in anger. BWAHAHAHA

PeonInChief said...

I know some people who got very, very lucky. They bought a condo in the early '90s for $160K and sold it in 2003 for $465K. But they hit a low point in the Bay Area market, and then sold at just the right time. Condos are a good buy if:

1. You really like the development and want to stay for a long time. (Condos have amenities that single-family homes don't have--community pools, landscape maintenance etc.)

2. You have checked out the maintenance records, particularly the roof. Roofing costs lots of money, as does rotting decks, termites and foundation problems.

3. There aren't too many tenants. And that's not because of the tenants. Landlords don't want to put any money into the place, and it's the landlord who has the vote on maintenance and improvements.

4. The dues are enough to maintain the property and provide a good cushion for unexpected expenses. It's easier to pay a little more each month than to get a "special assessment" of $10K.

It almost always takes two real estate cycles to make money on a condo, so you should plan on staying there for 15-20 years.

sacramentia said...

I think buying any attached housing is a bad move in a falling market, especially one with oversupply.

The opportunity right now is to find a good deal on the perfect house(insert your definition). In a normal market the perfect houses are overpriced, if you can find one for sale.

Rich said...

Patient- Just curious but what area of Rocklin? Like most communities, there are good areas, and not so good areas. Not that any area of Rocklin is horrible by any means, but remember, location location location.

And keep in mind you're not just trading your rent for a mortgage. You're stuck with it. Well, you're supposed to be, anyway. But the big advantage to renting is that you can walk away any time. We're looking to buy with the intent that we're going to have to be in it for 10 years, because we might not be able to afford to sell it any sooner.

paranoid renter said...

This is the one I'm talking about:
http://www.realtor.com/search/searchresults.aspx?mlslid=80121994

Curious said...

RV6Flyer said...
"Even East Sac condos (5200 Folsom Blvd) are being heavily discounted and I never thought I'd see that neighborhood start to fade."

There are condos at 5200 Folsom Blvd?

I honestly can't think of them. Are you sure you don't mean 4300 Folsom, the ones next to the cemetery?

Saturday, December 20, 2008 2:24:00 PM


Indeed, I actually meant 4100 Folsom Blvd. I have now re-introduced my fingers to the correct number keys on my keyboard. : )

Curious said...

Paranoid,

From the MLS listing: Here's a deal on a newer 2 bedroom 2 bath condo close to schools and shopping. The bank is motivated and has priced to sell. Being sold As-Is.
and:
HOA Yes, $222 Monthly

I have no idea whether or not you can write of HOA on your taxes, but it doesn't seem like it.

Good luck with your decision, either way, and if you do make an offer and it's accepted, I'd make sure I found a way to get onto the condo board (or at least attend every meeting). You have no control over your association fees and speaking for myself alone, I would worry about more REO's and non-paying buyers pushing that amount up quite a bit.

I would also worry about the "as-is" part. Looking at the pictures from another condo for sale in the same complex/building, the finishes are are pretty low end. Nothing wrong with that, but as PiC posted, be prepared to live there a very long time before you see any appreciation.

Curious said...

Doh!
I have no idea whether or not you can write off HOA on your taxes...

My fingers are traitors, I tells ya!

Diggin Deeper said...

Mortgage re-defaults rising with no sign of slowing

http://news.yahoo.com/s/nm/20081222/bs_nm/us_financial_defaults_4

""The data showed that after six months, nearly 37 percent of mortgage loans modified in the first quarter were 60 or more days delinquent. After three months, 19 percent were 60 or more days delinquent or in the process of foreclosure.

"One very troubling point is that, whether measured using 30-day or 60-day delinquencies, re-default rates increased each month and showed no signs of leveling off after six months or even eight months," John Dugan, head of the Office of the Comptroller of the Currency, said in a statement""

Looks like even do-overs aren't working out too well with the Govt and banks picking up the tab...Soon the US government will be the largest landlord in the world...Seems that all the wrangling to protect the homeowner is NOT producing the intended outcome...We're just flushing brand new dollars down with the old...kind of like doubling down on a bad investment.

With regard to homeowner HOA's. I believe you can write off the monthly dues if it's a rental.

Rich said...

6520 Hearthstone Cir

So right next to the train. Close to 65 and 80 but you can't actually get to them as the crow flies. To each their own, and I've never been to that corner, but some of those areas of East Rocklin are more likely to have a Camero up on blocks on the lawn, shallw we say.

I've always thought Condos were a way for people to get into the market if they couldn't afford a real house. Once you build some equity, you sell (for a profit of course since RE always goes up) and buy a real house. With the market dropping, patience is a better way to get into the market.

sacramentia said...

@dd -

No surprise on the re-defaults. On a personal level I've never known someone who was bad with money change their ways because of free money. Has anyone else?

Jacob said...

Why would they change. Changing would involve painful decisions. And if they default again maybe they will get more free money. Credit is already in the crapper so why not redefault.

Diggin Deeper said...

Sacramentia...agree. Deadbeats are being paid well for their "troubles".

Who wouldn't take advantage of such a program? You're upside down $300K on your home, and the bank will give you new terms if you stick around? You take the deal, stiff the bank, and get to keep 6 months mortgage payments. Now you've got a enough to buy groceries for 3 months, an HD TV, 3 months worth of rent, and a used car, after your's has been repossessed. At the end of the day, you're ahead $500 per month by losing the car payment and the home. Such a deal!

We just keep pumping money into those who had no business owning anything that wasn't paid for in cash...

Husmanen said...

Not sure if Mr. Mortgage is talking about the same thing, but here is a good write up on why you would not want to default again...

Husmanen said...

Can't get the link to work, but here it is:

http://mrmortgage.ml-implode.com/2008/12/17/fanniefreddie-come-get-your-loan-mod-pay-for-life/

Diggin Deeper said...

Husmanen:

Thanks for for the link. With all the turmoil and desperation, today's regs could very well get changed by tommorrow. That sounds like a refi from hell, and probably wouldn't stand up in court much less get too many takers if they read the fine print.

Cow_tipping said...

These people who got in trouble not only did they not read the fine print, they never even read the headlines.
Cool.
Cow_tipping.

Deflationary Jane said...

We made #5

From Fortune at CNNMoney
10 worst real-estate markets for 2009

'5. Sacramento
State Capitol building in Sacramento2008 median house price: $225,140
2009 projected change: -22.2%
2010 projected change: 2.3%'

'High jobless rates and low population growth are helping burst the capital city's inflated housing market. Prices are expected to fall another 22% in 2009, after tumbling 34% in 2008.'

Diggin Deeper said...

'High jobless rates and low population growth are helping burst the capital city's inflated housing market.

There's more than a few people on this blog that called these problems early on. Congrats to you DJ for many of them...

paranoid renter said...

Well...the agent has not yet been able to show me the condo. I only expect to put an offer on it if it's in decent shape. If shabby, I will pass. But first, the agent has to be able to show me the place...

I've heard the best deals don't even make it to the market. They're purchase by the bankers and their friends/relatives.

PeonInChief said...

Joy for gardeners--as long as the retail nurseries pass their savings along to customers. Prices went up a lot when gas prices were high, so plant prices may just return to trend.

patient renter said...

I've heard the best deals don't even make it to the market. They're purchase by the bankers and their friends/relatives.

I'm sure that's true to some extent - but that can only carry on for so long before everyone's friends/relatives already bought a few "smokin deals".

Deflationary Jane said...

Thanks DD.

Don't forget the overbuilt problem too >; )

paranoid renter said...

I'm sure that's true to some extent - but that can only carry on for so long before everyone's friends/relatives already bought a few "smokin deals".

Made me chuckle. :-)