Tuesday, December 02, 2008

Sacramento Regional Real Estate Trends for November 29, 2008


Anonymous said...

Normal seasonal lows coupled with lack of feeding of REOs to the market.


Max said...

Yeah, I've been hold back for some year-end commentary. Just the usual drop off, combined with the foreclosure moratoriums.

Deflationary Jane said...

weird because I see tons everywhere I look. Zip realty gives me email updates and while some are price reductions (lots of those), I'm getting slammed by these emails. Something doesn't smell right.

Max said...

I'm getting slammed by these emails. Something doesn't smell right.

You're probably on the receiving end of some aggressive marketing. Frankly, I'm surprised the "good areas" have held up so well this year. Ultra-low LIBOR-tied ARM loan rates are probably partially responsible.

FWIW, my wife and I will probably join the homeownership crowd sometime in the first quarter. We've waited long enough. :)

Anonymous said...

"FWIW, my wife and I will probably join the homeownership crowd sometime in the first quarter. We've waited long enough. :)"

With rates so darn cheap and the rate of decline slowing (negative 2nd derivative of price), why not buy? The only problem is, pickin's are getting slim. The number of houses on MLS for our zip has been rapidly declining. There is hardly anything to choose from, except for those die hards who will just keep the home listed and never lower the price.

Anonymous said...

You're either gonna find a spectacular home at a really discounted price or a piece of junk at a fire sale price, but likely not a spectacular home at a fire sale price.... those don't last.

Its rare that I've seen an REO that didn't need work.... 10-50% of the price.


Anonymous said...

Harvard's endowment takes 22 percent hit
Wednesday December 3, 10:04 am ET
Harvard's endowment takes 22 percent hit, and is expected to lose more

CAMBRIDGE, Mass. (AP) -- Harvard officials say the university's largest-in-the-nation endowment lost about 22 percent of its value, or $8 billion, in the four months since the end of the last fiscal year.
The endowment was worth $36.9 billion as of June 30.

Harvard will have to take a "hard look at hiring, staffing levels, and compensation," university President Drew Faust and Executive Vice President Edward Forst wrote in a letter informing deans of the losses.

They say the university should plan for a 30 percent drop in endowment value by the end of next June.

Forst tells The Harvard Crimson student newspaper that the 22 percent estimate may be conservative because some university money is handled by external managers that have yet to report figures.

Deflationary Jane said...

Interesting news on Harvard.

Just before I came back to Davis, I was looking at making the jump to Stanford. They made the offer then announced they were cutting staff by 10 to 12%. That made it a no brainer.

I think all the big private schools are in for a very bad time.

Anonymous said...

Harvard endowment in trouble? - consider that a gift from their "working" alumni on Wall Street!


Anonymous said...

crossposting from cr:

Good to hear you're not calling the RE price bottom CR. From what I have observed in the Sac metro area, prices are still way too high. The market is bifurcated, where foreclosures are reasonably priced but everything else is not. Incidentally, the 3X (or 3.5X) yearly median price metric is nowhere to be found. Median income for El Dorado County is about $54K/yr and the median home price (with 60% foreclosure short-sale mix!) is a whopping $388K! This equates to a 7X yearly multiplier - ie extreme bubble-zone pricing. And this is a supposedly hard-hit foreclosure area? Much more pain will be forthcoming.

Word verification: "sactio"

patient renter said...

Sure El Dorado County is bubbly, but I think a lot of Sac county still is too, even though you wouldn't know it by looking at the median.

Anonymous said...

PR, true.

So I'm going with what a RE analyst from Lyon said on KFBK the other day. He said that the higher priced areas that haven't been hit as hard as Sacramento were going to get smashed in 2009. He specifically mentioned Eldo as it hadn't been affected as much by the bubble-bust yet, but boy did it sure get a nice run-up during the bubble! My guess is Sacramento County is also highly bifurcated where certain foreclosures are reasonable and everything else is way too high.

Eldo is a good place to be if TSHTF in a serious way and you need a cabin in the mountains that is stocked with food, ammo, etc. and you need to shoot deer and live off the land. Not sure if this is going to happen yet. There are no real job centers to speak of compared with Sac, although a lot of commuters live in El Dorado Hills and Cameron Park.

Anonymous said...

DT - would you also complain that the homes on the shores of Tahoe were more than 3x income?

EDC has a concentration of high end homes that is regional in nature in El Dorado Hills, then another concentration in Tahoe that serves many outside the region.... (their incomes aren't measured here)

The Lyon analyst (I think it was Mike) is right as long as financing above $417K remains impossible... but will that be so? there's a lot of money to be made there and lenders need to make money too.

Talking to a broker friend (since we were age 8) of mine in LA today who has a pile of million dollar buyers, 700-800 FICA scores, $250-350K down, who can't get low doc loans - all self employed - we're not talking $0 down, we're talking about real money. Another friend recently sold a home here to a similar buyer who after going through 2 lenders, got ticked off and wrote a 7 figure check to close.


Anonymous said...


I've heard these arguments and have thought a lot about them but they really don't hold water. Take a look at Placerville itself on the MLS. Certainly you wouldn't say that Placerville is some kind of a hot destination for jet-setting millionaires like Lake Tahoe?

In Placerville, there are currently 55 homes between 0 and 250K, 166 homes between 250K and 500K, 56 homes between 500K and 750K, and 31 homes above 750K.

Now granted these are ask prices, but nevertheless, some back of the envelope calculations put the median in this group around 350K. Placerville has a median household income of 46K as of the last census and there is no reason to believe incomes have gained much since that time. Since this is based on tax records it includes anyone that commutes to Sac from this region. Therefore, this places the area in extreme bubble-zone pricing as the median house should be around 150K for sustainability.

Places like Shingle Springs, Pollock Pines, Camino, and Cameron Park are worse. Sippn, I hear what you're saying about the millionaires and there will always be such people. But by the numbers there are very few of them and the median in this county makes absolutely no sense and is STILL an extreme bubble. People selling out for large $$$ in the Bay Area and moving up the hill are becoming scarce and the fundamental value will re-assert.