Wednesday, February 18, 2009

Another First: -60%


According to the Sacramento Real Estate blog, the median price for Sacramento County homes is now 60% off peak.

The Sac Bee just released January DataQuick figures (updated). The median for Sacramento County is now at $165,000.

24 comments:

Buying Time said...

I guess I was optimistic, I voted for $160,000 in the poll you posted a while back.

Thanks again for all your hard work...never could understand how you had time to round up all that news! Guess that means I will have a bit more time, as I was a very frequent visitor =)

Deflationary Jane said...

I guessed 130k. We'll be close if not under that by the time we're done.

Jacob said...

I remember a few times predicting 75% off and getting flamed for it. Well we are almost there now.

And we are approaching the bottom. Just 40% more to go. lol

sacramentia said...

If you pick the outlier median of the medians, is that still the median? No, it's not.

megha said...

Yeah nobody expected so much correction. Thats why people got flamed.


commercial real estate,

Paul said...

On Monday of this week, Radarlogic average price per square foot for the Sacramento MSA, crossed the -50% mark as well. Of course I think everyone reading this blog knows that Radarlogic lags 60 days, etc. (The Radarlogic number also indicated that average price per square foot was back into 2001 territory.)

Husmanen said...

Wow, that burns my guess of $170k.

Although it is the lowest median, the 60% is only one of two data points for Jan 2009 (others from earlier time periods).

The other point in Jan is by SAR, at -57%. Given any margin of error we are very close or over the 60%.

How are the curves going? I mean are we still decelerating at an increasing rate or are we decelerating at an decreasing rate? I am not sure anymore.

Thanks again for the great work!

Diggin Deeper said...

Blows me out too...I was looking for $165-175K average and that's gone.

The good news, for now, is that home prices have fallen this far. The bad news is that if prices fall much further from here (say 70-80% off), the local economy has gone completely over the cliff (if it hasn't already), and home price to homeowner benefit relationships won't mean much.

Frankly, I am praying for a bottom (and soon). The quicker prices stabilize, the better off we'll all be.

The caution flag is up!

patient renter said...

Wow, that burns my guess of $170k.

Ditto here.

While I take what Diggin mentioned to heart (nobody wants to see the economy go off a cliff), at least for know, I'll drink to $160k.

Jacob said...

How are the curves going? I mean are we still decelerating at an increasing rate or are we decelerating at an decreasing rate? I am not sure anymore.

Here is the data I found for Sac:

Date / Median / YOY Decline / Peak Decline
8/1/05 / $399,900 / -- / --
1/1/06 / $385,500 / 04% / 04%
1/1/07 / $359,900 / 07% / 10%
1/1/08 / $280,000 / 22% / 30%
1/1/09 / $165,000 / 41% / 59%

The declines are still accellerating. So hopefully we will get to the bottom this year.

I agree that by the time prices are 80% off, I won't want to buy and we will probably have more important things to worry about like getting food and not getting shot.

Buying Time said...

"Frankly, I am praying for a bottom (and soon). The quicker prices stabilize, the better off we'll all be."

Amen to that. Unfortunately, I am not quite sure we are seeing the emergence of any macro/microeconomic stabilizing forces. However increased affordability should not be undersetimated. Y-o-Y sales have been up for many months now.

I love how the media always uses the term "firesale" prices when discussing the median these days. It reminds me of what the dept stores do: have % off sales, by first marking up the original price. It's only a firesale, if the original price was legitimate.

patient renter said...

It's only a firesale, if the original price was legitimate.

EXACTLY! They presume we have short term memories... but for the most part they're right.

Perfect Storm said...

60% off nothing to be suprised about, layoffs are taking their toll.

Diggin Deeper said...

The biggest problem is that this RE market is acting as a market should...same with equities. Economic turmoil is fueling the feedback loop and ramping negative emotions up to levels we haven't seen in generations.

Any sustained sales blip should not be construed as a bottom forming event. People need to feel like they're not buying into a money pit, that they're safe from unwanted change, and that there's a future in every purchase they make. That's not happening yet. There's no compelling reason to jump off the fence right now.

Changes are coming just as promised. Hope they're the changes we all bargained for.

Diggin Deeper said...
This comment has been removed by the author.
Cow_tipping said...

I dont see what justifies 2001 prices, in 01 the place was filled with working class jobs like call centers and paper pushing centers. Those jobs have gone, for good.
Also we didn't have the massive overbuild in 01.
92-94 was a small overbuild. So a 97/98 low price may be an indicator.
Cool.
Cow_tipping.

Ollop said...

Remember not to underestimate the power of a weak economy to reduce potential buying demand. My wife and I are a good example of that. We were looking at homes around Sac to buy, but have recently decided to rent instead due to the current economic uncertainty.

Prices are getting more reasonable, yes, in most areas. There are many parts of Sac where the monthly cost of owning is equal to or below rental cost. However, once you buy a place it really limits your flexibility if there is a job change, etc. So for us in our move to Sac, renting is the more comfortable choice for now.

Diggin Deeper said...

While we're fighting deflation in select segments of the overall economy (financials and housing), there's still inflation in other segments that continue to move upward. Food, clothing, medical costs, etc. haven't backed off, yet. Based on all the new money supply they might not.

If we move back to '98 median price point levels (in today's dollars) one would have reverse out all the inflation that occurred from 1998 forward. At 2.5% per year average inflation rate, that is a pretty stout discount considering that we'd be buying at the '98 level less an additional 30+% accounting for inflation.

Doesn't seem possible. However, we weren't fighting an economic disaster in '98.

Cow_tipping said...

That inflation on consumables, and deflation on durables, really was one of the points that Keith (housingpanic.com) used to talk about and often there will be someone on his blog who obviously was interested in selling real estate who would claim inflation = higher prices on houses and therefore buy now or be priced out forever. He literally would mockingly point out that inflation will not affect everything, or everything equally. I think its comming so true now. Millions of houses you cannot give away, yet building one is very $$$. Though given time, deflation will affect steel, copper, cement, wood, land, labor and lumber and whatever to a huge extent, cos those things mainly are in houses and almost not in anything else.
Cool.
Cow_tipping.

Diggin Deeper said...

"Though given time, deflation will affect steel, copper, cement, wood, land, labor and lumber and whatever to a huge extent, cos those things mainly are in houses and almost not in anything else."

While I'd agree to a point, I'm not so sure deflation ultimately wins this war. It takes consumers, worldwide, to buy all the debt we've put on the table. If we have to step in and buy debt from ourselves, the only way this can be done is to print "new dollars" to pay for rising volumes of indebted dollars...that debases purchasing power and eventually translates into inflationary pressure. PPI and CPI, just this week, show a rise that wasn't anticipated.

The signals are out there. Treasury bond prices have fallen over 10% since the new year as net foreign investment has dropped from about $180B per quarter to a mere $25B over the last 3 months. Go back another 3 and we'd find that foreign purchases of US debt had begun trending down. Look at the rise of the treasury inflation protected bonds...or the rise in gold...each on it's own doesn't give much information, but when taken together, they are beginning to forecast a differenct picture then we're seeing right now.

Cow_tipping said...

Yea printing money will cause inflation.
However there is a bunch of inelastic products out there, Gasoline, food etc. Those will inflate. The thing about houses no one wants, bought with debt that no one can afford (inflation = interest rates) and near impossible to sell without high transaction costs will take a long time to revive. Steel is also mainly in cars and other heavy equipment. I dont see that getting a resurgent demand picture either. Cement and some others use basic chemicals which may be redirected to other products, but by an large houses use things that really only houses use in that large number. Those I expect to drop like a rock. Lumber companies going out of business is a prime example.
Cool.
Cow_tipping.

sacramentia said...

DD - I thought of your last post when Obama announced he would halve the budget deficit by 2013. I wonder if his inner circle is starting worry about selling all the debt.

norcaljeff said...

If the stock market is going to 1995 levels I dare say RE isn't much farther behind.

Deflationary Jane said...

Jeff, check out today's posts and some of the comments on CR. Lots of people projecting assets, salaries, stock market, all of it, retreating back to 1995/1996.

CR's analysis on declining rents in view of the CAP program was especially good.