Tuesday, December 16, 2008

Stockton: $250,000 Off Peak

From the Stockton Record:

TrendGraphix said the median sales price fell from $190,000 in October to $175,000 last month in San Joaquin County. That compares with a $200,000 sales mark in January 2002, when TrendGraphix began tracking sales as the market was well into the start of a six-year boom.
That's a whopping $250,000 price cut from its $425,000 peak in September 2005.

The worst performing market in the nation [according to Zillow.com] was Stockton, Calif. The average home price there plunged 32.3% year-over-year to $210,179 in the first three quarters of 2008. Almost as bad were nearby Merced, down 31.2% to $167,282, and Modesto, was was off 30.4% to $197,368 in the same time period.

[Zillow's Stan] Humphries expressed surprise that these areas are still performed so poorly. "I would have thought that they would have produced some more positive trends by now," he said, "but we are seeing no slowdown."
From the Christian Science Monitor:
The housing market in California's Central Valley...is showing signs of new life...Buyers are out in force. Here in Lathrop, Calif., and in nearby Stockton – the nation's foreclosure capital – home prices could be bottoming out..."At this point, I don't think you'll see more price declines in Stockton," [says ForeclosureRadar's Sean O'Toole].
A recent NAR survey found 20 percent of buyers are investors, but Stockton-area real estate agents put the investor share at one-third or more...The pricing floor provided by these investors, however, has broken through several times when the number of new listings exceeded the ability of investors to absorb them, he [real estate agent Jim Muthart] says.
Strong rent prices are key to a good return, and rents have softened recently, says Muthart...[D]on't assume each foreclosure equals a new renter, argues Caroline Latham, CEO of RealFacts, a rental data-tracking firm. Many families who are foreclosed on will move in with another family or move to a cheaper region, not rent. "We are seeing a return to the notions that [investors] had in 2005," warns Ms. Latham, referring to the buying frenzy in the run-up to the housing bubble peak. "They think they'll be able to rent it and come out smelling good."


patient renter said...
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patient renter said...

Humphries expressed surprise that these areas are still performed so poorly.

Whudayaknow - another surprised "expert".

Cow_tipping said...

Where is that "plunge protection team now" ... oh wait, they are calling bottom for the last 25 months.
I think even the jobs have been priced out of the market to china and India.

smf said...

"A recent NAR survey found 20 percent of buyers are investors, but Stockton-area real estate agents put the investor share at one-third or more..."

More confirmation that the conditions that caused the bubble in the first place ARE STILL THERE.

No, the bottom is not here yet.

Deflationary Jane said...

SMF is right. Until the investors burn themselves out, it's not even worth shopping.

During a company xmas dinner, I was trapped at a table with an aquaintance and his agent wife. He asked if I was looking again now that I was back. To which I said, "not even with your checkbook. Not until the investors leave". His wife's face sort of fell. When I asked why the long face, she replied that that sentiment is something she has been hearing a lot. Apparently things were good during the summer when she was putting together speculator deals but now that fiancing for them is drying up and interest in buying is down, she's having a hard time coaxing the individual buyers back into the market.

I guess actual buyers, you know folks who _shockly_ plan to live in the house, aren't willing to buy in areas with large amounts of investor activity. They may be waiting for a stable neighborhood at a decent price. Now who would have thought....

All I know is that every time I turn around, friends are moving in with friends to save money. I'm one of the last 2 single people I know who lives alone now. And I may be changing that myself. that's gotta be leaving some marks on these newly-minted super genius' RoI.

patient renter said...

More confirmation that the conditions that caused the bubble in the first place ARE STILL THERE.

Yep. The people who would want you to believe that we've hit a bottom point to a few select factors that appear to have returned to normal, but carefully exclude other factors that are clearly not normal. Investment activity is one of them.

sacramentia said...

What is a normal amount of investor activity?

smf said...

"What is a normal amount of investor activity?"

Not 30%.

Did you see the amount of inventory overhang that was caused by this excess?

Even though many realize that a bubble occurred, the vast majority of the people I know still believe that prices will go back up, soon.

Would any of us hesitate in buying a $100K house if we 'know' that the house will be 'worth' $300K in the future?


But this won't happen.

And the bloodbath will begin once the majority realize this.

sacramentia said...

@SMF - It was an honest question. The total number of investors needs to be > 0%, but monthly sales are the rate of change, not the absolute amount so I'm not sure how to interpret the data. The excess supply screws up all the data (the rate of home ownership and investor purchases can climb at the same time).

The vacancy has to be somewhere. I'd guess at the apartment buildings and overpriced REO homes.

Deflationary Jane said...


The folks I know that are piling into the largest rentals they can get with lots of roommates. Cost per room is goes down, energy prices are split across many incomes, and there is always someone around to guard against theft.

These are people leaving smaller homes (under 1200 sqft) both owners and renters. The only people I know who lived in apt buildings anymore are students, usually foriegn.

patient renter said...

Sacramentia - I think it's a good question that needs to be asked. I'm not sure where to find an official answer though. My own personal guess would be certainly under 10%.

Jacob said...

You can get an idea from census data.


For example:

Roseville CA

2000 Census Data - http://tinyurl.com/4mg3tl

Population - 204372
Occupied Housing Units - 79833
Owner Occupied - 71.2%
Renter Occupied - 28.1%
People per housing unit - 2.56

1990 Census Data - http://tinyurl.com/3qfxro

Population - 44685
Occupied Housing Units - 16606
Owner Occupied - 10959(65.9%)
Renter Occupied - 5647 (34.0%)
People per housing unit - 2.69

But those renter occupied stats also include apartments, I don't see a breakdown of house type, tho it is probably in a one of the available census report.

sacramentia said...


If 1990 was more 'normal' than 2000, then there needs to be more purchases by investors than homeowners to return to normal.

All I can say is that I'd hate to own a class B apartment building right now with the oversupply. It's the kind of place where people live when they have too, not when they want too.

Jacob said...

The only wildcard I see is that the data I found doesn't break down the types of homes. So if from 1990 to 2000 we built more apartments or multi family homes relative to single family homes then it would skew the numbers.