Sacramento Regional Real Estate Trends for October 28, 2006

FYI: The blog was getting a little clunky with all the graphs, so I’m trying a new combined layout. If this doesn’t work for you guys, let me know…

For those of you who missed it, I have added a new set of graphs to the weekly stats. Allow me to formally introduce the asking price trend graphs:


(Please note that graphs are at different scales from one another in order to highlight trends.)

I think these trends give us an excellent insight into the seller mindset over the past six months. One thing noticeable right away is that all the numbers are trending lower, with average asking price declines ranging from 5-10% since April, and median asking prices dropping 4-6%. However, median asking prices are still lagging far behind median sales:


Keep in mind, I am comparing today’s median asking with September’s selling price!

As for inventory, the numbers keep declining slowly:



I expect to see a large drop on Wednesday when the old listings automatically drop off the MLS. It will be interesting to see if the numbers rebound by next weekend.

On the flipper front, things continue to deteriorate:




The strain on these guys must be incredible. I do not envy them at all.

Sacramento Area Asking Price Trends

After many months of data collection and analysis work, I have finally compiled pricing trend graphs for the Sacramento Region. After today they will appear every week or so as part of my usual stats post.

Enjoy!

Short Sales Continue to Rise

Short sale activity in Sacramento County continues to rise. From just over 100 in July, we now see 328 at last count. And keep in mind, this only includes listings where the agent is smart enough to know that there's a field that indicates a short sale in MLS! With current inventory at over 10,000 for Sacramento County, the numbers should get interesting in the coming months...Stay tuned!

Sacramento Regional Real Estate Trends for October 21, 2006

After a surprise increase last week, inventory remained unchanged:


So what is going on? The short answer is, I have no idea. Inventory levels have been holding relatively steady around 18,200 +/- 400 for the last month, with a very slight down slope.

What can last year tell us? Well, in 2005, I was only tracking daily inventory for Sacramento County:


Not a whole lot of similarity. Here is the whole picture:


You could argue that we are further along in the downtrend this year than last, but the 2006 falloff is a lot shallower. My mostly unverifiable guess is that the pie-in-the-sky sellers are throwing in the towel, leaving the market to those who have no choice but to sell. This scenario is supported by the continued flipper market deterioration:



(Note: The flippers in trouble number is higher here than on flippersintrouble.blogspot.com due to a more vigorous selection process there. This number could be slightly smaller due to duplicate listings or slightly larger due to condo listings without unit numbers.)

Also, I have pulled the pending vs active graphs due to some unresolved inconsistencies with other data sources. I am going to leave them out until those problems are worked out…

That is all I have for this week, but stay tuned. I’ve been working on a market pricing graph product that should complement this data nicely, and I plan on adding it later in the week.

Massacre at Lincoln Crossing

Back in July, I posted some pictures and observations made by John in Rocklin on a JTS development called The Estates at Lincoln Crossing:

Hillwood Loop is a ghost town. So how do you know a house is sold? The developer puts a sign on the lawn stating "Home Occupied, Please Do Not Disturb". Why is that necessary? The homes on Hillwood Loop sold in April and May, 2006. Contrary to what the signs said, I have not seen a single home that appeared to be actually occupied. Note the photos of the builder signs, then look at the front door handles. They all have "door knocker" flyers stuck in the handles, probably selling pools or such. No one has gone in or out of these front doors in days, if not weeks or months. Note the FSBO sign in the window, placed there because the seller is prohibited from putting out a street sign. Nice touch by the builder. Hmmm. Does he care? Not when he is still finding new buyers, who won't see the disguised problem.

Now, just in time for Halloween, Hillwood Loop has become the scene of a flipper massacre. In the last few weeks, JTS started a massive PR campaign to sell out the remaining inventory:



Unfortunately, the sale has put many of the previous buyers instantly underwater. This is a sampling of the 18 current listings on Hillwood Loop that have been drowned. Notice that all the asking prices are still above the previous sale price, save one:


Here is the first of what are sure to be many casualties:

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1206 Hillwood Loop Lincoln, CA 95648

Total Loss: $70,500 Percent Loss: 9.2% Asking Price: $695,000 Bedrooms:5    Baths: 3    Sq. feet:4042 Asking Price Changes: Down 16.2% from $829,500 On 06-22 Down 14.2% from $810,000 On 08-05 Previous Sales: Sold on 2006-04-14 for $765,500 MLS# 60068732      Google Maps

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Sadly, the fate of the flippers at Lincoln Crossing is not unique. We can expect a similar bloodbath in new developments across Sacramento as the builders bail out. For fun, I ran a Google Earth map of all the Sacramento County flippers, and one for FITs. Notice anything interesting?

4 County Sales Stats

I put together some sales stats comparing the September 2005/2006 years for Sacramento, El Dorado, Placer, and Yolo counties. All of the fields should be self explanatory. The only confusing one might be "Original Listing Price" which is the price the house was listed for when initially entered in MLS. These figures are not medians, they are true averages. As requested, I've updated the chart so that it's broken out by square feet.

Click image to view:

FIT Auction Update

For those of you who haven’t seen this on Lander's Site, the FIT from the auction post decided not to accept a lowball offer:

Seller John Chargin was among the half-dozen who declined to accept a high bid -- in his case, $450,000 for an Elk Grove home he listed at $549,950.

But Chargin, who wants to sell the house quickly after relocating elsewhere in California, remains upbeat about his prospects.

"I think I'm going to sell this house from this auction just from getting so many people through it," he said Monday. "There is no way in this market I would have gotten that many people, so we'll see."

Our seller paid $492,500 for the place back in February. Sadly, I did not save the title search document listed on the auction site, but if my memory serves me, he owed somewhere in the neighborhood of $440,000. An offer at $450,000 (less the 5% auction fee) gives him $427,500, which leaves him around $13,000 in the hole. Now, the carrying costs on the place are over $2,000 a month ($1,900 IO payment option with 1% teaser plus mello-roos and taxes), so in six months he'll be back at square one with the $13,000.

He's going to wish he took the offer.

Sacramento Regional Real Estate Trends for October 14, 2006

Sorry about the late post again this week. One reason for the delay was that I didn't believe the inventory numbers, and I wanted to check with Agent Bubble to make sure they were correct:


Your eyes do not deceive you. After three weeks of downtrend heading into the fall, the four-county regional inventory grew unexpectedly by 250 listings over the previous week. Agent Bubble showed an even bigger w-o-w increase, using a different source. We both think this is unusual, considering the time of year. Of course, we will keep you all up to date as we learn more.

Another surprise has been the rapid degradation of the flipper market. (For those of you wondering, I don't do the spreads for Yolo and El Dorado counties because the market is too small for accurate trends.) On October 14, flippers in trouble made up over 5.5% of total inventory in both Sacramento and Placer county, with a large increase happening within the last four weeks. On April 15, 2006, those numbers were just below 2%.

Put simply, the flippers are getting hammered:





On the price level inventory front, the unexpected increase looks like it occurred at the $500K+ price levels in Placer and El Dorado, and in the $200K-$350K range in Sacramento:





We will continue to follow this unexpected inventory increase, and report back here. One possibility for this is builders listing with the MLS as a last-ditch effort. Is there a way to verify this somehow?

Flippers In Trouble Turn To Auctions

From the Sacbee today:

'Going ... going ...' Sellers hope auctions will help deliver 'gone'

In Elk Grove, John Chargin, too, is turning to today's auction block for a 2,667-square-foot house he's listed at $549,950 and bought just last year. Chargin, a mortgage broker, moved to another office in California and wants to sell as fast as possible.

"When you have a mortgage and don't live in the house, you need to get rid of it," he says."

I ran a quick check of the auctions listed on West Coast Home Auctions site, and found two Flippers In Trouble:

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5110 Pleasantglen Way Elk Grove, CA 95758

Total Loss: $101,000 Percent Loss: 22.4% Asking Price: $349,000 Bedrooms:4    Baths: 2    Sq. feet:1979 Previous Sales: Sold on 2003-08-12 for $299,000 Sold on 2005-10-13 for $450,000 MLS# 60102062      Google Maps Assessed Value       Property Tax Bill

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10212 Shoech Way Elk Grove, CA 95757

Total Loss: $17,500 Percent Loss: 3.6% Asking Price: $475,000 Bedrooms:3    Baths: 2    Sq. feet:2667 Asking Price Changes: Down 13.6% from $549,950 On 09-02 Previous Sales: Sold on 2006-02-24 for $492,500 MLS# 60099147      Google Maps Assessed Value       Property Tax Bill

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The second listing is a classic example of a flipper by circumstance. The guy needs to move after buying a house within the last year. Whether he planned to or not, he has become a defacto flipper.

Of course, even though circumstances have forced him into selling, he was not above asking for a $50,000 profit when he first listed in early September. Also note the man's stated profession. If he can't break even from last year, who can?

Local Vacancy Rates

In a post on Sacramento Land(ing) a reader pointed out a high amount of vacant homes in MLS. Ever the curious mind, I decided to run some numbers for various cities in our MLS to see how things stacked up. I wish I had data from previous years for comparison, but I'm still really surprised at the ratio of vacant to occupied homes. Take a look:

Sold/Expired/Withdrawn Activity

I was curious how the sold/expired/withdrawn market has been doing and decided to put together a few charts to get a better idea of the situation. Data used is from the Sacramento, El Dorado, Yolo, and Placer county regions and includes residential listings.

Click on each image for a larger view

Sacramento Regional Real Estate Trends for October 7, 2006

The seasonal stagnation continued in the four-county Sacramento region, with another 100 listings dropping off the MLS. Total inventory fell to 18,326 in the counties of Sacramento, Yolo, El Dorado, and Placer:


Where have all the buyers gone?

Pending activity fell to another low of 3.5% of market (415 houses):


Keep in mind that although the number of pending sales gives an indication of market activity, it does not equate to months of inventory. Sometimes, a house is sold before it can be listed in the MLS, or the deal falls through and the listing goes back to “active.” Think of it as more of a snapshot of sales activity for that moment in time.

On the flipper front, their positions continued to deteriorate this week. 20% of flippers in both Placer and Sacramento County are now taking a loss outright (asking price vs previous sales price), and an additional 30% are looking for less than a 10% gain over purchase price:



It is now official: if you plan on house flipping in Sacramento or Placer County, you have a 50-50 chance of losing money/breaking even.

The price level inventory story continues to be the steady increase in lower-priced house inventory. In all four counties, there has been a steady increase in the $0-$200K, the $200-$300K, and the $300-$350K levels. All the inventory decreases have happened in the $400K+ ranges.