Like We Didn't Know

Finally, the press is catching up with the reality of realty. This is from the Wall Street Journal and I guess if they print it, it must be true. Welcome to the awakening.

From the Wall Street Journal (my comments in blue ital):

New home sales tumble in '06

New home sales plunged 17.3 percent in 2006, the biggest drop in 16 years, although warm weather in the Northeast gave a better than expected lift to December sales. In other words, the sales would have been even worse if it wasn't for global warming - I hope the RE industry is happy with our burning of fossil fuels.

The full-year median price of $245,300 was up 1.8 percent from the full-year 2005 average, but that price does not reflect the various sales incentives such as extra features or closing costs that the majority of builders are reported offering to support weak sales. The median price is actually lower, but the industry won't allow for the true numbers to come out or they may face mass hysteria from the over spent public.

John Tomlinson, an analyst with Majestic Research who follows the stocks of major
home builders, says the weather-impacted December readings are not enough to say that the new home market has found a bottom.

"This is such a seasonally slow time of the year, I think we'll have to see how sales pickup in the March or April," said Tomlinson. "They still have to clear the high level of inventories before they'll rebound." That may be tough with the number of foreclosures hitting the market - California is adding 300 REOs per day.

Major homebuilders such as Lennar, Pulte Home, KB Home, Centex, D.R. Horton and Toll Brothers all saw sharp declines in earnings in 2006 with the slump in home building and new home prices.

Alan Gayle, senior investment strategist, Trusco Capital Management, the asset management arm of SunTrust Banks, also agrees it may be a year or two before the home building and new home sales market show some significant strength.

"We think the market is trying to find a bottom, but what we're seeing is still some very significant discounting going on," said Gayle. "I think we're going to see some
further softness in the first half of the year. By the second half we will have gone through the worst of this slowdown. But a resumption of trend growth in housing could be another year or two off."

But David Seiders, the chief economist for the National Association of Home Builders, said the demand for new homes is showing relatively decent strength, falling only to near 2003 levels, which was a record at that time. Well, let's see...it had dropped to 2005 levels and then 2004 levels and now...2003 levels...uh, why won't it drop further?

"We knew all along that 2004 and 2005 were unsustainable binges," he said. "If we can move ahead from the average we saw in '06, we'll be happy as clams." It may be better to be oysters rather than clams, but I doubt there are any pearls in the year ahead.

But he said if new home prices are going to show strength again, builders will need to keep housing starts and construction slow a while longer to burn off the inventory left over from the building boom.

"The builders do need to move that off and they know it," he said about the supply of completed homes available for sale on the market. You know what that means...more discounts, incentives and decreases in the median sales prices. Hoorah!

I Surrender

From the Sacramento Bee:

"Hundreds of Sacramento-area homeowners who missed their first mortgage payments early last year fueled the region's most dramatic rise in home foreclosures
since the 1990s during the fourth quarter of 2006, a property research firm said Wednesday.

La Jolla-based DataQuick Information Systems said 865 capital-area homeowners surrendered their houses to the bank in October, November and December -- nearly double the region's 450 third-quarter foreclosures."

By my count that is about 10% of all the homes currently listed on MLS for Sacramento. This is just a little troubling.

"While foreclosure activity climbed sharply, statistics also showed the rate of growth in notices of default -- the first sign that homeowners are having trouble making their mortgage payments -- has slowed.

The region's 16 percent jump in default notices in the fourth quarter compared to a 25 percent jump the previous quarter -- and a 37 percent rise statewide."

This is interesting that because the 4th quarter “jump” in default notices is only 16% versus 25% in the 3rd quarter that the rate of growth “has slowed”. I don’t believe anybody talked about a “slowing” housing market when there was a 16% to a 12% appreciation. In fact, if I remember correctly all of the RE breed were shouting that there is nothing to indicate that this will ever stop and that you better sell your soul if you want a place to call your own.

"But trouble at home is still clearly on the rise. The 865 fourth-quarter foreclosures compare to 63 the same time last year in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties. Analysts said Wednesday the sharp rise reflects both last year's historic lows and the sheer number of owners who overextended themselves to buy houses during the recent housing boom."

Again, I am no Greenspan...but, that looks like...carry the 2...that is over 1200%! Uh...no reason to panic or become alarmed. Stay calm all is well. This is just a blip in the vast market that we call real estate.

We shall see. Stay tuned and we will continue to watch the carnage that is to come.

Perfect for Entertaining

I first noticed this house, which is “perfect for entertaining”, in September of 2005. Apparently they have not “entertained” too many offers at the price that they are proposing. In 09/05, which is almost a year and a half ago, they were asking $895k. It looks like they have done some thinking over the last 16 months and somehow came to the conclusion that the price must be a little excessive.

So, now it is way down to $875k. That should surely bring in those that were right on the edge and just could not bring themselves to spend that extra $20k. Good luck with sorting out all of the bids and enjoy the party.

Here is the link to get in line: Perfect For Entertaining

New Years Resolution - Pay Your Mortgage

With all of this “bubbly” talk about real estate, it appears that Amador County has also been feeling its share of the transition from the out of your mind price increases and "irrational exuberance" party to the "I should have sold sooner" regrets.

The denial of the inevitable hard landing in real estate prices and over-appreciation makes the entire ordeal a little more painful and drag on with every seller kicking and screaming along the way. There were those that cashed in early and got that last burst of sales from the few suckers left that were willing to part with their non-earned money and overly stretched credit. But I digress…

We will kick this thing off with a note about “Notice of Trustee's Sales” that seem to be shamelessly exposing themselves in some of the local newspapers. I will investigate further and provide some links and additional information regarding this when it is well researched.

From the future leading office of many home sales, let’s see what is shaking up on the steps of the Amador county Courthouse, 108 Court St. Jackson, CA.

The auction is beginning soon: Legal Notices Filed for Notice of Trustee's Sales