Monday, September 25, 2006

Sacramento Regional Real Estate Trends for September 23, 2006

Just a quick one this week because I’m swamped. I’ll have a more detailed commentary for this weeks stats on Saturday.

Four-county inventory was up slightly this week:

However, pending inventory in Sacramento County dropped yet again, to 4.8% of the market:

Flipper market spread continued to shift toward zero for both Sacramento and Placer:

Flipper inventory increased in all four counties this week, while the pricing trends continued:

Sunday, September 17, 2006

Sacramento Regional Real Estate Trends for September 16, 2006

Another week, another set of colorful graphs. Four-county inventory remained flat week-over-week:

It is not just the cool weather telling you we have started fall early. This trend was also seen in market activity:

Pending listings remained very low at 5.3% of market. There was nothing going on this week, inventory-wise. On the flipper scene, however, the trends we saw all summer have continued on. As promised last week, I broke out the flipper distributions for Placer and Sacramento:

What we are seeing here is a gradual inversion of the April 15 distribution (green bars). Back then, 95% of flippers expected a profit of some kind, with 70% wanting a profit over 10%. As the market has slowed, almost 20% of flippers have been forced into the loss bin, and those asking for large gains are diminishing.

Curious to me are those flippers still asking for, say, a 50% gain. They can’t not be aware of the slowing market. Either they owe more than 100% of the last sale price, or they are way more optimistic than the majority of their flipper brethren. Whatever the reason, I doubt they’ll be selling anytime soon.

On the price level inventory front, we are definitely seeing declining inventory in the upper price ranges, coupled with rising inventory in the lower ranges. The change is subtle, but it’s there:

Flipper market share trends continued unchanged this week, with a gradual reduction in flipper positions coupled with an increase in the flippers in trouble levels. The only exception was El Dorado county, which saw a slight increase in flipper levels over last week:

Bubble Bits

  • In my last post on the short sale class I attended, I forgot to include some information that I found very interesting about appraisals. The instructor had statistics that showed 55% of appraisers saying they were pressured to get a certain value by the lender. Additionally, 33% were threatened with no more appraisals if the value didn't come in. This was during the 2005 calendar year.

  • I ran some numbers for the Elk Grove area with regard to distressed properties. By distressed, I'm referring to any property that is either in short sale, pre-foreclosure, or bank owned. Here's what I discovered:

    • # of homes for sale: 1,440

    • # of short sales: 38

    • # of pre-foreclosure: 4

    • # of bank owned: 18

    • # sold in last 3 months: 469

    So, this is showing that 1 in every 24 homes in Elk Grove is either a short sale, pre-foreclosure, or bank owned. It's also telling us that there's a 9-10 month inventory supply.

  • Let's see how this compares to Sacramento County as a whole:

    • # of homes for sale: 9,313

    • # of short sales: 271

    • # of pre-foreclosure: 22

    • # of bank owned: 143

    • # sold in last 3 months: 3,292

    This is showing us that about every 1 in 22 homes is either a short sale, pre-foreclosure, or bank owned. There's also about a 9 month inventory supply. I can guarantee you the number of short sale/pre-foreclosure/REO is low because not every agent knows how to enter one in MLS. I've seen countless listings showing "short sale" in the comments field, but it's not in the status field (and not captured during my search).

Saturday, September 16, 2006

Pot House Update

Just a quick update on the pot house situation. There was another bust in Sacramento, this time in Rancho Cordova:

Pot plants seized in Rancho home

This comes on the heels of another big bust in Stockton:

Stockton pot ring uncovered

The similarities to the previous 21 busts in Sacramento were not lost on the media. Just like in Sacramento, the Stockton guys used the same Realtor:

Bay Area man helped all 5 buyers linked to operation

How big will this thing turn out to be..?

Monday, September 11, 2006

Short Sale Stats and Info

I recently attended a class on handling short sales at the Sacramento Association of Realtors. I figured that would be a good skill to have in the coming months. My concern, however, was that the instructor would paint a pretty picture of the current market and I'd quickly get tired of all the babble. I even thought about just getting the handouts and leaving before instruction started.

I'm glad I stuck around.

The instructor made some comments that really blew me away. He had no illusions about the market's current condition or where it was headed. His comments were so close to what we continue to say on this blog (and others) that I thought it might actually be Max in disguise. In his opinion, most people are stupid in an economic sense (his words, not mine). He said they use their homes and ATM machines and have nobody to blame but themselves. He also said the lenders only had one requirement before approving a loan--Can the person fog a mirror? I thought that was pretty funny. With most lenders passing the loans off to the secondary mortgage market, what do they really care anyway if the person isn't going to make the payment on their option ARM in a year or so. Finally, he predicted a 10-15% decline for our local market, which I was surprised to hear from someone in the real estate industry. All in all, a great seminar by a very informed instructor.

Now, on to some actual short sale stats. Take a look at the graph below. It's only current as of Friday, so I ran a new report today and the numbers have gone up even higher. This is only for Sacramento County too.

Saturday, September 09, 2006

Sacramento Area Real Estate Market Data for September 9, 2006

The four county region added around 150 new listings to the MLS this week, breaking (slightly) out of the declining trend of the last four weeks:

But the real story was the continued reduction in market activity. Pending sales dove to a record low of 5.3% of market inventory:

Flippers continued to lower their profit expectations this week as listing prices bunched up against the 0-25% profit mark:

I have a feeling there is more happening than meets the eye in that range, so next week I’ll break it out a little better.

An interesting trend has begun to emerge on the price-level inventory front. It appears that inventory levels in the lower price ranges are starting to rise after a long period of stagnation. There are now almost 1,000 houses priced at or below $200,000 in Sacramento County, and over 2,000 houses between $200K and $300K. This rise has been accompanied by a drop in both the $350K - $400K and $400K - $450K ranges:

Flipper trends remained constant, with overall flipper market share slowly dropping as those who remain in the market decline into loss:

Monday, September 04, 2006

Pot House Neighborhoods: Why Here?

Over the past few weeks, several houses in Elk Grove and the Natomas neighborhood of Sacramento were found to be part of a large marijuana growing operation. Notable was the fact that most of these houses were in newly built housing developments and sold for an average of $500,000.

After our hastily prepared analysis of the Elk Grove pot house neighborhoods last week, we received several requests for a better work-up. While much anecdotal evidence exists that the newer developments where most of the pot houses were found are also hotbeds of flipper activity, a detailed examination was needed to say for certain.

Mostly out of curiosity, we began looking at property records and neighborhood sales data on these houses. (Agent Bubble's analysis of property records proved to be an excellent predictor of future pot house busts.) We also noticed what seemed to be a large number of house sales on these streets within the last three years, and speculated that it would be easier for criminals to infiltrate a neighborhood with high housing turnover, since the neighbors would not be around enough to notice anything suspicious.

Our speculation notwithstanding, further analysis shows us that these neighborhoods are far above the county average for turnover rate and current sales listings:

Sacramento County has had a turnover rate of 23.4% over the last three years. 15 of the pot house neighborhoods were above that number, some by three or four times. One street (Catherwood Way) has completely turned over within the last three years. 17 of the pot house neighborhoods had for-sale rates higher that the county average, with 14 more than double. While the motivations of the marijuana-growers can only be speculated upon, the neighborhoods where they chose to operate were clearly in flux.

We would like to thank the Sacramento Bee for respecting our privacy wishes while giving credit to the blog.

Pot raids hit six more homes
Sacramento County Assessor’s Office
Home 'for sale' signs soar
Recent home sales

Sacramento Area House Listings Inventory For September 2, 2006

Inventory levels are officially in decline in the Sacramento Region:

Even the usual Saturday jump wasn’t enough to offset the end-of-the-month decline. If this trend is anything like last years, we should see a steady decline until January 2007. Pending sales also held the line at 7% of total listings:

Flippers continued desperately to try to prevent losses, as their positions bunched up against the 0-25% gain mark:

This deterioration is also reflected in the flipper market share graphs. Flippers are reducing their overall market holdings, and those unable to do so are getting into trouble: