Don’t Believe The Realtors: CA Housing Bust Just Getting Started
“No question that the bottom of the market hasn’t hit yet.”
– Esmael Adibi, Economist, Chapman University in Orange County
“I think we’re going to be dealing with this all the way through 2008.”
– Jack Haynes, Executive Vice President, Countrwide Home Loans at a conference for the Sacramento home building industry (Wed May 16, 2007)
“We think it’s going to take until mid to late 2008.”
– Timothy Sullivan, President, Sullivan Group Real Estate Advisors in San Diego
For those of you following the CA home market, here are some recent articles from the LA Times and Sacramento Bee worth taking a look at:
“Lengthy Housing Slump Expected: April Sales of New and Existing Homes Decline”, Sacramento Bee, Thursday May 17, 2007
Sales of new and existing homes were down about 20% in April 2007 from last April. Median prices for existing homes were down a touch while median prices for new homes were down dramatically: 22.3% in Sacramento County and 7.5% in Placer (which inlcudes Rocklin and Lincoln where there are alot of new home developments).
“Homes Sales Hint At Longer Slump Ahead”, LA Times, Wednesday May 16, 2007
All home sales, including new and condos, were down about 30% in Southern California in April 2007 from last April. Prices were down a touch Riverside, Ventura and San Diego counties, flat in Orange and up a bit in Los Angeles. The Inland Empire, where, like up here in Natomas, Lincoln and Rocklin, alot of new homes have been built is getting hit the hardest with sales in San Bernadino and Riverside counties down almost 50% from last year.
“Flood of Foreclosures Could Drive Home Prices Lower: Southern California Banks and Mortgage Firms Looking to Unload Properties Aren’t Offering Bargain Prices Yet, But That May Change”, LA Times, Friday June 8, 2007
The number of lender owned homes in Southern California still represent a small total of the overall 119,000 homes up for sale but are up dramatically to over 2,600 from about 10 a year ago. Should they start to lower prices to unload them, that will put downward pressure on home prices.
“South Sac Hit Hard By Foreclosures: Realtors Fear Huge Rise In Proceedings Will Drag Prices Down Throughout Region” (subscription required), Sacramento Business Journal, Friday May 18, 2007
1Q foreclosure proceedings in the Sacramento Area are more than triple what they were a year ago. In areas that saw alot of action and new homes during the boom, like Natomas, South Sacramento, Rocklin and Lincoln, foreclosure proceedings are 4, 5 and 6 times what they were a year ago.
“Sale of Bank Held Homes”, Sacramento Bee, Thursday May 31, 2007
Just like in Southern California, homes for sale owned by banks in the Sacramento area are skyrocketing, to 663 at the end of April from 92 at the end of last April.
For the state of CA as a whole, the number is 5,448 – up from 1,111 last April.
As they numbers continue to mount, and the banks get sit of holding onto all these homes, they’ll cut prices, putting downward pressure on the entire market.
So when a realtor tells you it’s a good time to buy home, you know what he means: like always, it’s a good time for him for you to buy a home.
UPDATE (Mon 6/11, 12:45pm): On Sunday The New York Times ran an article on an auction of foreclosed homes held in Riverside, CA: “Get Your Red-Hot Foreclosures Here”.
Two lenders attempted to auction off 100 homes, 93 of which sold. Most of the properties were in Riverside and San Bernadino counties where, as I related above, sales volumes are down about 50% from a year ago. Lenders foreclosed on 2.369 homes in those two counties in the first quarter of 2007 compared with only 255 in the first quarter of 2006 – an increase of almost 10 times.
This isn’t that different from the jump in foreclosures from 721 to 6,007 in the 7 counties that make up “Southern California”.
The auction company, Real Estate Disposition Corporation, sold more than 265 properties in San Diego, Los Angeles and Riverside during two weekends in May and is holding auctions in Sacramento (Sat 6/23), the Bay Area (Sun 6/24) and Modesto/Fresno (Mon 6/25) in the next couple of weeks.