Sunday, March 22, 2009

Sacramento Regional Real Estate Trends for March 21, 2009

We had a minor uptick in inventory this week, notable only because it was the first week over week increase since January. To bastardize a great writer, this may be how the Spring Bounce begins, not with a bang but a whimper. If there's any consolation for the buyers, asking prices remain on the downswing (save Yolo County). Indeed, median prices in Sacramento County have hit Y2K levels. Good hunting!


Anonymous said...

all within margin of error....

Hey, look at BoAs reentry (Sunday) into the Jumbo market... 20% down, less than 6% interest rate, 6 months reserves required.... sounds really reasonable but you know this has not been available for over a year.

Others will follow and it might get some sales moving again above the median price level (that and a week of DOW increases)

I'm hearing title companies and lenders are busy just from Thursday's rate drops.... Wells loosing a point in loan fees.

Did I say that already?


Anonymous said...

"We had a minor uptick in inventory this week, notable only because it was the first week over week increase since January"

It is the long awaited shadow inventory being "unleashed" on the market, causing a "cataclysm" in prices, just like Mr. Mortgage predicted!!!

Ohhh the humanity!!!!

Max said...

There was a good story linked on Calculated Risk over the weekend that sort of confirms what we've been saying here, mainly that the long awaited "dumping" of REO is happening as we speak. The article talks about San Deigo-Riverside, but I think it's true here as well:

HOUSING: Banks selling properties in bulk for cheap

One house was sold by Citi for $100k below comp. Of course this is an insiders game, but it's still happening. Interestingly, one investor is still pessimistic:

Another investor eyeing bulk sales is Bruce Norris, president of The Norris Group, a Riverside investment firm.

Norris said he has not yet found great value in bulk sales but expects bigger discounts on bank-owned properties in the near future. Instead, his company snatches foreclosures once they are listed.

So far, his company has purchased about 50 foreclosures after making about 1,400 offers. He says banks are routinely selling properties for 75 percent less than the mortgage note.

And Norris said there is a huge number of foreclosures not even listed on the market yet, meaning those discounts will get bigger and banks will rush to unload properties as quickly as possible.

"Capitulation is here already," he said. "What's coming, there's a new name. It's something we still have to dream up. It's complete terror."

Keep in mind, these guys need an instant payoff in the gross 25% range to make this worth they're while, so the bank is potentially leaving money on the table when it sells in bulk to guys like this. The bank is also pricing in future losses and deterioration of the property, plus the cost of borrowing needed cash.

The dump is happening now. You're just not invited to the party.

Anonymous said...

Max,the party just started.Give it a few months and you will be able to ride an elephant into the living room without being noticed.Norris is right about the bulk sales,notice how he is cherryicking and sticking to lowball offers on already listed foreclosures.With the number of homes likely to come on the market in the next 2-3 years there will be no shortage of good buys for those who have the $ and some self discipline.

Anonymous said...

"The dump is happening now. You're just not invited to the party."

B..B..But wait, Mr. Morgtage promised me! He couldn't just have been keeping me around to boost hits for advertising revenue from his site could he???

Anonymous said...

Where is Mr. Mortgage anyway? His last post on said he would be gone for a couple of weeks - but that was nearly 2 months ago.

Anyone know where he is?

Anonymous said...

Has anyone analyzed where we are in relation to the Affordability Index or Price/Income and Price/Rent?

Unknown said...

This is copied off something che_lives posted on the craig's list Sacramento housing forum in response to questions about the zip codes 95818, 95816, 95819. It includes directions to a really cool housing affordability map.

I would hold off "che_lives" 2009-03-22 12:14:56

I want you to look at this map. Then I want you to click on advanced themes, when you do so it will bring up affordability indexes and I want you to click on the owner's only affordability index. When you do, what you will notice is that in the neighborhoods you are looking at, a lot of the homeowners are spending more than 45% of their income on housing.,%20CA

That isn't sustainable. People need to save for retirement, pay taxes, get health insurance etc. People in this neighborhood had good credit, so they weren't subprime borrowers. How housing prices got so out of whack relative to incomes in that neighborhood was that people were qualified for loans using exotic finance: teaser rates, pay option loans, stated income loans etc (basically alt-a loans), to temporarily buy there way into that neighborhood. But those buyers will get into trouble as their alt-a loans start resetting. The neighborhoods with those buyers will get into trouble as those borrower get into trouble.

Anonymous said...

lamaiahoffmann what you don't get is those zip codes don't earn the median income. Oak Park is affordable to the median, but Land Park is not. That is because those are the outer ends of what creates the median. I really doubt the median household income of 95819 is $46,106. As I really doubt the median in 95817 is $46,106.
What a stupid tool that thing is.

wilk916 said...

re: stupid tool.

I must agree. If the income level is held fixed across the map (i.e., the median income), this map is showing nothing but property values across the region (all normalized by the same constant value). This is not a measure of affordability except at those regions where the median income really matched the area income.