Housing Market Meltdown Google Earth Video: 2006-2008

The following is a video I put together showing the Sacramento market meltdown. Each frame is a week of data, and the video covers about 28 months from April 2006 until December 2008. Each color represents a listing price range (see the legend), and each dot is one MLS listing.

The meltdown really started picking up steam by the middle of 2007, as evidenced by the spread of the red dots. Notice also the resiliency of the "good areas" along the river and through parts of downtown, although it looks like price declines are beginning to encroach. 2009 should be interesting, that's for sure.

**Update: Here are the first and last frames in high quality:


April 15, 2006


December 27, 2008

**Update2: It looks like some people are having trouble loading the video, so here's a lower-quality version that should load for everyone:

Sacramento Regional Real Estate Trends for December 27, 2008

Last stats post of the year, and the typical year-end inventory fall off is in effect, although not as precipitous as in previous years. This might have something to do with the lack of any real inventory growth at all in 2008; ignoring the weird spike in mid-March, the inventory high of the year happened in February.

I would have to say, the themes for the real-estate market in 2008 were capitulation and bifurcation. When the credit tap was shut off, the areas with the most speculative buying, along with the less desirable neighborhoods, saw prices plummet and foreclosures soar. The more wealthy neighborhoods responded by withholding inventory from the market in the hopes that conditions will improve. Both responses lead to a reduction in listed inventory as a majority of sales transactions took place in the REO market and didn't necessarily involve traditional listing services.

Overall, 2008 was the year when the impact of the housing bust began to impact the economy at large, and politics entered the mix. One mission of this blog is to attempt to use data derived from house listings as a way to gauge market direction. To say that politics has distorted the housing market is a huge understatement, and 2009 will be nothing if not worse in that respect.

I will post again later in the week with a revisit of last year's predictions, and a couple of my guesses.

Merry Christmas!

Merry Christmas everyone! Here's hoping your holiday is filled with good company, good cheer, and good libations. See you next week!

-Max

Sacramento Regional Real Estate Trends for December 20, 2008

I know the stats commentary has been rather light lately; frankly, I think they've become less interesting now that politics has come to dominate the market. I think making predictions is extremely hazardous under normal conditions, but these days you're better off playing roulette than trying to use stats to predict market moves. That, combined with the end-of-year slowdown makes this a pretty dull dataset. I'll try and keep it lively through year-end with some California State gossip as it filters in. Right now, the topic de jour at the state agencies I'm aware of is the proposed staff cutbacks (no surprise.) Some management types are unhappy that their pay increases are being held up, so apparently the workers they supervise now make more than they. :)

Let the bickering, bitching, back stabbing, and brown nosing begin!

Cutbacks

Hot off the Governator's press. So is this for real, or just another negotiating tactic?

State Workers Furlough And Layoff Notice 12.19.2008 Final

View SlideShare document or Upload your own.

Shut It Down, Shut It All Down

So it begins:

California road, school construction projects could be halted or delayed

Road, levee, school and housing construction projects throughout California are on the verge of being halted or delayed, as state officials prepare to shut off their financing in the most drastic fallout yet from California's cash crisis.

Officials plan to meet today to freeze financing on these projects and about 2,000 others, including park improvements, environmental restoration and repairs to state prisons...

Many of the projects were authorized by voters in 2006 and championed by Gov. Arnold Schwarzenegger in his reelection campaign that year.

All rely on funds that are nearly depleted because the state has been unable to sell the routine bonds it uses to keep cash flowing. Last month, the state failed to sell two-thirds of bonds worth $500 million, according to state Treasurer Bill Lockyer.

Lockyer told legislators last week that halting public-works projects would have a ripple effect through California's economy, costing private companies $12.5 billion and eliminating 200,000 jobs.

The cost of shutting down a project in midstream is enormous, said Jim Earp, executive director of the California Alliance for Jobs, a construction industry-backed nonprofit group that advocates for public-works spending.

"It gives the contractor cause to file suit for damages," he said. "It is incredibly disruptive. It can cause major safety problems. We are going to be putting thousands of people out of work."

The government agencies that I'm aware of are spending money as fast as they can before another freeze is implemented. Meanwhile, hope for a federal bailout is the only plan. Stay tuned.

Craigslist Trolling: Deflation Christmas No Money Edition

The Fed lowers rates to zero, but people still can't find any money. Here's a few examples from craigslist:

LADIES PLATINUM ANNIVERSARY BAND - $1900: "Every girl loves to sparkle and this ring does! BEAUTIFUL ring that goes well with any engagement ring or alone... Asking $1900 but willing to negotiate so we have Christmas money."
1999 Dodge Ram 1500 Extended Cab Pick Up - $4000: "Need to sell quick for Christmas money."
3/4 kt. diamond ring in white gold. Unique band: "My soon to be ex-husband and I purchased this ring 5 years ago from Aquamarine Jewlers in Sacramento. I need to sell asap for Christmas money & to help being laid off."
Thomas Kincade - $200: "wanted to list before the weekend in hopes to sell for Christmas money."
Full sized Oxygen Acetelyn set with cart - $280: "Must sell for Christmas money. Tanks are about half full."
vita mix 5000 blender - $275: "just lost my job so i need extra christmas money asking 275. will accept any reasonable offer."
Buik Regal 83 coupe lowered price - $1200: "we got a n 83 buik regal that we have just dropped the price on it runs great looks great has crome spokes all the way around it... i am trying to collect some more christmas money for my kids."
"LIZ CLAIBORN" PURSE - $35: "GOT IT IN NY AT BLOOMINGDALES! COST OVER $200 BUCKS ON SALE! SELLING FOR ONLY $35... DONT NEED IT! NEED XTRA XMAS MONEY!"
2004 Ford F-250 - $7300: "Need money for Xmas and looking to downsize is reason for selling."
Air Jordan Spizike "OG Cement" - $150: "shoes do not smell... brand new these go for $250... i need money for xmas so please help a guy out..."

Slaying the Meme Dragon: Smooth Criminal?

Here comes the excuses. You may find yourself wondering, how did all these rich, sophisticated investors with millions of dollars and access to the best financial advisors, end up falling for an old fashioned Ponzi Scheme to the tune of $50 billion? A former SEC official has the answer (via CNBC):

Madoff Was a 'Smooth Operater,' Former SEC Official

In the wake of the Madoff scandal, former SEC commissioner Laura Unger called for SEC reform on Monday.

"The market has just gotten far too complex, far too fast moving and far too sophisticated for the agency to keep up," she said on "Squawk Box."

While the commission needs to embrace technology as a regulatory tool, said Unger, she cautioned investors that they must do their due diligence.

"The government will help but they’re not going to protect you from losing all of your money," she said.

Unger also said Madoff ingratiated himself with both the SEC and Congress.

"They took great pains to make sure that all the people who had authority of their universe were known to them," she said. "He was a smooth operator; it's a brilliant, criminal mind."

Forgive me for having doubts, but this analysis seems a tad self-serving. A simpler explanation is that the SEC and Madoff's victims were lazy and incompetent. The SEC relied on the man's reputation alone to judge his business, despite years of warnings. The victims allowed greed to trump good judgment and due-diligence.

There is far less here than meets the eye.

Sacramento Regional Real Estate Trends for December 13, 2008

Outrage

What a week! Here's a rogues gallery of the country's most destructive individuals. Try and guess which number goes with each picture:

1. Lied about his fund's performance, costing his clients billions
2. Lied about his state's revenue potential, spending it to the brink of ruin
3. Ignored years of warnings on economic crimes, costing taxpayers billions
4. Took corruption to the level of cartoon villainy
5. Stole hundreds of millions of dollars from hedge funds, some run by teacher pension plans

For some well-written perspective, I recommend this piece by Keven Depew.

Cracks

SEIU's message has been more subdued lately. Maybe they know the blood in the water is real this time. Since union layoffs usually happen based on seniority, will the older members support reduced pay so the younger members can keep their jobs? All I know is, when SEIU starts backing down, it's about to get real ugly in unionville.

Here's a sampling from their November 12 newsletter (pdf):

We're fighting furloughs, holiday cuts
The governor is once again dragging state employees into the state's budget crisis – this time by disguising wage cuts as unpaid "furloughs." Local 1000 leaders were quick to denounce the governor’s latest proposal...

"California’s chronic budget deficit is a revenue problem," said Jim Hard, Local 1000 vice president for organizing and representation. "We must insist that legislators drop their political baggage to take real actions on raising revenue."

And this is from their December 3rd newsletter (pdf):

Substantial gains still in place
Our bargaining team has been meeting with state negotiators for six months and we've already signed more than 400 tentative agreements that both protect our hard-earned guarantees from past contracts and that improve our current contract.

"We've been very strategic in our approach," said Walker. "We've listened to members, prioritized their concerns and continue to organize and fight back."

Notice the shift from an aggressive message to an emphasis on previous success. The SEIU membership is divided; can the Governator conquer?