Monday, June 30, 2008

Sacramento Regional Real Estate Trends for June 28, 2008

The near-term growth in inventory accelerated this week, with a 2% increase over last week. The growth took place almost completely at the lower priced end of the market, which drove the asking price averages down as well. Interestingly, there appears to be a trend reversal in the flipper inventory also, which could be indicative of bank inventory dumping.

Like I discussed last week, it is looking more like the market has reached an inflection point. Next week I expect the usual monthly inventory drop, so any new trend should at least be understandable by July 12th or 19th.

Tuesday, June 24, 2008

Truxel Business Center Is Bankrupt

From the Sacramento Business Journal (via Lander's Blog):

Truxel Properties LLC, which owns the Truxel Business Center at 4090 Truxel Road in North Natomas and two residential development sites in the region, has filed for bankruptcy liquidation, listing $17 million in assets and $19.4 million in liabilities.

The center is about 40 percent leased, said Walter Dahl, the bankruptcy attorney who filed the Chapter 7 case, speaking on behalf of Truxel Properties and its managing partner, Volodymyr Dubinsky.

The company owes Bank of America $5.3 million on the property, according to the bankruptcy filings. Truxel Properties pegs the center's worth at about $6.5 million.
This is one of the properties I visited this February in my Natomas Area Commercial Real Estate Photolog. Here are some more pictures of this "40 percent leased" office park:

There is a huge glut of this kind of office space in Sacramento, so I'm not sure where they're getting their $6.5 million valuation. It's going to be doubly hard to get cash flow out of this property until a new, financially stable owner appears. Until then, the street racers will have a field day.

Sunday, June 22, 2008

Sacramento Regional Real Estate Trends for June 21, 2008

Inventory increased slightly this week. Not by a whole lot (80 listings), but this was the first increase since March:

Also, as previously noted by this blog last month using asking price data, and on Lander's blog this week using sales data, the Spring price change moderation is over. Overall market price declines are once again in full-effect, with a 2% drop in the median over the last 3 weeks:

It looks like inflection points have been reached in most of the market stress indicators for Sacramento County. Logic would seem to indicate that asking price is the leading indicator of market direction at this point (with the REO process stretching out for months or years), but we will know more in a few weeks.

Thursday, June 19, 2008

Big Game Hunting: On the Trail of the Elusive Shadow Inventory Beast

This post is based on an email I sent to Agent Bubble 10 days ago. Without getting too long winded about it, Mrs. Max and I have begun traveling down the long road toward house ownership. Our criteria is very tight, and we probably won't be successful any time soon, but now that sellers are at least entertaining the notion of a below-asking price offer, we thought we'd put ourselves out there and see what happens.

We started scouting a more established neighborhood east of town, and despite the lack of listed inventory, (we really like the area and it fits other important criteria for us), we noticed an interesting phenomena: what appeared to be tons of empty houses (dead or dying lawn, no furniture inside or blinds tightly drawn, no trash can out on trash day etc.) with no for sale sign, no auction notice on the door, nothing! There was one street with 5 out of 15 houses like this.

That was when we realized we had stumbled upon the elusive Shadow Inventory Beast, lurking in the very neighborhood we wanted to buy in! After barely escaping with our lives during our first casual encounter (those claws are sharp), we went back in a couple of days later better armed and started taking notes. Agent Bubble was kind enough to check into the properties for us.

Since we're not sure of the exact disposition of some of these, I'm not revealing the complete address. (Who knows, the owners could be on a 6-month European holiday.)

8*** Rolling Green Way, 95628 – Nothing in tax records.

8*** Kermes Ave, 95628 – Nothing in tax records

8*** Clifford Ct, 95628 – NOD filed 3/5/08

8*** Villa Campo Way, 95628 – bank bought on 12/21/08

This is just a small sampling, and we'll probably do a better survey in a couple of weeks. The takeaway from this is, don't rely solely on the MLS to do your house searching for you. Get on the ground in the neighborhood you're interested in: you never know where the Shadow Inventory Beast could be hiding. :)

Tuesday, June 17, 2008

Monday, June 16, 2008

Sacramento Regional Real Estate Trends for June 14, 2008

Most MLS trends remain in place, with slowly declining inventory and 50% of sellers with an asking price loss. One week doesn't make a trend, but it appears that the average asking price for Sacramento County fell slightly last week. It could be possible that the mid-Spring price moderation is over. Stay tuned...

Wednesday, June 11, 2008

Mortgage Fraud Call Out

Saw this little tidbit in the Wall Street Journal:

Some Buy a New Home to Bail on the Old

By NICK TIMIRAOS, June 11, 2008

Next month, Michelle Augustine plans to walk away from her four-bedroom house in a Sacramento, Calif., subdivision and let the property fall into foreclosure. But before doing so, she hopes to lock in the purchase of another home nearby.

"I can find the same exact house as what I live in right now for half the price," says Ms. Augustine, 44 years old, who runs a child-care service out of her home. She says she soon will be unable to afford her monthly payments, which will jump to $4,000 from $3,300 in August, and she doesn't want to continue to own a home that is now worth $200,000 less than what she paid for it two years ago...

In some cases, homeowners are coached through the buy-and-bail process by real-estate agents and brokers who see nothing wrong with it. Some blame the phenomenon in part on lenders' unwillingness to cut deals or restructure loans made when home prices were inflated. "It's just a business decision," says Linda Caoili, a Sacramento real-estate agent who is working with Ms. Augustine and others who are considering walking away from their mortgages. "If you're upside-down $250,000, why would you keep it? It just doesn't make sense."
Linda Caoili is an agent with Re/Max Gold in Natomas. She is also a "certified loss mitigator" (whatever that is) and "counsels struggling homeowners facing foreclosure and offers seminars at local bookstores with titles such as 'Foreclosure is Not a Dirty Word' and 'Foreclosure is Not the End of the World.'" She is also a member of NAR, who's code of ethics includes "Be honest with all parties in the transaction – not just with you, as his or her client, but also with the other real estate practitioner and his or her clients. For example, if REALTORS® represent a buyer with a spotty credit history, they can’t be dishonest with sellers about this fact."

One would assume that "being honest with all parties" includes the lender as well. I'm sure she advises her clients to disclose the walk-away plan to the lender on the new property. Because, to suggest otherwise would violate her code of ethics, as well as expose her clients to possible federal Fraud For Property charges. She wouldn't want that, I'm sure.

Tuesday, June 10, 2008

Trash Out


Drove by the pile again, and decided to have a closer look. Nothing juicy like a bill or even any junk mail, but I did find this note. Looks like Maria got laid off from Interstate Brands in Sac:

They're not even bothering to find an empty field anymore. Welcome to Franklin Reserve.

Monday, June 09, 2008