Friday, April 13, 2007

Up, Up, and Away!

13 comments :

Sippn said...

Now that rate of growth looks similar to previous years, but approx 10% higher inventory.

Real said...

Given subprime has evaporated, sales volume have fallen by 50% from the peak and the sacbee and the renters have been screaming to everyone that has ears '50% deline', I am shocked that inventories are up by only 10%. Well, actually I am not as the market is much stronger than any of the renters admit which is why it has turned from talk about the present situation to the 'future'...

BTW, as to numerous observations that most of the inventory out there is crap - I have to agree. If you look at the MLS stats from Feb., you will see that almost 60% of homes that actually close escrow have been on the market for under 60 days with almost 35% selling in the first 30 days. So, after the quality inventory is picked through, you get crap that lingers on the market for ages which is driving the increase in inventory. Now, if I looke at my neighorhood in particular, prices seem to have bottomed and are now increasing and I hear the same thing about midtown and the established non-gang havens near the city center. Looks like there will be some good deals to live in Elk Grove and Natomas coming your way, but the drop in prices has ended for the established neighboorhoods. So renters, you can take some of that money you save by buying in Natomas and invest in a good set of Kevlar for the family and some handguns for the kids.

Sittin' Out This One said...

Real,

You have a great deal of wishful thinking. The price declines have not even started. The inventory in the outlying areas is growing, prices are dropping and foreclosures are rising.

Look at Craigslist today: There are 144 houses for rent in Folsom, 161 in Roseville. A year ago, you would be lucky to see 25 homes for rent. Stuck flippers are eating payments on vacant houses and there are not enough bodies to fill them. It will take 3 to 4 years to find equilibrium in this market. People can pay $650,000 for a 1500 SF home in your area, or go to outlying areas where desparate builders are offering much nicer, 2500 SF houses for $400,000 with $50,000 cash back at the COE. Small price to pay for better schools, longer drive, safer area, and better shopping.

If you think that difference marks the bottom, you are foolish. You can not even see the bottom from here.

Sippn said...

Oh come now, using Craigs list as a borameter? Inventory grows YOY on it because its new to real estate.

Real - yes I would expect much worse now if the market was going to pot - Higher end in Sac co has been moving steadily since 1/1/7, builders moving through inventory in the $500-600k range, even with subprime problems - I mean 2005 was just a killer market we all know we won't be there again, but I'd be satisfied with the volume of 2003.

Max said...

Now that rate of growth looks similar to previous years, but approx 10% higher inventory.

I just ran the week-over-week four-county inventory:

Sacto: +4.1%
Placer: +5.3%
El Dorado: +5.0%
Yolo: +3.8%

Overall we're running 17.6% over last year at this time.

Real said...

"I just ran the week-over-week four-county inventory:

Sacto: +4.1%
Placer: +5.3%
El Dorado: +5.0%
Yolo: +3.8%

Overall we're running 17.6% over last year at this time."

Max, I don't quite understand your math here - are you adding the % over by county? With Sacto being the biggest market by far and it being up by only 4.1%, I find it hard to believe the 4 county region is up by 17.6% overall. Please explain the math you are doing because something is not computing on my end.

Max said...

Sorry if I wasn't clear. The 17.6% is year-over-year. The other percentages are week-over-week.

Sittin' Out This One said...

Sippn, you have a good point about Craigs List being new to the market. I have been using it since 1999 in other areas, so I guess I overlooked that fact for Sacramento.

However, if you get out into the burbs, the facts are that prices are dropping, sales inventory is sitting, rentals are sitting vacant for many months. If you drive around Placer, Rancho, Folsom, Elk Grove, you can see it all. Houses which sold in 2005 for $750,000 to Flippers are now for rent asking $1800/mon. And asking sales prices of $550,000 and they are still sitting (unless the builders provide a $50,000 rebate).

The point is this market is clearly still declining. Real estate is always sticky headed down and there are always dead cat bounces from time to time. Thinking an uptick in sales in the mid town area means the market has hit bottom is a fools game. Affordability is all time lows, vacant inventory is at all time highs, liquidity is tightening with tightening to come, and you just saw Max state that resale inventory is 17.6% above last year. You know higher inventory only leads values in one direction: Lower.

Anonymous said...

real wrote:

>> Now, if I looke at my neighorhood in particular, prices seem to have bottomed and are now increasing <<

What neighborhood are you talking about, real?

Anonymous said...

When you go to look at the data from the Un-Real-tors, and you see statistics like "..60% of the homes sell within 60 days...", and "...achieve 97% of listing price.....", please....go here and look at what is Reality..

http://bubbletracking.blogspot.com/2007/04/in-data-we-trust.html

Much of what you see is from the CAR group is spin. If you go out and look at the market you will see listings are up by 20% and accelerating. Properties are on the market for 6 months, then foreclosed and sit for 6 more months. The deals that close have $50,000 cash incentives for 2500 SF houses (adds $20/sf to stats and provides a false average and false median data).

This market is so overbought there will be no bottom until 2009 at the earliest.

Bubble Sitter said...

Here is a true Bubble Market First!

From Max's FITs site, look at MLS 70010445 on Pinehurst in Roseville.

This house sold in 2004 for $480,000. Someone did a cash out refi before First Franklin (the sub prime lender) foreclosed in Nov. 2005 for $828,000!

Here is the funny part. First Franklin sold it in August 2006 for $879,000 and the buyer used a new sub prime lender, Preferred Fin'l Group. PFG appears to be the new bagholder, as the property is listed for short sale at $574,900.

This market is years away from getting sorted out. There is no way to tell where real values are until real people, using real cash money, decide to set the market. The sub prime lending has chased values to absurd levels. Now it appears sub prime lenders have been cheating other sub prime lenders, so the first sub prime lender did not have to take the loss! Amazing!

Sippn said...

Anon 3:50 am - what loosing sleep over this?

Good catch on the data, but it works both ways.

Patient Renter said...

">> Now, if I looke at my neighorhood in particular, prices seem to have bottomed and are now increasing <<

What neighborhood are you talking about, real? "

You know, the one on Mars.