Saturday, August 2, 2008

Sacramento Real Estate

This graph (click on the image to see a larger version) may be of help to those of you who, like us, are attempting to make sense of the turbulent Sacramento real estate market with the hopes of someday buying a house. In addition, we've found the following two blogs to be of assistance:

7 comments:

Sharon said...

How much more of a fall are you waiting for, Dave?!?!

Anonymous said...

Do you read any information from a different perspective? These guys were really helpful to me, but they were saying the same thing in 2004. If I had listened to them it would have cost me terribly.

David said...

Sharon, I'm more than content to wait for the splat at the bottom...

Anonymous, did you look at the graph? If you bought in 2004 and had to sell today, more likely than not, you'd be losing money. Unless of course you were quickly flipping houses to less fortunate souls who are now either upside down or in foreclosure.

Oh, and sure, I've read a lot of other stuff -- most with less than compelling track records. Is there a site/blog you would personally recommend?

Stacy said...

for the gentlemen who read and write this blog...

so...you wait for the splat...of course you don't know it's the bottom until it begins to go up again (and may as well be this type of market)...but you'll be on the other side of the buyer's party leaving you much less to choose from, no?

Sharon said...

my point exactly...add interest rates to the mix...if this isn't a buyers market...

Maybe I've been listening to "anonymous" too much...

but, really, kids, there's good reasons for not buying too. I'm totally on your team here. I've learned my lesson, though, and anonymous totally knows his stuff.

David said...

Ladies and gents...again I'd like to steer your attention back to the graph. There are a number of reasons to suspect that the hangover from the housing party isn't over yet:

1. The decline in home prices is much more severe than the last downturn and seems to be continuing. The party lasted several years and the hangover could be just as long.

2. Even with the fall in home prices, affordability has only reached 50%. Last downturn affordability peaked at 71%.

3. Job growth just went negative in the Sacramento economy. Not a promising sign of an immediate housing recovery if the last downturn is any indicator.

4. Defaults and foreclosures have yet to peak. These two indicators were much more closely associated with the last market bottom.

5. Interest rates (not shown on graph) do not appear closely correlated with recent housing price declines. Rising interest rates would likely cause further declines.

According to Chris Thornberg: "Housing markets don't bounce, they splat. They hit bottom and they stay there."

So...what's the rush?

Lander said...

These guys were really helpful to me, but they were saying the same thing in 2004. If I had listened to them it would have cost me terribly.

If you are referencing my blog, then you are incorrect. (The blog was launched in January 2006.)