Everyone says we’ve hit bottom and are started back up. Hmm. Even Calculated Risk shows substantial improvement in some of the hardest-hit areas of the country, but if, say, 54% of all Sacramento house sales are still distressed sales, should we really be so cheerful that that number has dropped from 64%? If 25% of all homes are still worth less than is owed on them? If there’s an unmeasured shadow inventory lurking that, released on the market, will drive prices to the floor again?
The experts sound reassuring, but then they usually do, right or wrong.
Sacramento is doing a lot better than it was in 2007-2010, this is an interesting look at some of the stats. http://flippersintrouble.blogspot.com/
That’s the Sacramento metro area broken out by counties (there are four). Here’s another that deals with stats only and not specific properties: http://sacrealstats.blogspot.com/ and finally, the MLS is open to all http://www.metrolistmls.com/
I can tell you from my own experience that at the worst of the “crisis” in my particular zip, I had to break prices down into $25k increments to avoid going over the limit of 200 listings per query. Yes, $25k and that was with the selection of single story SFH homes with a minimum of 2 baths and a 2 car garage. The numbers were staggering, sickening even. I had NO idea that so many homes in my own smallish neighborhood had flipped in the run up of prices that burst at the end of 2006 (for my area). My street of 10 houses didn’t change hands but within 1/4 mile or less, more than a hundred either flipped or extracted equity and ended up severely underwater and lost them.
Whats the worry?
The masters of the universe are still making dough with the bond bubble and QE3, 4, 5, and 6 are in the pipeline. Greenwich will still be the boardroom and you;ll get your table scraps.
nationally, new supply has not kept up with obsolescence + population growth for almost 5yrs straight – this more than offsets “shadow inventory” in the long run
there are marginal buyers of homes that are well priced and every dip from here (if it comes) will be bought, either by investors (and there are tons of institutions who want to put big $ to work buying homes in bulk) or first time homebuyers; incremental price drop is being met with real demand
Greenwich has its own unique situation due to the secular decline of the financial industry, but eventually it will follow the national trend as well when Wall Street compensation has bottomed – so tell me when that happens (hint: I don’t think it can get much worse with cash bonuses capped at $100k last year) and you will see the turning point for Greenwich and the greater NYC metro area
Having been engaged in property investment in Europe, Asia, and North America for thirty years, I can assert properties in prime locations retain their values after economic downturns and crashes. Right now the US seems to be offering the best opportunity ever. The location is the key: sought-after areas, good streets, nice neighbors. Not sure if Greenwich, CT falls into such a category, though.
“…this more than offsets “shadow inventory” in the long run…”
In the long run, we’re all dead.
The best simple indicator of home prices is income. National income for national home prices, local income numbers for local home prices. The multiple expands and contracts through out the cycle but generally remains within a range. Get to either end of that range and a change in direction is imminent.
There’s a few old saws on the Street- 1) the bottom always starts somewhere (as does the top!) 2) if there is only ONE bottom, it is by pure chance that one calls it exactly right. Given the poor shape of the American economy, it is likely that some geographical areas will improve at a different pace than others based on the industry mix. Does Bernanke have the will/ability to create inflation in the same way that Volker did to break its back in the 1980s? That factor may have as much of an impact on home prices in our area as any other. Maybe not in Topeka….
Just_looking hit the nail absolutely positively squarely on the head. Older generations now asset rich but cash and/or income poor. Not enough younger high income earners stepping in to replace that population, buy some of those assets, etc.
That = problems in certain markets. Greenwich likely among them in a certain pricing band.
Mr. Fountain who is the typical $2-5MM buyer? Older folks just trading houses amongst each other, or new young money? Is there often super jumbo financing or all cash?
New-to-town young families. With cash. Where’d I go wrong?
You forgot to invest with the Noels.