Saturday, February 14, 2009

Sacramento Regional Real Estate Trends for February 14, 2009

More market flatlining this week, with no appreciable change. Went out house hunting today, and there were very few open houses. One agent we spoke with said she was starting to get calls about March listings, and that banks were becoming more flexible on the short-sale end.

I've been running some data comparisons looking at asking vs sale price averages by zip codes that I hope to publish this week. Here's a preview:

One takeaway is that on average, houses have been selling for less than the asking price for as far back as I have data, which is April 2006. This directly contradicts anecdotes about bidding wars taking place over deliberately low-priced listings. On the contrary, some agents I've talked to are still having to "educate" new sellers about the true value of their house.


Wadin' In said...

Max, I tend to be impatient and ahead of the trends by a year or so. I purchased a 3100 SF home from Countrywide in Nov. 2007 for $390,000 (foreclosed on previous $685,000 purchase made April 2006). I received 80% financing ($312,000) at 6.0%.
I called my lender Friday to inquire about refinancing and he said the computerized appraisal was $308,000 to $312,000! I would need to invest another 20% down to refi! Ooops. You did save me from buying in 2005 and 2006, which meant $300,000 in savings!

I also sold most of my stocks in 2007 at around $12,400. Missed the run up to $14,000, but also the resulting drop. Now I have been getting back into the market below $10,000 and have lost another 20% on the amount back in the mix.

Moral of the story: Take your time, munch your popcorn and wait for some signs of a bottom or indications of a rebound. Who knows how low this market will go?

Anonymous said...

Max, in a vacuum, the trends are a big question, but we know that January posted record sales numbers, and most of 2008 had much improved sales numbers over 2007, so just the impact alone of those sales could have created this lower trend line, but we also know that the REO feed has been slow the past few months as lenders battle political pressure and short term laws that have delayed their actions.

Wadin - shame on CW for using computerized appraisals - that's what got us here! Is the lender using comps or taking your purchase price and putting it on a trend line, assuming you bought at market instead of below it?


Max said...

just the impact alone of those sales could have created this lower trend line

Sure. What I find interesting is they're not even being listed before they're sold. It looks like half the sales are taking place without a listing, which jibes with the 40%-50% "investor" purchaser estimates that are being thrown around.

That's another whole set of analyses to do, but these can't all be rental cash flow buyers. Anybody paying more than $0.50/month/sqft in Elk Grove (for example) are buying on spec, and will take some pain down the road. Appreciation is still a few years away IMO.

Wadin' In said...

Sippn, you always know where the crux of the matters lie on the real estate issues. The loan rep was using comps. You are correct that the computerized value does not really reflect the differences in the houses on the same block. The subject property has about $50k in extras (premium view lot, 800 SF in 2nd story decks, interior upgrades, etc.). However, in a declining market, upgrades are just so much fotsam and jetsam.

The lender was GMAC, not CW, but that probably doesn't make a difference. The bottom line is that refinancing is an uphill climb! (I have an 800 FICO.)

Here is the more interesting part: the loan rep said to call back in 30 days and they will be able to offer me a loan modification. In other words, they will adjust the interest rate (and perhaps the principal) down to reflect the lower valuation and provide better affordability.

It is very curious and somewhat goofy out there.

I must say of the 140 new 2006 homes in my neighborhood, almost 110 have been foreclosed and resold. The remaining 30 homes are owner occupied, or purchased by investors with large down payments (plus 7 investors who should walk, but don't for some reason). We are about done with the foreclosures now, and I suggest there will be very few left to buy after 2009 is complete.