Sacramento market?

Question

What do you guys think? Do you think weve seen the worst, or is it just the tip of the iceberg? Im seeing houses getting close to dipping below 200k that were 300k a year ago. I can throw a rock in any direction from my front porch and hit 3 REOs. I dont see houses dropping much below low 200k, but maybe Im optimistic? Good time to hop on the market, or ride it out? Just seeing what the Northern California REIs think of this volitile market

Account Closed · Answer

Sacramento is really bad right now for SFR's and it's only beginning.  It's going to get much worse.  I know other Realtors in that area and they are extremely nervous because that market is not even level or flat, it's just tanking and it's going to be a lot worse.

Jon Holdman · Answer

I remember Houston VERY well from the 80's.  When I moved there in Jan 82, fresh out of college.  The apartment finder said "if you see something you like, rent it on the spot.  It won't be there when you come back".  A year later, the deal was "sign a one year lease, get two months free".  We lived right off the dome.  As in, you couldn't leave or enter the place when a game was on and we watched the Six Flags fireworks off our patio.

Although none of us realized it at the time, things were about to get much worse.  18% interest, negative amortization, see thru buildings, and three years later people just mailed their keys to the mortgage company and walked away.  I finally bought a house in 1987 with seller financing at 9% for 15 years and was glad to get it.  It could be much worse right now.

I think it will get worse, before its better, though not as bad as it did back then.  As for stocks, its impossible to time the bottom.  Its a good time to be a buyer.

Jon

Dick Green · Answer

This to shall pass though economist predict it might be sometime around 2008 or 2009. http://money.cnn.com/2007/09/13/real_estate/mortgage_meltdown.moneymag/index.htm?postversion=2007091408

Still one thing is sure.  The one that hunts the longest and the hardest shall continue to eat.  A good friend once told me that sometimes it's simple a matter of perspective.

In changing the way I market I've actually noticed an increase in business.  This type of market provides a lot of opportunity.  It takes the putting of two ingredients together.  Someone selling real low and someone who's qualified and wanting to buy.  Those ingredients are about to be in ample supply.

I remember when I first moved to Texas back in the mid 80's and the market was bottoming out.   Vacancy rates on commercial property were at an all highs.

I was offered seller financing, no credit check with a 1 year monetorium on payments on a 85+ unit apartment complex.  And for those of you that know Houston....it was near the Dome, 288, Meyerland, (real Hot area)...ect....I didn't know enough about the local economy to take advantage of it and passed.  Later I kicked myself.  I'm looking for the same type of transactions to surface in this current market shift.

Remember to fish when fish are biting and keep the faith!

Dominic Enea · Answer

With prices dropping and rents rising, see if you can get some houses under contract that can cash flow.  This will not work in the Bay Area, but I have seen some in Sacramento and the Central Valley that it could work.

Dominic Enea
Global Real Estate Services
Commercial Division

Frank Adams · Answer

I don't know any place that's going to be immune to the price drop. My part of TX has mostly retirees buying in the $225K-$475K range, for cash. We're seeing some hiccups because some of these buyers can't unload their old houses due to slow markets. It's not that they need that money to purchase, it's just that they're conservative enough not to jump in now.

I'm looking for spring of '08 to be a great time to buy. Coming off the normal end of year slowdown, with an election looming. Politicians will be pulling out the stops to get transactions happening.

all cash

Account Closed · Answer

What does the data tell us? Year on Year (YoY) numbers and other specifics?

I am finding that some press reports are claiming a crash but prices nationally are close to flat (less than 5% down). In some specific markets prices are up close to 10% or more. In some specific markets prices are down by almost the same amount. For 2006 the national numbers show prices rose in the US (ever so slightly) so still no down years since WWII. I expect 2007 to be down but is this really a 'crash'?

In come parts of the Midwest or TX they are still waiting for the boom to come their way as it did not happen between 2000 and 2005.

So, what is the Sacramento market really like (numbers) vs. anecdotal data?

John Corey