Friday, February 27, 2009

Sacramento Real Estate Market - February 2009 Water Cooler

Post off-topic links, observations, and stories about the Sacramento real estate market here. Please read the comment policy before posting.

91 comments:

Diggin Deeper said...

California holds back payments amid budget crisis

http://news.yahoo.com/s/nm/20090202/ts_nm/us_usa_economy_california_2

Looks like California is come to the IOU phase of this crisis. Can the Feds be far behind?

Rich said...

Have keys.

Will continue to watch market decline.

YMMV.

patient renter said...

Can the Feds be far behind?

Well if CA had their own printing presses, I'm sure they'd be using them by now.

I still can't believe Obama appointed Geithner. Every time I think about it, I'm blown away.

...but I guess it makes sense when you follow the money.

TwoWheelsBetter said...

The LA Times reports that the Westside (Santa Monica, Pacific Palisades et al) are capitulating, with 10-30% losses in recent months. Can East Sac and Land Park be far behind?

patient renter said...

Can East Sac and Land Park be far behind

No way! It's different here :)

RV6Flyer said...

"Can East Sac and Land Park be far behind?"

A big difference with East Sac is the lack of speculation and deep pockets of celebrities driving up prices.
Compare a chart of 95819 against Malibu, Brentwood, or Santa Monica--or even Elk Grove for that matter. Not quite the insane parabolic looking chart as those locals.

Diggin Deeper said...

...We're certainly going to get change as promised but from the looks of it, and the cabinet picks, the changes that might be on the horizon are not the changes most had been planning for...

The next round of stimulus proposed is roiling people...Only 23 cents on each dollar spent will assist in jobs creation according to reports over the weekend.

Tax cuts are great but if you don't have a job, what good are they? This country is losing jobs faster than any time since the Depression.

Our real estate market is teetering and it won't take much to push it over completely. Even the best areas will succumb if we go into a pricing free fall from here. The nice part about East Sac is that there only a handful of homes compared to the rest of the area. That doesn't mean that those who bought within the last 5-8 years won't take a major hit. It might mean they're not going anywhere, anytime soon.

Without some serious infusion of capital in Sacramento, we'll take the brunt of California's downturn...Maybe a 4 day work week or part time status would help to stave off layoffs that will undoubtedly will come...

anon1137 said...

I've been seeing much more stress in East Sac during the past few months - more foreclosures, listings stay on the market longer and then are removed without sales. Higher unemployment (people moving for jobs, etc.) and higher federal debt (cutbacks to Medicare) will hit this area too.

I see many, many similarities to the 90s housing crash except that this one is likely to be deeper and longer lasting. All that talk about steep upside followed by quick recovery is hogwash, IMO.

RV6Flyer said...

"This country is losing jobs faster than any time since the Depression."

Add me to the list. Looks like I will have a bunch of time on my hands to blog now.

Jacob said...

Sorry to hear that RV6.

Layoffs are everywhere. Macy's announced 7000 layoffs. And aside from layoffs lots of companies are cutting back on capital expenses, even Wal-Mart), so that in turn hurts the businesses that depend on that kind of work.

We'll see what the Jan job losses look like. If we keep losing 500k a month then this sucker really is going down.

patient renter said...

Add me to the list.

Man I'm really sorry to hear that. Best of luck bouncing back.

Deflationary Jane said...

Argh, not you! I'm really sorry to hear that, RV6.

anon1137 said...

Is the London trip still on?

RV6Flyer said...

"Is the London trip still on?"

Have no choice. Non-refundable and just bought a fist full of sterling.

Was bound to happen and luckily the significant other has a great job, we have lots of savings, and my network is large.

After several acquisitions we were bloated with management, so I guess I was the last one standing when the music stopped. Just didn't quite see it going down like this. In the last few weeks the message was getting louder and louder that the bank really didn't want to lend; the focus is really on treasury management and deposit growth, not what my team does.

Diggin Deeper said...

Rv6Flyer....

So sorry to hear this.

Maybe its an opportunity? A person with your skills probably doesn't stay down too long.

anon1137 said...

Hope you find something new soon, and enjoy your trip to London.

Husmanen said...

Rv6Flyer... very sorry to hear that.

Wish you the best.

Dave said...

I love that first article. So some poor shmuck in Stockton caused all this, haa! Patient zero my #$%. People were defaulting before him according to the numbers they give and you know the banks didn't have to give him the loan. The start of this is much further back then 2003. This is 20+ years of stupidity in the private and gov sectors coming together into a perfect storm not some guy in Stockton having a problem, geezzzz.

Dave said...

Oh and I forgot, sorry to hear about your job RV6Flyer:( Hope you don't have to sell the plane; you probably put a lot of work into it.

Diggin Deeper said...

"This is 20+ years of stupidity in the private and gov sectors coming together into a perfect storm..."

Exactly. And that's the very reason the unwinding will take longer than we're lead to believe. We've got 20 year leverage bubble has to deflate in order for us to find something other than thin air to spring from.

Businesses must downsize workforces, drive inventories to bare minimums, and then hold spending to "only as needed" levels. That puts real estate in the crosshairs of further price deterioration...at least for awhile.

The interesting thing is, real estate could bottom as inflation kicks in. It is one of main components of the serious deflation we've seen. It has taken a such huge chunk out of market pricing and wealth in this country, that a retrun to a higher inflationary environment might tend to put a floor underneath. And one might ask how you can have inflation without wage growth?...in a word...Zimbabwe.

Deflationary Jane said...

Didn't someone say that rents were not really coming down and that the
'doubling up' affect wasn't happening?

BRE Properties: Beginning of "Two Year Declining Rent Curve
http://tinyurl.com/avsfc4

From the report:
'And on households "doubling up":

Q: Can you just address with the drop in occupancy and the employment losses ... what's your sense in terms of where are people moving? Are they going to lower quality units, are they doubling up, going with parents, I mean, where are people going?

A: ... I think it's pretty similar to past cycles. ... while there's some exodus of households out of California the numbers aren't that great, so it would indicate that people are doubling up, tripling up, moving back to couches, moving back with mom and dad.'

Cmyst said...

RV6Flyer, sorry about your job but envious of your trip! Thank goodness you have a good second income.

My anxiety just keeps increasing.

Buying Time said...

RV6Flyer - My sympathies as well.

At this point it seems few are immune. I just heard a story about Delta Dental laying off over 100 people locally. The story went something like, our source was assured the other person would be laid off that does the same job.....then they both got laid off, along with the entire department.

I actually looked at my 401k yesterday to calculate how long we could last, given the 10% early withdrawl penalty.

patient renter said...

The "Flipping Subsidy" - from Dean Baker:

"Tonight Congress approved the Isakson amendment which gives $15,000 (or 10 percent of the purchase price, whichever is lower) to every person who buys a home in 2009."

"It's hard to see why tens of millions of people wouldn't figure out a way to buy a house from a friend or relative and get their $15k. If we can get one-third of the country's homes to change hands (lots of jobs for realtors) that would be good for $375 billion."

So we're going to make available tens or hundreds of billions of dollars just for the effort of trading houses around. Another ridiculous wasteful plan pushed through by the clowns in Washington.

Jacob said...

It would be better to just give every tax payer a check for $3k.

This reminds me of the liquidation "sales" where the prices are market up before the % discount is applied so you think you are getting a deal, but in reality you are overpaying.

Diggin Deeper said...

Jacob, I thought they were talking tax credit rather than a tax deduction? If so it would mean the average tax payer would get a sizeable tax break just for buying a home...probably the equivalent of a tax holiday for the year.

Sen. Dodd says could tweak mark-to-market

http://news.yahoo.com/s/nm/20090205/bs_nm/us_financial_bailout_accounting_2

...the entire world knows these assets are worth less than 3 dimes on the dollar and now some politician determines, by an accounting stroke, a bank can pretend they are worth what they want them to be?

The public's a whole lot smarter than they were a year ago. All the smoke and mirrors are nothing but a sideshow with an ending that forces banks with bad asset portfolios to succed or fail based on asset performance alone.

Jacob said...

Yea it is a refunable tax credit not a deduction, so you actually get $15k.

But only if you buy. If they sent every tax payer $3k (I was just thinking 100M taxpayers (made up number) * $3k would be $300B) then those people would spend the money or pay down debt and both scenarios help.

That way you don't leave out people that already own a home, or that don't want to buy a home, or that can't afford to buy a home.

If they do this then prices will just be inflated by $15k anyway so you want be getting a deal.

Deflationary Jane said...

IMO that tax credit is an awful idea. The cap gains exemption worked because it happened while tech wages were stoking inflation.

increased jobs + credit = home sales.

Now flip it around while we're firmly entrenched in a deflationary spiral:

credit = increased jobs and home sales?

**ponder**

norcaljeff said...

Is Agent Bubble still around?

patient renter said...

In pushing to get his stimulus package through Congress, why does the President keep saying "every economist" understands that we need this. Every economist? Really?

We seem to have jumped right past the debate about whether or not stimulus is a good thing. It's reminiscent of the last administration.

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

I was just reminded in an email just read, that Albert Einstein once said...

“Never expect the people who caused a problem to solve it.”

The math's not adding up:

1. Job losses Nov-Jan are pushing 1.7 mil.

2. We're on an annualized pace to lose between 6-7 mil jobs by Nov '09. Think auto, insurance airlines, and other financial companies a major contributors from here on.

3. 4.5 Mil people are reported out of work (add in those not looking any longer and it goes closer to 8-9mil). Some will find jobs but the hangover will be a big number of jobless... who will remain jobless.

4. The stimulus package will create 3 mil new jobs but the first shovel probably doesn't get turned for many months.

5. We've spent $Trillions over 18 months (Bear Stearns failed Aug 1, 2007) without a single spark to the economy.

6. So in coming months, and over the next year, we'll add 3 million jobs only to lose potentially 5 million more, and still carry those hangover jobless as well?

7. And then we have the Alt-A resets and the foreclosures that will ensue from that credit mess.

The deck is stacked one way. So we're going to craft an outcome, based on the same spending and stimulus outlays, that's produced nothing over the last 18 months?

HOUSE2008 said...

Hello everyone. Man, my heart goes out to those facing job cuts. But right now what has me buring up is the "creep" of cOMMPDITIES. Gas is going up & according to yahoo survey it due to increased demand! WHAT! 3.5 mil jobs vanish, along with 250,000 furloughed workers in Ca & other states. If people don't have jobs & or are forced to take every other Friday off where is this demand coming from?
It seems pretty simple to me. The less peoople work, the less they drive. Which in turn mean MFG produce less and that means the mfg use less fossil fuels. What am
I missing here? Help.

Diggin Deeper said...

House

Having spent nearly 30 years in the energy business there are no easy answers...

I think a certain amount of that demand is non discretionary. We all use energy for basic needs and those needs generally don't get compromised.

The only area where demand destruction occurs is in discretionary energy useage and through conservation. At sub $2.50gasoline, we're not inclined to use conservation measures as we've done when prices hit $4 per gallon highs we saw last summer.

Many oil producing projects cannot produce oil, at a profit, when we're at $40 per barrel. Most of the Canadian tarsands cannot profit until prices hit $50-60 per barrel. Same with deep water and land drilling efforts. Marginal producing wells are shut in, and await more favorable prices before resuming production.

While most look at demand destruction as the answer to low gasoline prices, that quickly gets balanced out by prodcution destruction when a major portion of supply cannot profitably produce at current low oil prices.

And when summer gas and CARB rules come into play, the price of gasoline in California goes higher still.

We're not running out of oil, we're just running out of cheap oil.

Sold in '05 said...

Haven't read the water cooler this month...

Sorry to hear about your loss RV. Hope it's a short dry spell.

DD,

The posting on jobs is a great lens for looking into our future economic weather.

My problem with the rising gas prices is that gas prices should FOLLOW cude oil prices NOT LEAD them. Cude is still near $40 and carrying huge surpluses in inventories. So somewhere between the oil storage tank and the gas pump, something is pushing up the price of the refined product. The fact that the reason is NOT readily apparent, (i.e. major refinery fires, seasonal demand spikes, hurricane affecting refinery areas, pipeline disruptions) makes the recent price rise smell fishy. Maybe too much speculative money looking for work?

-CD

Buying Time said...

Please exuse my ignorance...but I have been reading some suggestions that the Fed Govnt may purchase Treasuries....to keep a cap on rates.

Do they print new $$ to do this? Or issue new Treasuries to raise funds to purchase old ones?

I just don't understand how this works, how does the government buy its own debt?...could someone please enlighten me?

paranoid renter said...

It would be better to just give every tax payer a check for $3k.

Would I have to pay taxes on that?

Sold in '05 said...

"Do they print new $$ to do this? Or issue new Treasuries to raise funds to purchase old ones?"

They just put it on a credit card.

-CD

Diggin Deeper said...

CD

We all know low oil prices are a blessing..but they're also a curse. We benefit financially at this level...but low prices curtail millions of barrels of production per day that won't be produced at $40 per barrel...

My guess is, at these prices, we're capping the world's ability or willingness to supply oil at a faster rate, than we're conserving or removing overall demand.

Eventually we're back to shortages and higher prices.

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

Buying time...

It' a whole lot of both. Debt (bailout) creates the need for money. In order for money to become of value, it has to be "monetized" onto the country's balance sheet. To do this Treasury bills and bonds are created and sold on the open market, taking the proceeds and using the money for general bailout purposes.

These bonds are sold at prevailing interest rates based on demand and risk. Some of the bond sale moneis are used to payoff the principal on maturing bonds, some are sold as new debt (principal plus interest) to be paid at some future date, and some are used to pay interest on previous bonds that have not yet matured (normally shorter term paper).

It's a good thing when you get enough buyers to buy the debt when issued. It's a bad thing when there's too many bonds and too few buyers. The Feds must then allow interest rates to rise high enough to compensate buyers for their risk. If that doesn't work, as a last resort, the Feds buy the bonds.

There have to be enough bond buyers willing to consume all the new debt, or interest rates will rise higher in order to attract more. This probably is in conflict with the proposed 4.5% interest rate target the Feds are hoping to achieve.

Buying Time said...

Thanks DD -

Conceptually I understand issuing new debt to pay off interest and principle on old debt...but some of this other stuff makes my brain hurt to think about it.

Sold in '05 said...

"Eventually we're back to shortages and higher prices."

Right and also on the shutting down of higher production cost sources eventually leading to price stabilization through supply and demand balance.

BUT...

Those things are only beginning to happen right now and the effects should be seen first on crude market prices, THEN we should see the follow through to refined products. Indications are that many sources are still pumping to beat the band even though they are giving it away below cost. Countries like Venezuela and Iran need the income to keep up their economies and can not afford (politically or financially) the interruption to cash flow that would happen if they cut back to cost effective production levels. What we are seeing in gasoline prices right now looks suspiciously like a tail wagging and no dog attached.

Lately I have seen some questions being asked by the media about this and they have been answered with lame excuses like "normal seasonal increases" and "normal refinery shutdowns". It's like my kids shrugging and saying "I don't know".

-CD

Jacob said...

Would I have to pay taxes on that?

I was just thinking if there is bailout money out there, give me some. Don't give it all to people that are just buying houses, what about the people that already own or don't want to buy.

I will have to pass on the $15k to buy a house that will be worth $50k-$100k less in a year or two.

Don't get me started on paying taxes. As a single guy with no kids, no mortgage, no debt I also get no deductions (practically) and get reamed every year...

I don't mind paying, but when the money is used to make homes more expensive for ME to buy, then that pisses me off.

Rich said...

As a new homeowner who now gets to deduct his mortgage interest, I have to say it's insane. I also think it's insane that people who don't itemize their deductions have to predict how much health care they'll need so they can pre-pay it tax free. People who itemize for other reasons can just claim it. C'mon, health care should be tax free.

While I'm posting, here's a "Should I stay or should I go now" discussion:

http://freakonomics.blogs.nytimes.com/2009/02/09/our-daily-bleg-a-real-estate-dilemma/

HOUSE2008 said...

"While most look at demand destruction as the answer to low gasoline prices, that quickly gets balanced out by prodcution destruction when a major portion of supply cannot profitably produce at current low oil prices"

Thanks DD,

I'm cognizant of this & as something else to think about, having oil producing nations get too little for their oil creates other unintended consequences. Sigh.

As for taxes, I wish congress would tax ALL stock transaction & campaign contributions. That would adress both systems that got us into this mess & pay towards getting us out of it.. Oh and another thing that gets me. I've not heard ONE Republican or Democrate champion ZERO taxes for military service members. Why are we taxing them? Sigh.

Diggin Deeper said...

http://www.cnbc.com/id/15840232?video=1021551579

A must see... a look at one agency through the eyes of a probing Congressman. Another reason why it's dangerous to leave responsibility in the hands of the inept. Hats off to the Congressman who tells it like it is

patient renter said...

"Jet-setter fugitive seized at border"

http://sacbee.com/topstories/story/1618836.html

lamaiahoffmann said...

I've been reading this blog for just a couple of months and based largely on it, have decided to put off buying a house in East Sac/Land Park/Curtis Park area to see what the market does.
In the meantime, our young family needs to rent a bigger place- (630 sqft isn't working! :)
We would like to rent a house, but having read about some people getting evicted without warning due to foreclosure, am a bit leery. Any advice? Suggestions of property management agencies to trust or avoid? Or other ideas for what to rent that will both give us decent space (at least 1100 sqft) and at least some privacy?
Thanks so much for any ideas!
Lamaia

patient renter said...

Lamaia - In general, just try and find out as much as you can about the situation with any prospective homes you're looking at, and their landlords. What is the landlord's goal for the home? Why are they renting it? Did they intend for it to be a rental? How long do they plan to keep it a rental (based on how long you'd like to stay there)? etc...

Using various online tools you can find out when the home was purchased, for how much, whether there are back taxes owed or liens on the property, etc. All of this info can help you decide if a home might be safe to rent, or is a foreclosure waiting to happen.

Cmyst said...

I would avoid Homepointe if possible. My rental is being foreclosed, they knew it, and they were not going to tell me. I've heard since from other property managers that if a property is foreclosed, the tenants have 60 days to move out. And in some cases, the lender (especially Fannie or Freddie loans)will encourage the tenant to stay in the home.

The basic decision you have to make is whether to rent from a middleman property manager, or directly from the owner. There are pros and cons to each. I could be wrong, but I feel that you stand a better chance of getting back what is likely a sizable damage deposit if you rent from a management company. OTOH, if you rent from the owner directly, even if they are foreclosed you may not have to leave the house, as many banks are encouraging paying tenants to stay put. Signing a lease with a property management company, say for a year, should pretty much guarantee that you'll have at least a year in the house. Be wary of month-to-month rentals; almost every legitimate owner or manager wants a lease signed, so if they don't that's a sign they don't expect the house to be a long-term deal.
In the 3 years we've lived here, Homepointe never once inspected this place. No property managers that I've ever rented from have inspected the properties they're "managing". Owners I've rented from HAVE inspected them, usually with a 24 hour notice. And that can be very inconvenient.
I know some people think a house will cost more if a manager has to be paid, but what I've found is that managers price the properties much more reasonably than owners. The manager realizes that your rent is not going to cover a mortgage payment on a new house, but owners seem not to have gotten the memo that renters aren't going to pay for their mistakes.
Lastly, if you manage to rent a place that you really wouldn't mind buying, even if it's foreclosed you will likely be given the chance to buy it.

Giacomo said...

Lamaia:
I don't think renting from a property manager is necessarily the safer way -- we went that route with our last place, and the owner simply hid his financial situation (after about 8 months, he was defaulting) from the management company. They didn't care that he avoiding spended a dime on maintenance or repairs. We never saw the owner in person, or even spoke to him, so if was hard for us to get a handle on the situation. By the time the lease ended he was clearly entering foreclosure, and despite leaving the place better than we found it, the manager STILL tried to keep part of our deposit.

With our new landlord we were not only careful to learn everything to could about him on the internet, and around the neighborhood, but we had the opportunity to ask him questions and judge his sincerity face-to-face. And it's been a good experience so far.

We were also able to get some concessions on price and lease terms up front -- good luck trying that with a management company.

lamaiahoffmann said...

Thank you for your advice. It's given me direction and some confidence to go forward with!
Lamaia

patient renter said...

Housing tracker is back!

Sold in '05 said...

Best Buy's high end outlet store Magnolia Audio is quietly closing down in Roseville. The shelves are already pretty bare.

I'm sure that retail space in Roseville is at a premium and someone will move into the space right away... Probably just after the Home Depot Expo Design store finds new tenants across the parking lot.

What we need now is some extra chain restaurant space. I wonder how long before PF Changs, Bucca de eSpensive or Cheesecake Factory vacates some.

-CD

Diggin Deeper said...

The entire country is overburdened with excess retail companies. If a location isn't in the black, for the most part, companies will close them down. By the time this is behind us, we'll get down to the bare essentials in this space. In our area, there will be a an abundant variety of space for the next Hawaiian Barbeque chain to choose from.

Jacob said...

I always wondered how all these businesses could stay in business. Whether it be a starbucks on every block or even a bank, There must be 20 Wells Fargos in Roseville. It is convenient for me if I need to go to one, but we really don't need one every two miles.

Same with Wal-Marts or fast food or restaurants...

Way too many.

patient renter said...

Good point on the banks. There do seem to be a lot of them, though it's a great business to be in (fractional reserve lending) if you can manage not to screw things up.

norcaljeff said...

If you haven't already watched it, check out CNBC's documentary called House of Cards. It's awesome.

Deflationary Jane said...

SMF- remember the debate way back on household creation, PCI data, and new housing units? Well seems you have been vindicated my friend. Take a bow >; )

'Harvard economist Edward Glaeser estimates that from 2002 to 2007, the country's housing stock increased by 8.65 million units, outpacing the number of new households, which increased only by 6.7 million over the same period. Taking into account a rise in the number of vacation homes, Glaeser estimates an overhang of about 1.3 million vacant units. Absorbing that excess, he said, could take an additional two years. '

CR gave an estimate today of 1.5 to 2m in over building.

patient renter said...

Under the modification program which would involve government subsidies to lenders, lenders will be responsible for bringing down interest rates so that a borrower's monthly mortgage payment is no more than 38% of their pre-tax income. After that the government program would match the amount reduced by the lender to bring a homeowner's payments down to 31% of their pre-tax income.

Very interesting. I doubt I'm the only one thinking that a reduction down to 38% gross income could be quite a big reduction for some homeowners, and that lenders are not going to be lining up for this one. But we'll see.

patient renter said...

I was going to post more comments on the home affordability plan #294,517, but it's too sickening to read any longer. Have a look at the official document:

http://www.scribd.com/doc/12595181/Homeowner-Afford-Ability-and-Stability-Plan-Fact-Sheet

Summary:

1. The government will attempt to fix home prices. If price fixing fails to go smoothly, as it has every time in the history of the world, what's a few billion down the drain.

2. The government will help pay your mortgage. If you don't have a mortgage, you get to help pay for someone else's.

Give it a read, just don't eat beforehand.

Deflationary Jane said...

Helping an acquaintance, someone here will know this:
How long do you give your LL to contact you to repair something before you can break the lease?

patient renter said...

DJ: Not sure off hand, but it's most likely in the CA tenant handbook:

http://www.dca.ca.gov/publications/landlordbook/catenant.pdf

Deflationary Jane said...

PR,

I tracked it down to Ca Civil code 1942 and 1962. Apparently the LL never stated in the lease any contact info and the phone numbers he was given don't work. They've been there for 4 years. Smells like pending default.

No contact info in the lease is grounds for terminiation under 1962so I guess he can break it any time.

Just another reason to stay away from amatuer landies.

patient renter said...

DJ - glad you got it sorted out.

All - Excellent article today by Caroline Baum:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a3_NEEk3tTNU

Diggin Deeper said...

PR

Good article...

If you haven't seen this video...it's creating quite a stir.

http://www.cnbc.com/id/29283701

Rick Santelli is telling it like it should be told! And he's acheiving "rock star" status and the ire of Washington.

As a rebuttal to Santelli's rant, CNBC interviewed the new Hud secretary (who looked no older than a 5th year college student) and the rhetoric was what you'd expect from the Washington mainstream...more of same old tired policies that treat symptoms without solutions.

When main street is against these programs, and the markets show their displeasure, there's a good reason why....

The next shoe to drop appears to be Eastern Europe. Currency and financial systems are failing and default on debt is a high probability. Fears are that will cascade throughout the rest of Europe and on to us.

No way does Sacto real estate have a chance to find stability until the rest of the world settles down...

Deflationary Jane said...

Falling rents:
http://www.calculatedriskblog.com/2009/02/falling-rents.html

So many people saw this coming in 06 and 07. One more leg down

mopar777 said...

Does anyone know about whether or not Zillow is using trustee sales for comps? I read something to that effect somewhere. I also heard Zillow is owned by the real estate interests. Does anyone have tales of realtors in open houses using trustee sales for comps?

smf said...

dejavu, again...

"Investors and real estate speculators, meanwhile, can snap up foreclosed properties on the cheap to sell during the next boom in California's boom-and-bust real estate cycle, a boom they believe is inevitable and possibly not far off."

http://news.yahoo.com/s/nm/20090223/us_nm/us_california_property

Lander said...

Another Deutsche Bank report on bank-owned shadow inventory, including a mention of Sacramento.

Diggin Deeper said...

U.S. home prices drop at record pace in December: S&P

http://news.yahoo.com/s/nm/20090224/bs_nm/us_usa_economy_homes_index_4

"There are very few, if any, pockets of turnaround that one can see in the data," David Blitzer, chairman of S&P's index committee, said in the statement. "Most of the nation appears to remain on a downward path."

YOY over 18% pricing declines...One of these days, if you've got a job, housing might beecome affordable again.

Watch out for life insurance companies, as they were smack in the middle of all the "stretch for yield" derivatives that have crushed the financials. Ratings mean nothing. AIG is the poster child for the industry and will post, in addition to the $150B government bailout, another $60B loss for the quarter. How much more do we have to give them before we realize AIG is dead? Who's next...Travelors, New York Life???

Imo, we've got a long road to go here

patient renter said...

Another Deutsche Bank report on bank-owned shadow inventory, including a mention of Sacramento.

Lander - any details to share? It's subscription only so I couldn't check it out.

Lander said...

PR-
Try here (while it lasts).
http://tinyurl.com/c9we3m

Lander said...

Basically DB estimates that 5 CA markets (including Sac) are averaging 67 months of banked owned properties. Also in 5 CA markets (presumably the same ones), banked owned inventory outnumbers MLS inventory.

Not sure about how good their methodology is but maybe Max will have some more specifics...

Diggin Deeper said...
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Diggin Deeper said...

http://www.cnbc.com/id/29350033

Sacto at a 4.2% vacancy rate which is 8th in the nation. Bad but not unbearably so. It's that 67 month of off book inventory that's scary. If true, then these vacancy numbers are skewed way too low.

I'm coming around to your way of thinking DJ...rents are probably in bubble as well.

Just adding a side note...Bay Area price declines yoy now posting over 30% declines, following Phoenix and Las Vegas as areas with the greatest price declines (30%+)across the country.

Deflationary Jane said...

DD and other folks watching rental markets,

They are now coming back down in earnest. I see folks trying to get out of leases signed last year as things slip, other folks doubling and tripling up. Month to month rental are easier to find tenants for then leases. Renters want reductions in exchange for the 1yr commitment. It's all pretty textbook actually. It's the same sort of protections we'd ask for right?

One thing that was pointed out to me recently was the lack of garages in the rental market. Sacramento/Modesto/Stockton had the 1 through 5 slots tied up for highest auto thefts per city not too long ago. As people fear that their last 'asset' will be broken into or stolen in tough times, noone I know will rent anything without an enclosed space for vehicles. A covered parking space behind gates doesn't cut it. They want doors and locks NOW. Just another reason why all those new luxury 1 and 2 bedroom apts put up in the last 2 years are in big big trouble.

Oh and landlords want renters without pets but they want to attract nice families to stabilze their area. Guess what? Many families have pets, especially dogs. Want those units filled? Make room for fido before your competition does.

That's the chatter I hear lately.

patient renter said...

to sell during the next boom in California's boom-and-bust real estate cycle, a boom they believe is inevitable and possibly not far off."

This is exactly what I've been harping about!!!! The bubble mentality lives on. "Investors" think there's going to be another boom like we had previously.

anon1137 said...

Does anyone have any confidence in the Obama recovery plan? The plan seems to be this: keep giving loads of taxpayer money to failing businesses (banks, auto companies, ins companies) and hope that time will heal all wounds. Also, insist that banks resume making loans to poor credit risks, like car dealers who aren't selling any cars.

Wish I had a crystal ball to see where this country is going to be in 12 months. It looks really ugly to me.

Diggin Deeper said...

"Does anyone have any confidence in the Obama recovery plan?"

I really do feel sorry for Obama...He now projects a $1.75Trillion deficit for the year. That's a 75% increase in just over 30 days office time. One can only imagine what that figure will be in 6 months as leveraged derivatives, modelled strictly for growth, disintegrate. We're talking more money then the world's entire GDP (about $50T), and no one, not even the President of the US, can stop that from happening.

Washington continues to try and rescue those that fell prey to their own greed, and reward those who's poor decision making is at the root of OUR problem.

Word verification dummu

Unfortunately the markets don't see it that way, and that's probably why there's such a disconnect between Washington, Main street, and Wall street.

When one considers that financials failure here can economically wipe out smaller countries like Iceland and Latvia, one wonders if we're immune from a similar fate?

Deflationary Jane said...

Here is something interesting released this morning:
http://tinyurl.com/df8hkj
Record Jump in Non-Agency Jumbo Prime Foreclosure Starts: Report
'Lender Processing Services announced Wednesday its release of the February 2009 LPS Mortgage Monitor, which revealed a record increase in non-agency Jumbo Prime foreclosure starts as of month-end January 2009.

Non-Agency Jumbo Prime foreclosure starts have increased the most of any product — nearly 125 percent since January 2008, according to the LPS report — as foreclosure starts across all major product types have continued to climb over the past several months, despite moratoria and mitigation actions.

LPS found the pace of growth in foreclosure inventory was highest in Jumbo Prime and Option ARMs. “Even over a shortened period of time, acceleration of deterioration in Jumbo Prime exceeds all other product,” read the report. '

More evidence that those big ARMs and Neg AMs are not done. There are just backed up and waiting for all the moratoriums to expire.

Jeff said...

Since Lander is scaling back(sadly), what other blogs do you guys watch. I live in Sac so blogs pertaining to Northern California are what I'm looking for.

Husmanen said...

On the right hand side of Lander's blog is a plethora of links, some local some not. Here are selected sites I check regularly.

http://sacrealstats.blogspot.com/

http://averagebuyer.blogspot.com/

http://piggington.com/
Although in San Diego, great data and conversations.

http://www.doctorhousingbubble.com/
Great analysis for CA.

http://patrick.net/housing/crash.html#links
Daily update of housing news across the Country.

Deflationary Jane said...

Lander isn't disappearing entirely (please let that be true!) and many of us regulars check in on the water cooler thread.

There are lots of CA folks on CR and of course I always follow Max at SacStats.

I wish Lander all the very very best with his new endeavors. He's been here since the first and he certainly reserves a rest. His reduced presence will be truly felt by me. I'm hoping someone will pick up his torch and cover this area as it's becoming apparent that this bubble still has a long way to unwind.

Deflationary Jane said...
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Deflationary Jane said...

Speaking of rents, did anyone catch the piece by Wasserman today?

Home Front: Renting has seldom looked so good
http://www.sacbee.com/realestatenews/story/1657425.html?mi_rss=Real+Estate

"Renting has seldom looked so good as now, as homeownership is increasingly associated with instability and fear.

Renters are nimble. They move easily across town to score ever cheaper rent, or effortlessly accept that great job in another city. Renters can rapidly adjust their living space and monthly payments to sudden changes in income.

But homeowners – at least many who bought during the boom – are "trapped." They are "underwater" and "upside down," owing more than their property is worth. Their home is often described as an "albatross," and the only way out is a "distress sale."

As home values slide and foreclosures rise, the ideal of owning a house, once the very definition of stability, has fallen to a low ebb. In the Atlantic magazine, urban theorist Richard Florida now suggests that "government policies should encourage renting, not buying." He cites a study from the Wharton School of Business saying homeowners are no happier than renters. Indeed, Florida goes so far as to say that rising homeownership made our society less nimble, which is bad for the economy "when businesses, industries and regions are rising and falling quickly."

Jim, you owe us lunch >; )

Buying Time said...

Lander made the MSM!...From this morning's SacBee.....

"another prominent real estate blog, Sacramento Land(ing), which has chronicled the housing bust for three years, has announced it is scaling back "due to time constraints."

Some loyal Land(ing) readers are seeing the pullback – and departure of other housing bubble bloggers – as a sign that most of the collapse has happened now and the bottom is approaching. Land(ing)'s author – whose identity is not known – was defiantly a bear when most in the real estate industry were bulls. He recently counseled his audience, "The story is not over yet. The 'landing' is still in progress."

Diggin Deeper said...

Add this to the Fed Tax Credit...

http://www.sacbee.com/business/story/1652233.html

Now the state is giving a $10,000 tax credit, to be taken over 3 years, as incentives to buy NEW homes. Effectively a new home buyer who closes after March 1, 2009 and up to Marck 1, 2010 will qualify for the credit. It's first come first served as the state put enough tax credit funds to accomodate about 10,000 new home transactions. Once the money's gone, so goes the state credit.

This will have an impact...Somebody with a chance to get couple of checks in the mail that total $11,333 next year and potential for an additonal $3333 for '10 and '11, will bite.

David said...

I'm starting a blog to track the latest articles by Robert Shiller and provide a forum for discussion, etc. Would love to have all of you be regulars: www.shillerfeeds.blogspot.com

patient renter said...
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