Monday, July 02, 2007

Preliminary June Sales Stats

The early June sales figures are in. June has typically been the high sales month for the year, but it's not shaping up this way for 2007. Expect this number to rise by a hundred or so as MLS is updated by some of the stragglers.

We're at about 17,650 for inventory which gives us around an 11-month supply of inventory. We also lost 985 homes that expired at the end of June, the highest for any day that I've ever seen.

38 comments :

Anonymous said...

Thank you for all your work. Its so difficult to get some decent data around here. I do not trust the government at all on this. I found another website, which you all probably find interesting. Its about subprime news:

http://subprimemess.blogspot.com/

Diggin Deeper said...

Didn't take you very long AB...Thanks for such prompt updates. Onc thing's for certain, falling sales and rising NODs/foreclosures are beginning to close the gap between each other. Predict by the end of the year(Nov/Dec)that actual Sacramento area foreclosures in a given month will outstrip total sales per the MLS for the same month. This phenomenon will clearly separate this downturn (crash if you will) from any other in history save the Great Depression. And it certainly won't help prices remain at their present nose bleed levels.

AgentBubble said...

Just wait till you see my monthly "Distressed Properties Update" and you'll see things are indeed full steam ahead!

Darth Toll said...

11 Months of inventory, wow! Serious pain is coming. Probably some sellers think that serious pain is already here, but they are wrong!!! Things are about to get much, much worse as diggin mentioned in the NOD/sales ratios. At some point in the very near future, foreclosures will be about the ONLY thing selling besides truly high-end, which always sells due to bifurcation. But this won't be the kind of wanna-be psuedo high-end that some people think is high end. I'm talking about 2mil+ mansions, etc. For the rest of us, realty reality is very grim.

Sometimes I wonder if all of the current knife-catchers really think they got a great deal. LOL! It just baffles me how anybody could be falling for the obvious lies and distortions of the Realtwhore machine. But, you can't save 'em all, I guess.

Agent, can you confirm if foreclosure sales do/do not show in median price stats? I've heard they don't, and that could mean that we're getting a lipsticked-pig picture of the current situation, as ugly as it is.

AgentBubble said...

darth--

Foreclosures will only appear if they are closed in our MLS. Since the trend seems to be leaning towards auctions, that's a whole bunch of data that will not be counted.

Anonymous said...

God, this thing seems so rigged. Every means possible to bury data is taken by the realty cartel. Aren't these people regulated?

Diggin Deeper said...

anon 9:28...

Why would anyone whose livelihood is dependent on real estate(save a few) want you to know the truth? Damage control is the du jour of the day.

Just watch as they come into these blogs with all their statistics about demographics/population shifting, platitudes that played during a different era, and mantras that would make the Hari Krishna cringe. If you're looking for truth, it's not coming from the real esate establishment. Most of them are hanging on to a career that's caving in right now.

We're talking about some potentially serious losses here in a market that's in deep trouble.

There are those who bought at the high and want anything that smacks of a confirmation that everything's going to be ok. Sadly, it's not and won't be until all the excess inventory washes away, the last set of keys are left on the counter, and the builder dejectedly walks away from his project. And that might take years based on the raw data that keeps pouring in.

Anonymous said...

And you've got to love (hate) the sinister effort by the MSM establishment to discredit bloggers. As if Joe-barely-passed-high-school doesn't have it tough enough trying to navigate the real estate world, now he has trusted advisors on Fox News telling him not to use the best resource available! Fish in a barrel...

Rob Dawg said...

'05 3627
'07 1544
Death spiral.

anon1137 said...

Foreclosure sales should be reflected in the monthly Dataquick numbers, since DQ tracks all sales through title transfers, not just MLS stats.

Thanks for the prelim data, AB. Seems like sales are continuing to fall about 30-40% yoy. I'm a little surprised that the market is holding up so well, given that median prices have not fallen that much. $400/ft2 is pretty common in ESac.

Gwynster said...

Anon1137,

I had someone contact me about a lease to own in East Sac early this month. I kid you not

Dreamer said...

Off the subject, but a few posters on Sacramento Landing suggested they would be ready to buy when prices return to where they were in 2002. Anyone have any ideas on where one could find data/overall guidelines on what prices were back then? Probably a good benchmark going forward...Thanks in advance

Gwynster said...
This comment has been removed by the author.
Gwynster said...

For me, I know the areas I'm looking at. I then do a sweep of the homes using county records, looking at prices from the sales since 97.

Another way to do it is to establish the 1997 base and then add in core cpi inflation annually and give them 2 or 3% appreciation annually too. This usually takes me back to a 01 price.

The best part is watching the listing agent's face as you run the numbers to make an offer >; )

dreamer said...

Gwynster

LOL, I can only imagine those looks you get from agents ;). Where do you get the county records (or...are they available online?).

Darth Toll said...

"I'm a little surprised that the market is holding up so well, given that median prices have not fallen that much"

This is a common misconception reinforced by years of Realtwhore brainwashing. First of all, the market is NOT holding up well as the horrible sales figures plainly show. And yet medians haven't dropped much. What can this riddle mean?

IMHO, it probably means that medians are a real poor way of determining market pricing due to bifurcation of the market. The ultra high-end still moves, yet the sales volume on everything else tanks, skewing the median higher.

I'm surprised anybody here still cites high median prices as a sign of market health(?)

Darth Toll said...

"$400/ft2 is pretty common in ESac"

Also, those are asks my friend. Not many takers at those prices as lack of volume shows again. Sure, you can always find an example of the next biggest fool (knife catcher) but that is the exception.

Put more simply: Most people know better prices are coming and are not shelling out $400/ft2.

Gwynster said...

Even the good stuff in Davis is now under 300 sqft (those El Macero hovels aside)

I know Yolo county doesn't display a lot of the public records online anymore. Too many people complained. You can still go to courthouse and it's all public record.

You can also just use Zillow but make sure you use it only to get last sales price. There vaules calc are all messed up.

If you use Zip Realty, there is a link on the listing that goes to the Zillow data. I keep an account and save everything in my price range and but the last sale data in the notes.

Anonymous said...

So I posted here about 3 weeks ago thanking everyone on this blog for educating me on this housing market and let everyone know I purchased a new home in lincoln park. The deal was a 2K sf townhome with 30K in upgrades, 50K off the current model price and builder would pay 6% (max allowed)above the sales price for closing, mello ruse and HOA fees for 2 years. A total of 98K of insentives.

I figured, that was a pretty good deal and I've been waiting a long time to own. I'm a obsessed bitter renter. I'm even more bitter because I worked hard to get a great 100K job with our main goal of having my wife the ability/choice to stay home and raise our children full time.

Anyway, I was going to sign papers yesterday to close the deal. All that changed when I noticed that the builder reduced the prices on all the model homes by 15%. This happend because Q2 ended on Saturday and July marks the beginning of Q3. For these homes 15% equals about 50K to 60K price drop on the base models. Thats a huge price reduction.

I broke off the deal, my original insentives were basically fake, and the desperation of the builders is honestly a little scary. Of course they have offered even better deals, but what happens next quarter? Another 50K drop?

Lessons learned

1. Don't settle for anything in this market, buyers have almost godlike power.
2. Be careful if your going to buy, location is everything, even in a down market.
3. plan on living in the house for at least 5 years.
4. I know its hard, but if your a bitter renter like me, don't be taken in by the brand new homes you now can afford, that a few years ago you could only dream about. They are going to get cheaper and catching a falling knife is hard to do.

It sounds weird, but I think the time to buy will be when the builders are not in "panic" mode, but when they are realistic, prices are at a point when buyers are buying. That will mean prices have stabalized and the risk of being stuck in a home worth 100K less than what you paid for it.

Anonymous said...

P.S - If your buying from a builder, here is a tip. Insist that you want to use your own lender. They will agree up front and then create a purchase agreement that makes it difficult for your lender to submit a good faith bid.

The builder will then take the good faith bid (if they can actually submit one) and try and match it with their lender. What they do is hide additional fees in the back end of the loan that gives the builder some additional funds to make up for the insentives.

To work past this, keep insisting on using your broker, I'm sure your broker can beat any deal from the building lender (it will save you a minimum of a few hundred a month). When it comes down to it, the builder will say, "sorry, we can't do this deal without our lender". Total used car salesman tatic. What you do is simply walk away from the deal, call them out and say they never intented to use your broker, say they broke the purchase agreement deal (make sure your lender is named in the purchase agreement) and you want your deposite back.

The builder's sales manager will approve your sale with an outside lender and you will be good to go. This will not save you time, but it will give you a heads up on what they are doing.

Anonymous said...

Edit, above I ment to say Lincoln Crossing, not Lincoln Park

Real said...

"IMHO, it probably means that medians are a real poor way of determining market pricing due to bifurcation of the market. The ultra high-end still moves, yet the sales volume on everything else tanks, skewing the median higher."

You are wrong. It means that in the desireable areas (established neighborhoods with good locations) DO NOT NEED TO SELL so the people pull the listings rather than sell at a reduced price. A house is not a warmed burrito under a heat lamp at Taco Bell and the owners are not forced to sell before they spoil. This is the exact reason that foreclosures and inventory is only sitting in certain areas and not everywhere. Anyone with even half a brain knows that this is the exact way any recovery occurs and prices in mature, desireable neighborhoods are moving UP not DOWN.


"Another way to do it is to establish the 1997 base and then add in core cpi inflation annually and give them 2 or 3% appreciation annually too. This usually takes me back to a 01 price."

Good luck with that approach - hope you enjoy renting because if you are waiting for Davis to return to 2002 pricing, you are wating on someone to invent time travel because prices will never go back there. Sorry to burst your bubble.

"Dreamer said...
Off the subject, but a few posters on Sacramento Landing suggested they would be ready to buy when prices return to where they were in 2002."

Like with Gwynster - good luck with that. The people that post on Sacramento Landing lead to a self-reinforcing negative bubble that defies reality. Because these people only seek negative prices indicators, they fool themselves into thinking that only negative news is available and that doom and gloom is equally distributed rather than concentrated. I would also buy another home or 2 at 2002 levels - the difference is the fact that I understand reality is that prices will not go there for any area that you actually want to live in. South Sac, further out in Elk Grove, and maybe some places in Natomas - but Land Park, McKinley Park, almost all of East Sac, etc will never see 2002 prices again.

So, to save some money, you can either buy a new home out in the middle of nowhere in a development that might never get finished (at least for 4-5 years) and lacks the infrastructure needed for traffic flow, water, sewer, other services or you can buy in a development from 0-2 years ago in Elk Grove, Natomas, South Sac where people are defaulting. You will not see 2002 prices in anywhere where you want to live because LOCATION, LOCATION, LOCATION still rules real estate. Welcome to reality.

Anonymous said...

Hey Dummy.

It's not location location location.


It's timing timing timing.

dreamer said...

"if you are waiting for Davis to return to 2002 pricing, you are wating on someone to invent time travel because prices will never go back there."

Perhaps you are right, Real, but I've read your posts on this board before, and I'm sure this market has already gotten to a point beyond whatever you thought it would. I'm skeptical of your insights, my friend.

It may be true that great location won't return to 2002 prices, but its impossible to say what houses are actually worth right now. That is the quandry caused by the bubble. I went to work for a biotech company in 2000, and the stock price went from $20 to $160 within about 4 months. The rampant speculation made actual value impossible to determine (like we see now). Once the stock started going down, people wouldn't sell until it went back over $100/share. It never did, and lo and behold, it settled back in around $20. FWIW

anon1137 said...

I just did a search on sacbee.com of all sales in 95819 closed in the last six months: 108 sales, avg sales price = $504K, avg ft2 = 1372, avg $/ft2 = $370, with 30/108 sales at > $400/ft2.

So I stand behind my previous statement, that $400/ft2 is pretty common in ESac.

Darth Toll said...

anon1137,

108 sales is the point. Yes, there will always be SOME idiots that buy for top dollar, even in the worst markets. Sales volume trends precede pricing trends and fewer and fewer are willing to pay those kinds of prices as better prices are on the way. So you say $400/ft2 is common yet the volume isn't there. Doesn't that mean that the market isn't doing well and $400/ft2 is NOT a common sales price?

Real said...

"So I stand behind my previous statement, that $400/ft2 is pretty common in ESac."

Annon1137 - you have stumbled upon the truth that the angriest of the renters have yet to accept - people are willing to pay CURRENT MARKET PRICES for desireable neighborhoods. Most of the people in East Sac have no issues making payments and the neighborhoods are not filled with investors - those are the new neighborhoods and will face very, very different pricing. East Sac is probably bottoomed and will be headed back up for the better neighborhoods.

"Perhaps you are right, Real, but I've read your posts on this board before, and I'm sure this market has already gotten to a point beyond whatever you thought it would. I'm skeptical of your insights, my friend."

Actually, no - I would say it is the exact other way around. The doom and gloomers are predicting 50% decline and have seen maybe 10% on average with desireable areas basically flat. I have said all along that there would be pricing pressures in South Sac, some areas of Elk Grove, and Natomas. East Sac, Gold River, Davis, some areas in Folsom, etc are holding up just fine. Not that long ago I posted the most recent comps in my neighborhood - basically no change from the high and you will find prices are up from 2 years ago. Basically, you will not see a decrease in the actual sales prices - I know that pisses off a lot of renters like the posting from Max in Davis that HAS GONE UP - but the fact of the matter is that prices in desireable areas are just fine. The doom and gloomers do not understand the market and the funny rationale that they use is 'lender fraud', etc - funny how out of touch they are.

"So you say $400/ft2 is common yet the volume isn't there."

So, what is 'normal' sales volume? Yes, the sales are down from the totals over the last 3-4 years, but is that normal following a huge run up and the fact that sales can be off by 50%+ and prices have not moved should tell you that your 'Burrito Theory' of housing inventory is wrong. Usually when someone screams 'bubble' for the last 4-5 years and prices go up in desireable areas, they would realize that they were wrong, shut up, and then go away. For the doom and gloomers - they just scream louder and think every else is stupid despite the fact that reality continues to show that in fact - they themselves are the idiots.

"It's not location location location.

It's timing timing timing."

LOL, is this Patient Renter making an idiot of himself again? Please tell me how all real estate appreciates at the same rate which equals the rate of inflation....

Patient Renter said...
This comment has been removed by the author.
Patient Renter said...

"LOL, is this Patient Renter making an idiot of himself again?"

Not me.

I'm curious though: Why is it that you think your position will be best supported with childish name-calling, let alone multi-page tirades that nobody here cares to read?

anon1137 said...

I think there are more frustrated investors around here than angry renters.

Diggin Deeper said...
This comment has been removed by the author.
Diggin Deeper said...

This is not your normal real estate market correction. To compare this to the early 90's or any other past period(save the Depression)would be dangerous at best. Point to any indicator that shows this market isn't freefalling, and I'll begin to change my mind.

Just ask any real estate expert and you'll get the same bulls**t they've handed out for decades.
It worked then, so it must be true today. Wrong!

It appears that some want to apply these "truths" to the entire Sacramento market but base their opinions on a small sample of neighborhoods surrounded by some magical moat. If 10% are holding up and 90% are falling or in distress, is it safe to assume that 10% will continue to thrive? In a normal market correction, I'd buy it.

If we were facing a normal market swing based on balanced fundamentals, I wouldn't argue with past performance as an indicator of future expectations. But the whole picture is skewed. There are real problems facing this market nationally, statewide, within our cities, and in our neighborhoods. Consumer and government debt loads, inflation based on excessive liquidity, irresponsible real estate loan practices, an economy that's beginning to waver, etc, all tie together to differentiate this one from the past. The Fed cannot save the day with cheap money without creating enough inflation pressure to consume any good that lower rates would achieve.

You can talk about the 10% that's holding up for as long as it does... but the real inertia and momentum will come from the 90% that's in trouble. To think the "magical" moat will hold under the pressure a bit like the French building the Maginot Line only to get over run from the rear flank.

Slick50 said...

"The doom and gloomers are predicting 50% decline and have seen maybe 10% on average with desireable areas basically flat." -real

The market is 10% lower (in under two years) with no visible signs of getting better in the near future. I wouldn't be quick to discount the fact that nobody knows where the bottom is.

Real Estate doesn't correct overnight and a prudent buyer will wait to see where the market goes from here. Only time will reveal the actual figures, but the economic indicators support lower housing prices in the foreseeable future. Buyers have all the time in the world to wait this one out.

Also, I'm curious as to your proof that "desirable" areas are remaining flat? I currently rent a nice house in folsom and see "reduced", "buyer bonus" tags attached to many of the "For Sale" signs around here. These are nice homes in "desirable" areas.

"It means that in the desireable areas (established neighborhoods with good locations) DO NOT NEED TO SELL so the people pull the listings rather than sell at a reduced price." -real

Just because someone lives in a "desirable" area doesn't exclude them from needing to sell. There are plenty of For Sale signs in almost every area of sacramento, desirable or not. Sure, some areas have far more homes on the market than others but saying that "desirable" neighborhoods are immune to price drops because they "DO NOT NEED TO SELL" is erroneous.

"Usually when someone screams 'bubble' for the last 4-5 years and prices go up in desireable areas, they would realize that they were wrong, shut up, and then go away." -real

Prices are up? Why do you think we're at 11 months worth of inventory? It is because sellers are still in denial about the market (denial sound familiar to anyone) and they refuse to lower their prices. "Well I'm sorry if your house isn't worth what you paid for it in 2005 Mr. homeowner... but guess what, we're not buying at that price!"

I'm not bitter that sellers still don't have the picture. I am however, waiting to buy a home when it makes sense as an investment. Get the price down to a little above what I could rent it for and I'm interested. Keep it priced ridiculously high and I'll wish you good luck.

smf said...

"The doom and gloomers are predicting 50% decline and have seen maybe 10% on average with desireable areas basically flat." -real

The beginning of the end started with the low end, and is slowly spreading to the higher end market.

I have finally seen houses in Gold River start to come down in price.

As for desirable areas being immune, why don't you talk to my in-laws?

They bought a 3600 sq.ft. house in EDH with a full city and lake view.

Last time they checked, the value was down $270K from the time they bought, which was already down from the high.

There was also another mansion around Powers Drive in EDH (not the one in foreclosure now). It was on the market for 1.850K. Someone offered 1.800K. The RE agent told the owner not to accept it.

He ended up selling for 1.500K

Diggin Deeper said...

For many years, and at different intervals in my life, I lived in Irvine, CA. It is one of the most successful master planned communities in the country and I watched it grow from 300 people(1966) to over 200,000 residents today. Talk about amenities, schools, HOA's with teeth, open areas, green belts, pools in every development, upscale shopping, and that overall snooty atmosphere that it breeds. This is one of the most dissected, visited, and modelled cities in the world. It was and still is one of the most desireable places in Orange County to live.

When the market turned in the late 80's and early 90's prices dropped in Irvine just like they dropped everywhere else. Real estate was a hot topic around town, because prices had never dropped until that downturn. And they fell upwards of 20% during that period.

Frankly, Gold River is nothing more than a tiny community of about 3000 homes with very little protection against the market's whims. In comparison, hard as the town fathers might try, they will never have the insulation, swagger, or money that an Irvine has and those that believe this little berg has a chance to escape the market are kidding themselves

Gwynster said...

DD,

We both grew up near each other apparently. Irvine was always my vision of hell on earth. At school, being from Irvine dubbed you wanne be nouveau riche. Real money was from CDL, Laguna, Newport and those prejudices went deep. My family was from Berlin, SF, and the DC area before everyone moved to OC. Needless to say, we saw all the rampant classism very, very differently.

A friend of mine lived in Irvine during the early 80's. I remember her parents cussing up a blue streak at the dinner table about the HOA committees.

**shudders** OC really was awful.

Diggin Deeper said...

Gwyn...it really is awful as you say..and I'm happy to be out of there. So restrictive, and so snooty. It got so bad, I moved to north San Diego County.

Like everything else in OC, if you got something it's probably on loan or leased.

I'll say one thing for Irvine. It's one of the cleanest city you'll ever live in. Drop a gum wrap one evening and its gone the next day! The litter nazi's do their work during the wee hours.

And God forbid, you have a party or drive a little over the speed limit. The Irvine PD are almost Gestapo like the way they handle that city.

You're right about the nouveau riche and they indeed have an "attitude" about the place. But regardless, if one wants to live in OC...CDM, Newport, Laguna, Tustin Heights, Villa Park, and Irvine will all be talked about in the same upper end circles... with Irvine being at the bottom of the per capita income scale.

I guess my point is there are few communities in this area that will compare from upscale point of view.

Gwynster said...

Your're right, nothing here is on the right scale and our "good" pockets are surrounded by a whole lot of bad.

In 99, I almost bought a nice 3/2 30's spanish 2 story in Curtis Park (Cutter and Coleman) for 188k. What kept us from buying was the police reports for the area. There were lots of break ins and auto thefts. The neighbors next door had actually been mugged just getting out of their car.

Curtis Park was the nearest nice area and suffered the brunt of the economic distress from the neighborhoods south on Franklin and East into outer Oak Park. Being in easy driving distance was all it took.