Home prices next year (Roseville, Rocklin: foreclosures, rent, houses)

[edwardius]

Median prices can change for two different reasons. First they can go up because on repeat sales of the same home in the same area, the price has gone up. This is generally what people mean when they say that prices are rising in a region.

But median prices can also change because the composition of sales in the market has changed. If one month you have lots of small condos selling in the market and in the next month if you have fewer condos selling and you have a lot more 10,000 sqft mansions, the reported median price can be going up when the price on both the condos and mansions themselves are actually still falling. In a market like this the reported change in median prices is a poor indicator of the underlying health and direction of the market.

This later situation is the thing that is happening right now. As the foreclosure problem has spread to the wealthier parts of the market, the composition of sales is changing, there are proportionately fewer small homes being sold and proportionately more bigger homes being sold. This is why people think the market has been bottoming out - the reported median seems to no longer be falling as much as the composition of sales changes.

So when you are trying to figure out the direction of housing prices the relevant figure isn't the reported median price in the neighborhood but the median price per sqft. That helps to reduce the effects of changes in the composition of sales in the market.

If you look at the data, in the past year prices are down on a per sqft basis in just about all of the zipcodes in the region. The fall in prices is widespread and continuing.

Because the number of foreclosures in the area is huge and because the number of people late on their mortgage is continuing to grow and because the local unemployment rate is so bad, the banks know they need to get this stuff off their books as fast as they can jump through the hoops. How they are moving product in such a bad market is by cutting asking prices dramatically. The hope is that if the listing price is far below recent comparable sales that will draw attention to the listing and start a bidding war on that listing. But even after the bidding war, prices are still down on those listings.

This is why people's perceptions are wrong about the direction of prices even in the low end. People see a bidding war and assume that prices have stopped falling especially when the reported median prices appear to be starting to flatten out owing to the change in the composition of sales. But when you look at the repeat sales of the similiar homes and when you look at the price per sqft data, again prices are still falling around the rate of 20% in the past year in most zipcodes. Prices are still falling.

Lastly remember this is the peak of the summer sales season. You have a lot of people who would prefer to move when school is not in session. This is occuring during a period when we have a couple of changes in the notification requirements for banks to foreclose (aka foreclosure moratoriums). But in the fall, a lot of this seasonal demand will abate and by fall I suspect both the state and feds will have ran out of excuses to sustain the various foreclosure moratoriums. In short, I think things are likely to get much worse than better in the near future.

DQNews - Sacramento Bee Zip Code Chart

Home Front: 9.5 percent of Sacramento-area mortgages are late

Calif. Imposes Foreclosure Moratorium - CBS News

[Ludachris]

I also think this winter will be telling for the health of the area's housing market. This is the busiest time for buying/selling. Let's see how things are in the "off-season", especially if the unemployment stats don't turn around.

[jkca1]

About the same. I'm looking for the housing market to hit rock bottom by December. Once that happens I expect to see some growth in demand starting in April. If you can buy anytime in the next 6 months you ought to jump for joy at the deals you are going to see.

[NorCal Dude]

I mean how much lower can home prices go really. At some point, homes are going to be worthless at this rate. You can get a home in sacs seedier parts for about the same price as a fully loaded honda accord.

[Ludachris]

Originally Posted by NorCal Dude

I mean how much lower can home prices go really. At some point, homes are going to be worthless at this rate. You can get a home in sacs seedier parts for about the same price as a fully loaded honda accord.

I doubt those prices will drop too much more. It's the pricier areas that will be affected. Areas that are still above the national average.

[Ludachris]

Here's a new article touching on what I've said in this thread about more foreclosures to come:
Treasury: Millions more foreclosures coming - Real estate- msnbc.com

[edwardius]

You may also want to read this article in the NY Times.

http://www.nytimes.com/2009/09/09/bu...er=rss&emc=rss

[NorCal Dude]

Well I am from Granite Bay and we did have a foreclosure down the street about a month ago. They moved in the middle of the night, too embarrassed I assume. In this economy no body is selling if they can avoid it, so you know when homes go up, it s a short sale or a foreclosure.

[MapleLeaf]

"analysts anticipate more than six million Americans could lose their homes in the next three years." WOW....huge number! didn't think that crisis is so deep.
Nothing similar in Canada, we don't know even term "Short Sale" lol
[SIZE=2]August 6, 2009 -- In July 2009, Greater Toronto REALTORS® reported a record 9,967 sales, up 28 per cent from July 2008. The average price for July transactions was $395,414 – up by six per cent compared to the same month last year.[/SIZE]

[sacramento916]

As a Real Estate Broker, I am in the middle of the market everyday. I think that home prices have bottomed out but will remain relatively stable in the next two years before slowly rising again. There is a shadow inventory coming out, but demand is extremely strong at this point. Nearly every property under $400,000 is getting multiple offers. If you are shopping under $250,000, it is very difficult to get a house, most houses sell above listing price due to competing offers.

In fact, home prices have begun to raise steadily in the last few months. That's the first time that's occurred in over 3 years.