Thursday, August 06, 2009

Sacramento Foreclosure 'Surge' Dead Ahead?

From CNN Money: Buy foreclosures now - before it's too late

In many markets, if you want to buy a repossessed property, you better come with your best offer first -- and fast. You've heard of speed dating? It's got nothin' on foreclosure buying these days. In many places, anyone who wants to buy a foreclosure better act fast, or they're going to come away with bupkus.
The hot spots for this fast-paced foreclosure activity are former bubble markets where foreclosures soared -- places like California cities Sacramento, Riverside and San Bernardino. In Sacramento, for example, the inventory is down to less than 30 days, making it a cut-throat market.
The trend is causing intense agita for buyers. "People feel like they're getting left out," said [Caesar] Dias, the agent in Stockton.
From News10:
Declining home values might also be in our future, especially homes priced at $300,000 and up. Jim Waters, a regional director for Lyon Real Estate, said there are more than 20,000 foreclosed homes waiting to be released by lenders just in the Sacramento region.

"We're going to see a good surge, probably in the middle to latter part of September or the end of the 3rd quarter, and that surge will run all the way through the end of the year and all of next year, from what they're telling us," said Waters, who talks regularly with banking executives.

When asked if the economy will see as many foreclosures in the coming year as the past two years, Waters replied, "More, more."
From the Sacramento Bee:
In Sacramento "we have a lot more decompressing to do," added Sanjay Varshney, dean of the College of Business Administration at California State University, Sacramento. "Normally, I would have said we would have defined a bottom, too, later this year or early next year. I think for us the challenge is the government layoffs have just begun. "We might be looking at our cycle to be pushed out compared to the national cycle," he said.


patient renter said...

The CNN article is worthless in that it discusses market inventory without even mentioning shadow inventory, which as Deutsche Bank's data (via SacRealStats) show is an additional 150% of market listings in Sac.

If prices are determined by supply and demand, where supply is being vastly manipulated, so too are prices.

robert said...

In many places, anyone who wants to buy a foreclosure better act fast, or they're going to come away with bupkus

Buy now or be priced out forever. LOL!

Diggin Deeper said...

This next wave ought be interesting. Those areas that sidestepped significant price reductions during the first wave are now going to be the ones to take the big hits. Big reductions coming on Jumbos and those home >400K. The lower end probably doesn't see near the price declines as these homes are still in demand.

wrong moves said...

Just this week we have lost out on bidding on REOs for the second time. A "consortium of investors" swooped in with a cash offer. I just can't compete. At least the houses we are bidding on keep getting nicer and nicer as the time passes.

smf said...

As I have stated time and time again, the speculative fever that gripped the nation during the bubble, IS NOT OVER!

This is not only a price issue, but an excess inventory situation.

I can purchase many homes, but if I can't rent any of them, my expected profit will quickly turn into a loss.

Did you not all see CR today?

Interesting article as to how speculation has barely budged from the highs of a few years ago.

Till this speculative fever goes away, this won't even be close to over.

(And don't tell me how these are all cashflow 'investors', about 95% of the stories and the people I talk to about the bubble think that prices will come back 'soon'. Even those who realize that a bubble occurred)

patient renter said...

smf - Agree 110%

paranoid renter said...

smf - agreed 100%.

However, just because it's not over doesn't mean we can't have an echo boom. There is too much money chasing too few goods, and unless the govt forces people to recognize lossless, there will always be too much money and it will create these weird side effects.

That does not mean it is a good time to buy.

Am thinking of changing my name to Renter4Life because the way things are going (all the govt. meddling and all), I'll be dead before it's a good time to buy.

patient renter said...

just because it's not over doesn't mean we can't have an echo boom

Yes, and certainly echo crashes. I still think most of the analysts looking for indicators of a bottom are grasping at straws, and still continue to ignore the basic historical metrics like price/income.

I also think it's important, as always, to distinguish between a bottom in sales (which Realtors and industry folk care about) and a bottom in prices (which the rest of us care about).

smf said...

What about ignoring the excess built during the bubble?

Was there not a story how from 1990-2000 5 'golf communities were built in the area, and during the bubble 24 were built? What changed in the last decade to cause that?

When, before this bubble, did people build speculative mansions? Yet I can find hundreds of spec. mansions in Granite Bay and EDH alone.

The excess has not been addressed at all, perhaps because there is really no fixing a housing excess with our current conditions.

RV6Flyer said...

"What changed in the last decade to cause that?"

Tiger Woods

gordon said...

Interesting take on the 'next' wave of foreclosures.

patient renter said...

"Tiger Woods"

I don't think the average golf course community homeowner is necessarily a golfer, at least not the ones I've known.

husmanen said...

The lots around the golf courses in Folsom are very very small.

The golf course gives the feeling of openness, to get away from the 'apartment/condo' feel of the McMansions.

sacramentia said...

The 'surge' has been on the way in just a couple months since January. Who knows when it will get here.

norcaljeff said...

It's funny how these articles cancel each other out. No ones on the same page. Oh well, I'll have plenty of foreclosures to choose from once the moratorium is lifted in 45 days.

In fact, my neighborhood has one on ever street, I have my pick and they aren't moving at all! LOL

patient renter said...

"The lots around the golf courses in Folsom are very very small"

Indeed, which is problematic on a few holes where the houses have numerous ball shaped marks in the stucco :)