Wednesday, January 21, 2009

Share of Sacramento Homes Sold to Investors Hits 25%, Back to Bubble-Era Levels

From the Sacramento Bee:

In 2008, long to be remembered for fear and opportunity, capital-area investor Scott Arbuckles and partners also saw the sudden opening...Last year, he bought eight Sacramento County repos priced below $120,000 to fix up and rent. By December, investors like him accounted for one in four home sales in the county – the most since mid-2004 – according to statistics released Tuesday by MDA DataQuick of La Jolla.
...
"It's fair to say we've seen the beginning of a recovery in sales," said [DataQuick's Andrew] LePage. "But it's a strange recovery that's not as broad-based as you'd usually see. A lot of starter homes sold and nothing happened. A lender gets the money back, but no one is moving up."
...
The outlook for 2009: more of the same, said LePage. "I think so much is riding on the health of the job market this year in Sacramento. For the market to really stabilize, you have to end that vicious cycle of foreclosures in hard-hit areas, and it's going to be hard to do that if more people are thrown out of work."
DataQuick statistics by county
DataQuick statistics by zip

From The Union:
I just want to know one thing: If Barack Obama fixes the economy, will that fix the shortage of girls available for the Nevada County Girls Softball Association? This year, unlike many years prior, the association’s participation has dwindled. Both league president Jennifer Ulatowski and NorCal representative Todd Richards referenced the faulty economy as to why the league has about 275 girls right now, compared to the 400 that participated a year ago.
...
“I’m pretty sure it’s the economy,” said Richards, who doubles as a coach in the league. “Most of the Sacramento leagues are feeling the hurt too.”...[R]ecreation, at this point, appears to be a luxury to some and their children that few can afford. At least, a lot of parents have said as much...What’s even tougher is acknowledging that the numbers may not come back anytime soon in a community that has more and more families moving away.

31 comments:

smf said...

So...

...finally the news stories have caught up with what I have stated for months now.

The rampant speculation that caused the bubble in the first place, HAS NOT ENDED!!!

Plenty of trouble still ahead.

patient renter said...

I think so much is riding on the health of the job market this year in Sacramento.

Hey, for once I agree with LePage. Unfortunately, Sacramento being the government driven town that it is, in a State facing a incomprehensible budget deficit, things don't look good.

For the market to really stabilize, you have to end that vicious cycle of foreclosures in hard-hit areas

Unfortunately this is impossible. What the analysts/experts still fail to publicly acknowledge is that many mortgages were doomed to become foreclosures the second they were signed. There's no avoiding it.

The rampant speculation that caused the bubble in the first place, HAS NOT ENDED!!!

That must mean we're at a bottom, right!? Hah.

Husmanen said...

Wow! Did you see the New Home sales data for El Dorado County? Dec07 $525k; Dec08 $262k. 50% reduction.

El Dorado Hills specifically had a 17% reduction year over year.

More pain to come, Folsom has been holding out but from my Metrolist check lately the gates are open.

Deflationary Jane said...
This comment has been removed by the author.
Deflationary Jane said...

Testify SMF... until the cheeseeatingsurrendermonkey specuvestors have been beaten from the area, nothing has changed. Well maybe increased vacancy rates in income properties.

The good news is that when investors bail, the smart ones bail with incredible speed but at least their losses will speed us to the bottom. That's the only way I see us getting there any time soon.

Diggin Deeper said...

Maybe we keep getting new waves of investors until the last lot gets it right (after all they're bottom callers too).

Maybe the market is working just like its supposed to, sopping up property at distressed levels regardless of where it ends up from here.

Consider that the greed factor goes up as prices come down...and that equates to a higher volume and percentage of new investors wanting to take a crack at foreclosure central.

Now as for investing in a property you cannot rent...maybe its coming but vacancies haven't spiked that high, yet. Suspect that once we run out of renters, vacant homes owned by investors would rise straight up.

Deflationary Jane said...

People need to feel like they have a stake in their community. Feeding your landlord's monthly mortgage monster does not fill this need, it aggravates it. Which increases crime rates and makes the chances of civil unrest higher, yada yada yada. I think it's safe to say that I see what is happening from a very different prespective then the money changers.

Jacob said...

So "investment" activity is slowing down? Where did that number come from? And is 25% even a normal level of activity?

Anyone see the new NAR commercial with a family sitting on a fence looking at a house wondering why they shouldn't buy. Someone told them not to, but the house looks so pretty. lol

I wonder if everyone will hop off the fence this spring.

I personnaly don't believe there are too many people that qualify for a loan that are on the fence. I think that most of the people that qualify for a loan and wanted to buy have done so and the rest of the people that are waiting for the bottom and/or an end of the recession will continue to wait, even if there is a little good news here or there.

smf said...

Recall that for many investors, profit does not come from renting the place, but from the expected appreciation once the market 'comes back'.

Hint:

The market is coming back already, to a lower level than way you paid.

And still the excess has not been deal with. Calculated risk had a story about 1.5 million excess units.

Oops!

RV6Flyer said...

"I personnaly don't believe there are too many people that qualify for a loan that are on the fence."

I got a reality check today when I called one of the mortgage bankers at our bank today to ask about a client's son who wanted to buy a house.

Here are the stats on the proposed borrower:

Has 3.5% to put down
Filed BK 3 years ago
a 610 FICO

So I called the mortgage guy and gave him the rundown. I figured he would laugh and say yeah right. Well I learned a little more about FHA.
Min FICO is something like 550. A BK over two years ago is okay. 3.5% down is all you need.
He then went on to say how profitable FHA loans are and how much more commission there is with them.
Next I got a schooling on USDA loans. Same rules as FHA, but 100% financing.

patient renter said...

I don't doubt that there are still plenty of people who qualify to buy who shouldn't. But moving a home from one pair of weak hands to another doesn't solve the foreclosure problem.

Deflationary Jane said...

FHA is 3.5%, 2 yrs out of BK, yada yada yada. It sounds easy until you really get into it.

FHA is the insurer and not the folks pushing the initial paper. It's the folks on the front end that are troubled. BAC/CW seems to have clamped down in the last 2 weeks. Wells is better but not much. Not sure about the wholesale folks (taylor bean, etc.)

Now a 610 fico isn't getting a great rate, FHA or not. I'm sitting on 35% cash with 810 fico and I had a hard time. Then there is PMI (pay monthly or do the buydown) which is expensive.

Oh and one other thing, almost everything that looks like it might be priced reasonable won't go FHA. What will go FHA is priced too high or is smack in the ghetto - that is the rub.

Why did I get another prequal? It's almost spring which means it's open season on agents. Everyday is a potential lowballing day. I know it's more sporting to bag them in the wild but I just can't resist tackling them from behind the screen of an open house. **wink wink, nudge,nudge**

Rich said...

"Now a 610 fico isn't getting a great rate, FHA or not. I'm sitting on 35% cash with 810 fico and I had a hard time. Then there is PMI (pay monthly or do the buydown) which is expensive."

'hard time' DJ? I have 20% and 750 and just locked at 4.5% (with two points buydown).

Deflationary Jane said...

send me the name of your broker-
deflationaryjane@yahoo.com
seriously

Diggin Deeper said...

Get it while you can. It's the interest rate bargain of all time....

New starts and pemits plunge at greatest rate since '74 as reported this morning.

Bet the new home builders in the area will cut their price, add more incentives, and buy that 4.5%down even further...that's if you're inclined to jump in right now.

I've said this before, the window will close on low rates...too much pressure's building as the volume of new Treaury bonds keeps rising. Even if we have the same demand today (which has been very high) and we double or triple the size and number of bonds that hit the market this year, rates this low will not attract double or triple the amount of buyers to keep rates this low for long.

And for the argument, "I don't care about paying high rates, I'll refi into lower rate later"

Good luck

RV6Flyer said...

"I'm sitting on 35% cash with 810 fico and I had a hard time."

What did you have a hard time with?

mopar777 said...

There's a short sale duplex I'm interested in Folsom that they're "asking" 315K for. The realtor said the bank is considering an offer and mine would be #2. Even so, he jumped at the chance to show it to me. He said I could see it tommorrow if I wanted.
Remember that arranging showings with tennants living there is difficult and by law one has to give 24 hr notice, except in an emergency. I agreed to see it next week but thanks to CMYST and her informative story I'll probably offer about $260.

Husmanen said...

Mopar777, if you can get that duplex for $260k with 20% down, 5.1% for 30yrs that is a PITI of a little over $1500. If the tenants pay $900 each you are in positive cash flow territory by $300 per month.

Note, I did not include any deduction for interest.

Wish you the best.

mopar777 said...

Thanks, Husmanen. At $260K I'll be putting just over 50% down. Since my home is paid off I'll probably be going for a HELOC for the rest. It's an easier loan to do than an investment property loan, lower interest rate too.

Husmanen said...

A little off topic but, does anyone have a range for current sq ft price to build, excluding land costs and developer fees.

I have some old numbers that are $125/sq ft.

norcaljeff said...

I previously posted a link about how these future flippers will just prolong the decline in RE prices. I also got 9 properties that hit my narrow search range on zip realty on Wed nite. Spring inventory flooding is just starting.

RV6Flyer said...

It's the End of the World as We Know It; And I Feel Fine

Diggin Deeper said...

"It's the End of the World as We Know It; And I Feel Fine"

Ditto!

mopar777 said...

Coming to your neighborhood: RVs clogging the streets. It's already happening here in Folsom. See the story at http://latimesblogs.latimes.com/laland/

paranoid renter said...

Nice story on CR on shadow inventory.
http://www.calculatedriskblog.com/2009/01/housing-and-ghost-inventory.html

Deflationary Jane said...

Nothing phases me anymore.

I know so many people who, in the last 2 mo, are now effectively homesless unless they can find someone to let them live on their couch. 2 are over the age of 70 and living solely off SS. Finding a studio inexpensive enough in an area where they are not in fear for their lives is tough. I'm helping to search for options for these folks and it's heartbreaking. Any gov assistance seems to have dried up.

In some cases, groups have banded together to rent mcmansions but these tend to be young people with more flexibility and deeper pockets. But some are not so lucky.

Like I said, something broke in Sept/Oct and now the bodies have swollen enough that they are floating to the surface. Having that physical reminder of bad times parking outside your door sure makes that $20 bottle of pino taste flat.

In other words, expect more RVs, not less.

sacramentia said...

"RVs clogging the streets. It's already happening here in Folsom"

The modern day Hoovervilles, Living on Bush St.

Buying Time said...

"It's the End of the World as We Know It; And I Feel Fine"

Seriously? Not me. Watching friends and family struggle as they lose their jobs (completely unrelated to housing or construction or finance) is just hearbreaking.

Menwhile folks like Thain are handing out billions in bonues while reporting losses, and asking for taxpayer assistance.

It reminds me of a bumper sticker I once saw....if you aren't outraged, you haven't been paying attention.

Diggin Deeper said...

BT....I think the frustration is just beginning...once it dawns on the public there's no easy fix. All the money pumping the world has to offer is not delivering the intended outcome...

Will it ever?

Thain is yesterday's problem, BofA is likely tomorrow's....anytime it takes but 48 hours to analyse and make a $multi-billion transaction, you're bound to have missed something...like untold $billions of Merrill Lynch's off balance sheet non performing assets...not to mention all the trash and bad debt that came with the Countrywide purchase months before.

What the hell was BofA's CEO sniffing?

If we don't restore confidence in our financial system, how can we find a bottom in our RE market?

norcaljeff said...

how soon we forget the impact of shadow inventory: http://tinyurl.com/6efy4u

norcaljeff said...

and don't forget this gem: http://tinyurl.com/9l4zd7