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. 
5 comments :
Max, thanks for adding the pending sales total count and the note about not translating it to months of inventory. No matter how you slice it and dice it though, the pipeline continues to bulge. Your site is one of a kind and presents info that is very enlightening and it would be very difficult to find it elsewhere. I always look forward to your posts.
"....historic and monumental once-in-a-lifetime skyrocketing of prices...."
True that - if you're under age 15. This kind of runup happens every 10 years or so.
Real estate is not an investment for those who are impatient. If you treat it like a commodity, it will burn you.
Even Tony Soprano has to use "muscle" to get consistent returns over 25%.
Thanks for crunching the numbers, Max. All the anecdotal evidence is interesting, and personal impressions and prognostications are another thing, but the numbers tell the real story.
"True that - if you're under age 15. This kind of runup happens every 10 years or so."
I used to think that maybe this runup was similar to what happened in the 70s or the late 80s, unitl I saw this:
Shiller's History of National Home Values
http://sacramentolanding.blogspot.com/2006/08/soft-landing-after-this.html
anon 7:57,
I think Mark Twain’s saying about lies, damn lies, and statistics applies here. Max's blog is a good one and I also appreciate the number crunching, but let's not forget how often the industry groups (NAR, CAR, NAHB, MBAA, etc.) like to cook up new metrics and spin stuff. The re-write on Ca affordability numbers comes to mind. Also, the median price gimmick, along with selectively quoting MOM or YOY stats depending upon what they want the headline to look like. How about the mortgage numbers that went up 5% and they say, "Wow, that's great" without mentioning that is a MOM stat and activity is down 19% YOY.
For these reasons I also like to hear the anectdotal stuff. After all, a financial mania is primarily based upon psychology - trees growing to the sky, etc. And the sentiment on the street ultimately will pop the bubble. The numbers will just feed into a self-reinforcing loop of lower prices, reduced expectations, lower prices, etc.
Come to think of it, this entire bubble economy is one big confidence game.
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