Monday, April 06, 2009

Sacramento Regional Real Estate Trends for April 4, 2009

Although it's still too early to call this year a bust, there are no signs that a Spring inventory bounce will happen. It looks like banks continue to dominate the marketplace, offering substantial discounts through direct sales channels and bypassing the MLS altogether. In the zip code I'm looking to buy in, fully 25% of all MLS listings are short sales, and 33% are sellers in trouble. Clearly, those who would like to sell, but can afford to wait, are holding back.

The only trend I see here is further domination of the market by banks, and the continued, gradual decline in "regular" sellers. With the Sacramento job market in the toilet, and credit remaining tight, there's not a lot of upside here.

Anecdotally, my wife and I have toured several REOs in the Fair Oaks area, and most are in deplorable condition. Most striking to us was not vandalism, but the deferred maintenance issues. Exterior water damage was common on non-stuccoed walls. Rotting decks, poor drainage around properties leading to foundation issues, and damaged roofs were also prevalent. Interiors were OK for the most part; there was the usual dirty appliances and carpets, but no major damage. We got the sense from these properties that the owners were long-suffering, and foreclosure was merely the culmination of a history of hardship.


Buying Time said...

Now you know why we gave up on foreclosures (okay, dealing with the banks was a real pain as well) and bought new. The cost to fix the foreclosures was not worth the bank discount and the massive amount of time it would take to fix up the homes.

Okay, okay, well to be honest we also got tired of waiting ;)

Anonymous said...

Max if that inventory trend follows the trend of last year, you will need to resize the graph soon!

Anonymous said...

A house is a 30 year structure that needs regular maintenance along the way. Great maintenance and repair and updating, of course, can take it towards 100 years or more.

I've seen roof leaks take out new homes in 15 years.

A resale home is just a nice piece of land with __% of salvagable structure that resembles a house.

Make sure to see the movie, "The Money Pit"

A couple of years ago, after living in a nice new home, I bought a 50 year old home in good condition on a spectacular property. Whoops. If I can keep the speed up, I won't be sucked into the black hole.


Nooge said...

"Great maintenance and repair and updating, of course, can take it towards 100 years or more."

Yep - mine is 186 years old & still goin strong...

Max said...

I once stayed in a house in France that was 900 years old. Really puts a TV show like "The Detonators" into perspective.

The cost to fix the foreclosures was not worth the bank discount and the massive amount of time it would take to fix up the homes.

The REOs that make it to the MLS have not been bargains at all. We have seen some nicer new infill inventory, but the prices are still too high for the risk involved. I straight-faced asked a rep what the financial status of her company was, and if they expected to complete the project. She responded without batting an eye that the company was doing great, and they were building out on a sale-by-sale basis. What a difference from 3 years ago. :)

I think it would help if there was a baseline turnover rate for housing, absent bubbles and bursts. We're pretty frustrated with the market right now, but maybe the current inventory level is "normal."

Anonymous said...

Funny that I too was thinking of the homes and buildings I saw in Paris a few years ago when I wrote my comments.... they tend to suck in a lot of maintenance and rehab dollars anyway even though the bones are good, but Parisans believe they are the center of the civilized world.

Anyhow, I noticed that even wood structures there could last centuries if they had both a good foundation and a good roof. The roofs were typically slate, copper or mostly lead. I think the bell towers in Notre Dame are all wood with lead roofing - which of course poisens the water system.

Now for all you "where's our quality housing" crowd remember that these stone and slate buildings were built by wealthy noblemen using slaves and cheap labor - similar to the large homes here that have survived more than a century. The masses live in KB homes in the burbs.


commercial real estate said...

it takes more time and money...

Bryan said...

And the wealthy "nobles" live in molding JTS homes in EDH?