What one earth is going on ... How low will things fall (Sacramento: sale, real estate market)

[inpd]

Hi,

As unusual as it sounds, dropping home prices
are causing this buyer to get cold feet.

There are several homes in the pocket I'm
looking at. Tracking the price reductions I see
that every two weeks they drop the price $15,000
which at any time of the year is crazy
but just before Christmas is down right weird.

1. First things first. When does the home buying
season start next year? Mar/Apr/May?

2. So what's going on? Am I missing something?
Perhaps people expect new years market to
be really bad and are trying to sell now. That's
my only explanation. Or is there something
about the Levy situation that some people in
the pocket know about and I don't.

3. Also how low will things go. A further 5%, 10%, 20%
I'm taking generalities not specifics (yes I know the mantra
all real estate markets are local, but newer homes
in Natomas go for $250K which does effect
the entire area).

[Tim Currie]

Inpd -

Did you ever read over that blog I linked for you about the Sacramento housing market? (I'll re-link it if you need it)

Looks like prices arent going up anytime soon, why rush to buy, especially if they keep falling?

[DMenscha]

If you see a property with a scheduled price decrease you may be looking at a REO. The banks are pretty silly about that stuff. I had a deal where we represented the bank and they wanted to reduce the price another three per cent WHILE THEY HAD A DEAL IN ESCROW! Fortunately we finally found someone with some sense at the bank and we closed at the original price. It's hard to maintain a fiduciary responsibility with someone who doesn't care about the money.

[inpd]

Originally Posted by DMenscha

If you see a property with a scheduled price decrease you may be looking at a REO. The banks are pretty silly about that stuff. I had a deal where we represented the bank and they wanted to reduce the price another three per cent WHILE THEY HAD A DEAL IN ESCROW! Fortunately we finally found someone with some sense at the bank and we closed at the original price. It's hard to maintain a fiduciary responsibility with someone who doesn't care about the money.

Its not listed as a REO, just a regular resale.
Supposedly, the owners have decided to sell it quickly or llease it
for a few years.

[inpd]

Originally Posted by Tim Currie

Inpd -

Did you ever read over that blog I linked for you about the Sacramento housing market? (I'll re-link it if you need it)

Hi Tim,

I did read that blog. It's quite scattered but contains some useful
nuggets.

Originally Posted by Tim Currie

Inpd -
Looks like prices arent going up anytime soon, why rush to buy, especially if they keep falling?

Yes. Very true. There is no rush to buy, but I can't put my family's
life on hold for-ever. If I buy now and prices fall a further 5%, fine,
I can tolerate that. But if they fall 30% after I buy now, then I'm stuck
with everyone else owing more money than there home is worth and
hence being unable to move.

So is it going to be 5% or 30%. All of the blogs are analysis of what's
happened. I know predicting the future is tough, but I want a ball park figure
that's all.

[Tim Currie]

Right, so wait it out. The prices aren't going to all of a sudden start shooting up again anytime soon, and when they do start rising you'll have plenty of time.

So why not pick out a nice rental in whatever neighborhood you want to buy in? How is that putting anything on hold? You'll also get to know the neighborhood that way, and can watch the market and know for sure that it's the right time to buy when prices become stable.

Just my thoughts...

[GLS]

Originally Posted by inpd

Hi,

As unusual as it sounds, dropping home prices
are causing this buyer to get cold feet.

There are several homes in the pocket I'm
looking at. Tracking the price reductions I see
that every two weeks they drop the price $15,000
which at any time of the year is crazy
but just before Christmas is down right weird.

1. First things first. When does the home buying
season start next year? Mar/Apr/May?

2. So what's going on? Am I missing something?
Perhaps people expect new years market to
be really bad and are trying to sell now. That's
my only explanation. Or is there something
about the Levy situation that some people in
the pocket know about and I don't.

3. Also how low will things go. A further 5%, 10%, 20%
I'm taking generalities not specifics (yes I know the mantra
all real estate markets are local, but newer homes
in Natomas go for $250K which does effect
the entire area).

The other posts do a good job of addressing your most important questions.
In reference to your comment on price dropping around Xmas, the motivation may be more associated with the end of the year rather than the holiday. A sale before 2008 may represent a tax advantage to a person or a bank.

[inpd]

Originally Posted by GLS

The other posts do a good job of addressing your most important questions.
In reference to your comment on price dropping around Xmas, the motivation may be more associated with the end of the year rather than the holiday. A sale before 2008 may represent a tax advantage to a person or a bank.

But they dropped the price $20K on 12/01 and $20K again on 12/17. There
is now way anyone can close by 01/01/08 even if they bought on 12/17 so
that doesn't jibe.

[inpd]

Originally Posted by Tim Currie

How is that putting anything on hold?
Just my thoughts...

Good thoughts, but I think we think differently.

Living in a swank 1110 sq ft apartment in midtown (as I am now)
is putting my life on hold since I'm not putting down roots.

So is moving to the area I want to live and renting since
nice homes are hard to come by.
Renting is also a loss of money ($20K a year).

[Kingsnkali]

It might be too soon to buy. Of course, it might be a great time to buy IF you can get a loan. The banks/mortgage companies were big players in running up the prices with their crazy lending practices in the boom. Now they are making the crash that much worse by NOT approving loans. They are too restrictive.

You are in a good position. Are you sure you want to buy in the more distressed or flood threatened areas? These same newer developed areas (Natomas etc.) have a much bigger flood threat than the eastern suburbs of Sac. The Pocket is nice as long as their levees are stronger than their West Sac neighbors. 250k in Natomas might be a great price when the waters are near the tops of the levees and homeowners are living in absolute fear. You get what you pay for. The only reason these newer areas saw prices up in the ozone layer was the funny loans and flippers. Now that the foam and froth has come off the bubble, you will see other issues (like flood threat) return to the pricing formula.

By the way, in a more normal market, this time of year is bargain time. Very few folks are looking to buy around the holidays in the dead of winter. The spring market probably gets going in late February and March. Prices would typically firm by then.