So looks like the downward price trend is picking up steam this week, the average price per square foot of homes for sale in my criteria dropped by $2 from last week. Inventory is holding and contract activity increased a hair, but is still below the average for the stats I have collected.
Back in May I did some premature calculations on when I would feel comfortable buying given the current trend in price per square foot. Shortly after that, I got incredibly discouraged as I saw the price per square foot creep up.
However we have been on another down slope for over 2 months. Nonetheless, at its current rate, it would be almost a year before the average dropped to $180 a square foot....sigh.
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Guess what we're doing this weekend?
Unpacking. Even the Sig has been moving his boxes of things.
We have internalized that we will not be buying another house for at least another 2 years, and we have finally admitted that we need to get all our "stuff" organized. 18 months after we rented this place, we've finally decided that despite the yardwork and the awful ductwork/energy bills, we'll be staying for at least another 2 years by all the housing indicators.
We actually "decorated" the kids room walls with the removable stickers last weekend cause I was soo sick of off-white walls.
I think things will start to drop a lot faster next year. There are still a lot of owners / investors that expect appreciation in 08.
When every starts wishing the numbers would go back to the numbers for September (horrible as they are) then we should see some real motivated sellers.
Companies are now starting to take multi billion dollar losses and they still have more pain coming.
And new homes are still being pumped out like crazy.
Add to that:
The Recordnet. “Central Valley sales figures weren’t available for the Wednesday state Realtors association report. In San Joaquin County, real-estate agents and brokers say foreclosure homes have been a logjam in the sales market for existing homes.”
“Some asset managers, who are handling foreclosed houses for the entities repossessing homes, are more open to negotiation to reach deals, he said, though it’s not across the board.”
“‘I wouldn’t call it a lot more (sales),’ he said. ‘We’re beating them into submission is what it is - every day it’s ‘You’re priced too high, you’re priced too high, you’re priced too high.’”
“Real-estate agent Kevin Moran said that just within the past few weeks, asset managers are starting to reduce prices on overpriced houses and also are bringing new foreclosures onto the market at more reasonable introductory prices.”
“They also have started telling him that they’re getting instructions from higher-ups to get more aggressive on moving foreclosure properties through better prices and negotiating, he said. ‘I think they’ve sat on their inventory long enough.’”
So be ready for more markdowns on REO because they've finally figured they need to clear the decks to make room for more.
"There are still a lot of owners / investors that expect appreciation in 08."
Bingo! As I have said, there are still plenty of investors out there, these are at least 50% of the people buying foreclosures, assuming that they will be able to cash in next year.
I called for the official end of the bubble by August 2008. This should be the time when absolutely NO ONE will believe that their way to riches is in RE.
"Companies are now starting to take multi billion dollar losses and they still have more pain coming."
I don't think many companies realize how much pain is coming. As mentioned before, it could be YEARS of planning and permitting before dirt is moved for a new project.
In the meantime, you have contracts and commitments to keep for a project, and if you don't build it, you won't get any return on the substantial amount of money that has been already spent.
On Foothills near HP another apartment complexis going up. I just notices that street lamps are all up. And there are 10 other apartment complexes (at least) within 2 miles that have vacancies.
But builders gotta build and like you said you get no return on dirt so might as well build it up I guess.
When some of the hundreds of real estate shows go off their air then it might be time to start looking.
Or when auctions start to get no bidders (and noone even showing up), although that has happened a bit already.
I guess this holiday season will let us know if there will be a recession or if we have a chance to escape that. I know car sales are hurting, but I am curious how the rest of retail does.
Lots of job losses outside of realestate will make this get really bad. I just want it to bottom out asap then start recovering so I can buy.
"But builders gotta build and like you said you get no return on dirt so might as well build it up I guess."
Some of their thinking was this:
'Housing is so expensive, that the people that can't buy will rent'
or:
'Those who will lose their homes will rent'
But we have not done as many apartments lately.
"Lots of job losses outside of realestate will make this get really bad."
It all depends. A lot of the workforce consisted of illegals, and I heard on the radio today that remittances to Mexico are down. However, a friend tells me that those who came from Mexico will stay here regardless.
"I just want it to bottom out asap then start recovering so I can buy."
I already bought years ago, but we want to move up. I want this to get straighten up soon so we can all move on.
Another year is not bad :)
I also agree with Jacob - one has to consider that things are accellerating a bit.
Buying Time: I am seeing similar anecdotal evidence in the one zip code that I watch (95682) but by a slightly different measure. In the past week I have seen a handful of large price reductions, week-over-week with houses that I am watching. These are in the magnitude of about 7-12% price reductions. A couple are known to be distressed, but one is not. This puts them all below $190/sq ft. Our favorite REO still has a long ways to go before it will be within a range that we will make an offer!
RE: "builders gotta build" true but remember the capped oil wells in Texas during the bust - just like land development, there was already a lot of money invested in the ground and the oil had already been found.
FYI just listening to a big housing critic/analyst - Ivy Zellman on 1140 today who said
" Its a great time to buy a new home in the Sacramento area, . . . the problem is in resale . . . many sellers not realizing the prices they need to drop to . . . "
". . Main problem right now is getting loans . .the mortgage market. . . "
I saw a new commercial that went something like...
Its never been a better time to buy, blah blah balh, then goes on to have one person say "why should I rent when I can buy for a lower monthly payment".
I lol'ed at that. Either he was renting a 4000 sq. ft. home and bought a 900 sq. ft. home, or he has a sub prime, neg am, interest only, or some other loan that doesn't require him to actually pay back the loan (for a couple years at least).
Tho I have to partially agree. 2007 is a lot better to buy than 2006, and 2006 was better than 2005. But 2008, 2009, 2010 and maybe beyond will each be better than now.
But of course it is always a great time to buy. If the market is going up, down, or holding, it is always a great time to buy, and also a great time to sell. Realtors just leave out the part about "Who" it is great "For".
"Its a great time to buy a new home in the Sacramento area"
Wait till the next few years to get a good idea of 'great time to buy'.
"the problem is in resale"
The problem is everywhere, from high prices to high inventory.
"many sellers not realizing the prices they need to drop to"
Most realize it, they just don't want to confirm their loss by selling their house(s). And if they don't realize it, they ALL will by next year.
We decided to get the kids a dog, after promising them one when we buy a new home. We've been renting for 2+ years now (started with 9 month lease). We're not concerned with what the landlord will say.
my guess is not that inventory is high, but the banks now want to realize the loss on the books before the end of the year. Realizing a loss on the loans proves the paper assets they're rolled into are worthless.
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