Friday, May 15, 2009

Sacramento Real Estate Market Charts - April 2009

After steadily declining this spring, average price per square foot rose 1.8% from March. According to TrendGraphix, that was the first monthly increase in Sacramento County since April 2007. Prices are still below January levels and down 23.1% from last year.

Turning to median price, the Sacramento Association of Realtors reports the median price in Sacramento County (and West Sacramento) fell 29.5% in April. That was the first year-over-year decline since March 2008 not to reach at least -30%.

So far, no "spring bounce" for median price as measured by the MLS. The median for single-family homes has been essentially flat since February. Unlike the previous three years, the median price has remained below January levels.

The median price is now at April 2001 levels.

Sales in April were 17% higher than the previous year. That was the smallest year-over-year increase since March 2008.

Looking at the historical record, sales remain at relatively high levels. While the inevitable spring bounce between February and March was the weakest in at least 9 years, that is not surprising considering the record sales of January and February.

Here's a look at the percentage of MLS sales which were bank-owned. At its peak in January 2009, REO sales made up three-fourths of total MLS sales. That proportion has dropped off in the last few months as REO inventory has shrunk, presumably due to legislative tinkering and private foreclosure moratoriums.

Finally, here's an update on Sacramento County's foreclosure statistics from ForeclosureRadar.


Jacob said...

Nice charts. The REO sales as a percent of total sales may be way off recently, but they are still at 65% it looks like. What is the historic average? 5%?

Looks like the bigest declines may be behind us. Of course we went from a median on almost $400k to $160k in a couple years so there isn't that much left to give.

Around $150k seems reasonable. Median wages are around $40k-$50k and coming up with a down payment of 5% or 10% at this level should be doable for most would be home owners.

So I guess the next question is, do we level off and after a year or too see modest appreciation, or do we spend the next 10 years going down 1-5% per year?

patient renter said...

"So I guess the next question is, do we level off and after a year or too see modest appreciation, or do we spend the next 10 years going down 1-5% per year?"

I dunno. I'm probably not in the mainstream with this, but I'm thinking the latter. Our policies are so much in line with the policy failures of the Japanese...

Jacob said...

That's the way I am leaning as well, though I am hoping for the former.

Though any stabilization of prices may run into a wall of sellers running for the exit:

patient renter said...

Yea that zillow post on CR was very interesting, and definately confirms what many have been suspecting.

Diggin Deeper said...

If we use the median price line as a market base, then one would think you'd use median income as it's buyer base...when job losses mount, particularily at the state level, I would think that median income would fall, and pressure prices as it moves lower...The other thought is that prices in free fall tend to overshoot the bottom and a correction to a more reasonable price level occurs rather rapidly. We may be seeing the effects of some of this in pricing today...

A Japanese style of extended recession is a scary thought. It assumes we have the same internal conditions they did. While the world continued to grow and increase consumption, Japan maintained its workforce to feed demand with her products. Japan had margins of safety as long as the world bought Japanese goods and her people saved money.

That's not happening here, in fact, just the reverse is true...employment, our producer base, and consumption are all falling together as one negatively feeds off the other. We're the world's largest producer of IOU's and wholly dependent on others to finance our needs.

Our margin of safety is suspect...

sacramentia said...

Thanks for the charts, as always very interesting.

I've heard from a couple Realtors that there is a wave of inventory coming soon that has been held back due to some moratorium which will expire at the end of April.

On the flip side, everyone I know trying to buy is having long delays getting deals closed. This would mean that pending sales data should be up and closed data is lower when compared year over year.

I'm curious to see which one wins out and I'm betting lower home values over the next couple years. I write values because I'm completely stumped on the deflation/inflation issue - but I do think it will require less hours of average labor to purchase a home for a while.

norcaljeff said...

My friend tried to refi his home which has over 200k in equity, great long term job and only wanted a few bucks back. It was a very long, drawn out approval process. Money is still tight, so that's going to keep purchases an sales flat for a long time still.

Ignorant Opinion said...

"I'm completely stumped on the deflation/inflation issue"

Unfortunately with printing presses running in the U.S. and debt getting out of control only one way to go on this debate. In a couple of years (if the economy starts growing again) we will start seeing the sure fire way to be able to repay the debt is to incur significant inflation and devalue our currency. Bernanke will fight it, but public outcrys against high unemployment will make him lose the fight.

If the economy doesn't start growing - foreign governments will have decreased demand for our debt and interest rates will have to rise to stimulate demand and the spiral down will escalate.

Most anyway you look at the situation we will have significant inflation within the next couple of years.

Japan is not a good comparison - Japan has a significant surplus. The deflation in Japan will not happen in the U.S. with the significant fiscal and monetary policies and intervention.

In a high inflation environment, hard assets at reasonable valuations secured by cheap long term debt typically do very well.

Diggin Deeper said...

"In a high inflation environment, hard assets at reasonable valuations secured by cheap long term debt typically do very well."

I believe this will happen, and once housing does bottom, prices will be pressured to at least stabilize based on the inflation component...It may not be as far off as most are projecting (those that believe inflation is inevitable). The $ index is getting pretty close to breaking down below the .82 level. Commodities such as oil and ag will continue to price based on the strength or weakness in the $.

We've seen oil rise by 90+% from its low while demand was being destroyed. Food prices haven't backed off much. When the $ index bottomed at about .72, inflation was at or near the 7-9% level, depending on what stats you're willing to believe.

It's all about the $ and what it eventually won't buy...and low fixed priced money will be golden if inflation does indeed occur...

As an aside, most projections are that today's election propositions are in trouble. Seems like the public's got no stomach for more debt...If we have to hunker down, business as usual at all levels of govt. doesn't appea to set well...

Diggin Deeper said...

U.S. housing starts, permits hit record lows in April

"The Commerce Department said housing starts fell 12.8 percent to a seasonally adjusted annual rate of 458,000 units, the lowest on records dating back to January 1959, from March's upwardly revised 525,000 units."

Talk about a market that is a skeleton of what it was 3 years ago...I guess it's more tied to homebuilder's replacement costs against the stressed prices of foreclosed existing homes they're competing with.

At least it makes room for additional inventory to hit the market without the pressure of new homes adding to future price declines..