Tuesday, November 13, 2007

October Sales Stats

A small surprise for October's sales data...Sales increased when compared to the previous month by about 5% and were down 26% from the same month last year. I looked at the data and couldn't find any strong signs to suggest increased new home sales or anything like that to contribute to the rise. We had a similar increase from September to October in 2006. The next 3 months (if history repeats itself) will show drops in sales.

16 comments :

Sippn said...

Looks like Sept/October were unusual - due to credit lock up in August.

With the builders cutting back (Lander cited another 1000 non starts in mothballed subdivisions not including Dunmore) AND resale inventory below last year's peak AND job growth still occuring - the bank owned stuff should get sold off pretty quickly.

Its not like people leaving Denver in the '80s.

Real said...

Sippin - the people preaching doom and gloom fail to understand the the increase in existing inventory is being offset by a cratering in new home starts - new home starts that will take years to restart and and at a much higher cost (due to expired land options). With sales bottoming and soon to be rebounding, prices will stablize and then trend up - except for the really bad areas such as south sac and neighborhoods that are half built today (which will not be finished for years to come).

Perfect Storm said...

Sippin,

You get all that from a 5% increase month to month, probably the increase is due to the increase in foreclosures that are going to destroy the Sacramento area real estate market for the next ten years.

Gwynster said...

"AND job growth still occuring"

ROFL! ok you owe me a new monitor. This one is now covered in coffee. Next you'll say it was all the new well-paying Gov jobs >; )

Gwynster said...

I have to ask where the data came from because I keep seeing TDs due to foreclosure counted as sales. When 25% to 35% of all your standing inventory is distressed, that can cause a significant miscalc.

Perfect Storm said...

I bet the majority of auction sales are going to investors who will then try to flip or rent. Any way you put it will cause a further increase in inventory for years to come as they shuffle home sales from OREO to investor or rental market becomes more saturiated with rentals driving down rental income.

Gwynster said...

PS,

Check Lander's latest post >; )

Real said...

PS - 40% of households in Sacramento rent currently. If I add 20K more homes to the number that are currently rented (750K HH in the Sacramento MSA today), do you really think that will have a cratering effect on rents? As a matter of fact, I have several friends/co-workers attending auctions looking for rental properties at the current prices. As I have always said to you angry renters - prices may come down so they are affordable to you - but they will be in areas that you will not choose to live (south Sac, Natomas). You are in a catch 22 and breathing venom on homeowners or hoping Sacramento will turn into Bartertown is just ignorance/jealousy on your part.

AgentBubble said...

Thank you real for making it easy for me to admit I made a mistake in not buying in 2006. Just think, if I would have only paid $740K for that house in Waterford (EDH) in May of last year, I would have only lost $125K as of now! Instead, I made a foolish mistake of renting a bigger house for $1800 a month less in a better neighborhood. And then I had the nerve to invest that money I made on my sale and make $30K a year in interest. Shame on me.

Perfect Storm said...

From Fortune Magazine

But Phillips sees an opening to revive the stricken business: plunging construction costs. He says that prices of finished lots, equipped with roads and utilities, have fallen from around $135,000 to $75,000. The cost of construction has gone down around 35%, from $85 to $54 per square foot. "Developers can now sell their houses for at least 20% less than a year ago and still make decent margins," says Phillips.

According to Sippin builders costs are not going down, wrong again Sippin. So a developer can build a 1400 sq foot house for around 150K and this is in San Bernardino. I bet building costs go down another 30% in two years, you would not believe how dependent some of our Cities including the City of Sacramento are dependent on building permit revenue.

Were right on track for a 50% decline by 2009.

Gwynster said...

PS,

I can add to that!

"The Mail Tribune from Oregon. “There could be more belt-tightening among Southern Oregon wood-products companies after layoffs were announced at a pair of mills last week.”



“‘We’re seeing lumber at or below prices we’ve seen at any time in 50 years, when you factor in inflation,’ Schott said. ‘A year and a half ago, studs were running $320 to $340 per thousand board feet for green Doug fir. It’s averaging $150 to $160 now. It’s the most ugly pricing I’ve seen since 1980-81.’”

AgentBubble said...

We were just talking to our uncle who lives in Eugene Oregon and he was ecstatic over the lumber prices. He's building a house right now and couldn't believe how inexpensive things were.

anon1137 said...

Yea, I can see sales really taking off by next spring. The coming wave of subprime ARM resets and the 10% across the board cut in all state government departments should really motivate people to get out there and buy houses. Not to mention gas prices climbing to $4/gallon.

Sippn said...

PS - you're right, but. . . " Kent Phillips, president of Storm Western Development, is selling houses for $330,000 that last year went for $400,000. "It's dreadful," says Phillips. "Last year we were selling four houses a month. Now it's one a month. The end came just like turning off a water spigot." Despite the steep discounts, Phillips is still holding six houses that haven't sold in a 16-home development he completed in January. " He won't be able to take advantage of those new cheap costs unless he unloads what he has for some cash.

G - did they talk about the lumber layoffs? they need bodies to cut cheap lumber for you. The cheap lumber has always been available offshore, US has a protected lumber industry.

Fuel and other inflation will impact costs by spring.

Here's the litmus test - builders have shut down 1000s of starts in our region due to lack of sales and price support. Send them your arguments, maybe you can change their minds.

Sippn said...

Bubble - reading your comments - you're seeing October as a rise vs September, but really both September and October were wacked off the normal path from August due to the credit markets - most of the impact was in September. Look at 2006 and 2005 trend lines. ..

Gwynster said...

Yes they did mention the layoff. But they still have the warm bodies they need to produce... no shortage of availablity.