Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
Sunday, October 16, 2005
The 'Wild Ride' Is Over In Sonoma
The Press Democrat had this in the Sunday paper. "Sonoma County's housing market is slowing after a record run. Price reductions and seller concessions, listings languishing on the market and buyers negotiating better terms are signs the housing market has cooled after a sizzling three-year home buying binge."
"The extent of the sales slowdown and flattening prices show the shift in the real estate market goes beyond the seasonal swing that happens almost every autumn. Inventory is at a three-year high. Homes are taking five weeks on average to sell, compared with three weeks a year ago."
"Unlike last fall, when inventory was dropping to all-time lows, the number of homes on the market is growing this year. Ever higher prices combined with rising interest rates appear to be sapping the market of strength heading toward year's end."
"Among sellers, price cutting is becoming more common. In Camp Meeker, a home first listed more than a month ago by agent John Starkey remains on the market. So the owner lowered the price from $415,000 to $380,000 in hopes of generating greater buyer interest. 'We put it on the market at exactly the wrong time in terms of maximizing the price. It just shows that there are four or five times more properties on the market than there had been a few months ago,' Starkey said."
"'It means sellers have to be more competitive. I think stubborn sellers might believe that their particular property is golden and is going to sell higher than the last one that sold down the block. If they really want to move their property, they're going to have to change their thinking,' he said."
Sonoma county is a PRIME target for a MAJOR correction. The prices there are WAY out of whack! I expect the median price to drop by 35% in the short terms with upwards of 4% depreciation annually for many years to come. Towns like Petaluma and Santa Rosa are going to be hit HARD!
ReplyDeleteDon't say Real Estate never goes down:
ReplyDeletehttp://www.investopedia.com/features/crashes/crashes4.asp
And don't think 'It's different now' because it ain't.
"'It means sellers have to be more competitive. I think stubborn sellers might believe that their particular property is golden and is going to sell higher than the last one that sold down the block. If they really want to move their property, they're going to have to change their thinking,' he said."
ReplyDeleteCan't these realtor's just say "lower thier prices", or is that just too distasteful?
Fixed the link :-)
ReplyDeletehttp://tinyurl.com/7megy
What do blogs have to do with anything? People talked back then( face to face, believe it or not :-) and read newspapers. A bubble is a bubble is a bubble internet or not, it is caused by massive speculation. So no I don't think the internet has anytthing to do with it pro or con. On your second point: If the real estate bubble bursting is coupled with a stock market crash of 40% in a year, then yes I could see RE prices falling 80%. Keep in mind, is some markets, there has been 100% gains in three years.
ReplyDeleteI think the other thing that leaves the real bottom of how low prices could fall up in the air is that it's all about expectations. Just like everyone having the expectation that prices will never go down has driven the mania (along with easy credit of course), once everyone is fearful of prices never stopping to fall who really can tell where prices will stop. If prices dropped 40% would you then be ready to step in to buy? You probably would be interested, but what if there was just negative news everywhere and there was still tons of unsold inventory out there? Then you'd likely wait. That could be the case for a long time though before you ever see any sort of bottom happening.
ReplyDeleteIt's not unforseeable that prices could head back to where they were in 2001 which seems to be a somewhat stable point before everything went crazy. At least at that level I think people can afford homes based on their incomes. And since I don't feel that markets ever head back to a normal state without overshooting it somewhat, we could even see prices that go back into the level of the 90's.
Calguy,
ReplyDeleteIt would be interesting to hear what her realtor told your sister. Did she say she could sell it quickly? Did she say the market is getting saturated? Has your sister done any comparisons on her own of what's on the market around her? It would be fun to track someone's actual sale on this site.
The extent of the sales slowdown and flattening prices show the shift in the real estate market goes beyond the seasonal swing that happens almost every autumn.
ReplyDeleteThis brings to mind a sight just last fall in a Sonoma plaza realtor's office window: in bold letters, an article stating "There Is No Bubble". I need to drop by and ask what happened.
Btw, I'm noticing a lot more signs in the county, many with "price reduced". There's been a noticeable spike since early september, which I didn't see last year.
sf slum lord said about walking around town in SF today:
ReplyDelete"I saw a few that were 1.5 million and up- but the amazing thing is that those 1.5 million dollar units wouldn't fetch more than that 60k to 70k if they were located in my hometown of Iowa City.
What a fucking joke. This town is going to be utterly destroyed. Some reports put the number of IO/no-doc/neg-am/ARM loans in san francisco at upwards of 90% over the last 3 years.
Prices are going to crash so hard it'll make pets.com look like a cakewalk.
We already KNOW from the dot.com experience that people in this area are absolutely willing and able to fall for the most overpriced shit (tech stocks) and never even ONCE consider that they may be making a fatal financial decision."
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I've said it before; I'll say it again:
People have a great ability in the SF Bay Area to delude themselves if it fits their purposes.
This includes their financial dealings. It all likely stems from their belief that it's "different" here and "different this time."
Well, we shall see.
Another sign that the housing bubble should pop soon is that it seems like new bubble sites are "popping" up every day. One of the good sites that i've found lately has real good info and even links back to Bens Blog: www.realestatedecline.com
ReplyDeleteTowns like Petaluma and Santa Rosa are going to be hit HARD!
ReplyDeleteMy wife told me that when she does a search in Santa Rosa on CleanOffer.com withing the range of $400k - $1mill in Santa Rosa, then number of listing cannot be shown because there are too many. So I asked her how far she had to reduce the price range until CleanOffer would list them. She said she had to reduce the reange to between $400-500K!!! Only then were listings shown. Santa Rosa is up for sale!
Good Morning October 17th..
ReplyDeleteWell.. The good news is the sun did rise here on the east coast, it's not the end of the world yet. But hopefully the new bankrupcy laws get enough media attention today to at least give the would-be speculators some pause. Bad news? Oil up, futures down, some big data on the economic calendar this week and Wilma steaming towards the rigs
-grim
http://nnjbubble.blogspot.com
San Diego up 689% YOY*!!
ReplyDelete* (1981)
citationcj1 said:
ReplyDelete"Several years after Pets.com crashed and burned one of the venture caps involved in the IPO said:
'We didn't really understand how expensive it would be to ship dogfood to retail buyers.'"
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There's a reason why I sometimes call them the "venture idiot community" here in the Bay Area.
There's a reason why I sometimes call them the "venture idiot community" here in the Bay Area.
ReplyDeleteYeah, just like the dot-bomb, the RE craze has caught on so hard here due to eveyone believing they're a bigger genius than the next guy.