While sales for both Folsom and
EDH are still slow, on a seasonally adjusted basis, it looks like pricing appears to be hitting a plateau. This doesn't surprise me much for Folsom, whose month's inventory is still low compared to the rest of Sacramento, but it is unexpected for El
Dorado Hills with between 9-11 months inventory out there.
In general, I was hoping to see the correction pick up speed after the spring selling
season collapsed under the weight of all the inventory. For these two zip codes, that doesn't appear to be the case. Is this the end of the correction for these two markets....at 14% and 16% from the peak?
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4 comments:
Looks like you're correction was made - just not what you were looking for. DOn't expect these 2 markets to act like Elk Grove, the have much less # months inventory, FOlsom less than 6.
Also, active building in these markets coupled with still rising costs - both areas have increased permit related costs significantly since the peak. - instead of builders handing that discount to you, part went to the city/county/school.
Have patience. Prices may be extra "sticky" in some areas, but fall they must.
As suggested by someone's posting on Ben's, have a look at Wikipedia's entry for "Behavioral Finance." It makes sense that many sellers will cling to high prices for emotion reasons; from there I don't think it's too much of a stretch to suggest that this phenomenon will vary in intensity between socio-economic groups, and from zipcode to zipcode.
Or put another way, who would be more likely to have their self-image tied up with the perceived value of their house- someone who bought in El Dorado Hills, or someone who bought in Elk Grove?
Realtors and bubble-bloggers may pay attention to inventory levels, but I think that few individual home-sellers want to; at this point, they are still thinking about what the neighbor's house sold for 18 months ago.
giacomo is absolutely right. There's a psychological component to the economics of this. But, ultimately, necessity will force the hands there too. The fundamentals don't support the prices there either. But prices will be stickier coming down than going up.
Thanks for the pep talk David and Giacomo.....I know in my head there is a lot of stickiness going down....especially good point about the upper crust being extra stubborn. It does make me question why I want to live here...(but the public schools are good).
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