Sunday, March 11, 2007

Sacramento Regional Real Estate Trends for March 10, 2007

March 2007 is turning into a "March of Death" for flippers. Flippers in trouble now make up one out of nine MLS listings in Sacramento County. Anyone who doubted the effect flippers have had on this market over the last two years should look at these graphs:

57% of all flipper listings are now in trouble, and the year is really just beginning. Flipper inventory in Sacramento County held at over 2000 listings until early November last year; currently there are only 1626 flipper listings. "Hold onto your hats and glasses…"

On the inventory side, things are starting to pick up nicely:

Four-county inventory stood at 13,584 on March 9. Last year we didn't have that kind of inventory until mid-May. We are beginning to see an up-tick in inventory at most price ranges as well. Spring is springing, at least from an inventory perspective.

I can't say the same for asking prices. Each county spent the last two months finding a trend, and they’re finally emerging:

Sacramento has resumed the downward trajectory it had since last summer, while Placer and El Dorado seem to be flattening. With far few houses on the market than the other counties, Yolo trends will always be volatile, but asking $/sqft seem to be on the decline there as well.

Finally, I have a couple of favors to ask. One, if anybody is flying into town and their approach takes them over Elk Grove or Natomas (i.e. Southwest), could you get a window seat and snap a few digital photos of the new houses below and email them to me? I've got an interesting idea I want to test… Also, I'm looking for information on the condition of local lending companies here in Sacramento. How's business these days? Is the purported national credit-crunch having any effect on you?

Thanks in advance.


Anonymous said...

I can tell you for a fact that the referral fees for sending a borrower from a hard money broker to subprime have dwindled to nothing.

Perfect Storm said...

Oh their has to be tons of laid of liar loan officers all over Sacramento. I bet these guys have all sorts of crooked stories to tell about their former employers.

Look at the guys who got shxx canned from Coastal Pacific Mortgage. You guys are probably a little disgruntled, tell us some good stuff.

Look they canned you and told you to leave, you owe them nothing, but the same misery they bestowed upon you.

Anonymous said...

I was listening to a local investment talk show yesterday on KFBK and some caller with a rental house asked about selling his rental in this market. It seems he HELOC'd $60,000 to go buy his new house and now the rental was about $900/month negative.

The advisor told him he could sell it now, or plan on hanging on to it for 10 more years, because prices were probably going to drop another 10-20% before they hit bottom. Then the advisor said the Sacramento area would take about 10 years to recover to today's prices.

It was nice to see some straight talk from people in a position to make a qualified assessment. You do not hear that very often.

Perfect Storm said...

It looks like a bounce may have happened in Novemeber/December and then a steady decline. However, housing tracker seems to remain constant with the median price.

Josh said...

However, housing tracker seems to remain constant with the median price.

Housing Tracker goes by neighborhood, while my data is county-wide. They also lump different counties together.

Not that they're data isn't accurate; just that we're measuring different things.

Anonymous said...

Perfect Storm,

Keep in mind Housing Tracker lists only the asking prices. As the Realtors say "That's the most they will take!"

Perfect Storm said...

Asking price, I see, should have know.

... said...

Anony - if you are talking about the investment talk show "H&M" remember they don't know much about real estate except their business completes with real estate investment - nice netral advice!

Anonymous said...


The weeks ago, the real estate talk show on KFBK had a special on short sales and sub prime borrowers who were stuck. Even the host said real estate had gone down 10% last year and the forecast was another 10% drop in the coming year.

I believe it is pretty common knowledge today that the Sacramento real estate market is in for a very rough ride in the next 5 years. In fact, a knowledgable source recently mentioned the elevator may not get back to the top floor any time soon!

... said...

That I did. Agree that both percentages will someday reflect in the median price in Sac area; however, some places more, some less, some sooner than later.

The builders already took care of that 20% and are having success. Area from east sac out to Fair Oaks and Folsom has already been there and bouncing back.

The higher end is moving on without asking the rest of us.

Looks to me like the commodity priced housing, vast areas of production homes with more on the way are still "adjusting".

But the next opportunity ot throw someone elses money into a home and flipping it in 3 months without ever moving in, will likely not happen again here.