Flatlining is Still a Bad Thing, Right?
"Hold on for a long but shallow housing slump across California, according to a study issued today that forecasts home prices will remain flat over the next five years."
"Housing markets including Sonoma County's should continue coming down from peaks reached a year ago. Job losses in construction and other real estate sectors will be a drag on the economy, yet overall employment and income growth should help offset the housing downturn over the next two years, according to the latest widely watched UCLA Anderson Forecast."
That's nice news for the rest of the state, however, Sonoma County's economic outlook is a bit bleaker than that given the mysterious job losses. ;-) hmmm... where oh where could all those jobs be?
'"The housing problem is going to be with us for some time," said Edward Leamer, director of the forecast."
'"Clearly the decline in sales has been much more accelerated than we forecast," said Leslie Appleton-Young, the association's chief economist."
"'I certainly agree that this is not going to be a two- to three-month slowdown and then we're going to be back to the conditions of a couple of years ago. Those conditions were unsustainable, if for no other reason than affordability."'
"The problem is a steadily weakening housing market over the past year following eight years of strong sales and record prices in Sonoma County and across the state. More buyers can't afford to purchase homes, particularly with interest rate hikes over the past two years pushing monthly mortgage payments even higher."
"Yet many sellers continue to resist lowering prices. Leamer said deeper price cuts will not become widespread until there is a prolonged period of weak sales or sellers face a job loss or some other financial hardship.As a result, prices are expected to bounce around a flat line until personal incomes gain ground on housing costs, economists said."
Bounce around a flat line? LOL.... like a bad game of Break Out? (old video game from Atari. Remember?)
I love that next part... bouncing around a flat line until personal incomes gain ground on housing costs! Good lord, Michael Coit is full of laughs tonight. Right Honey, y'all let me know when those service industry jobs start paying enough to buy a $577,000 house.
Flat line... I love that. Think of the housing market as being in the ER and go ahead and interpret that flatline the same way. Dead. You can give it a try shocking it back to life... but the market may come back in a persistant vegetative state.
"Home prices have started falling in some areas, including Sonoma County. Prices here have dropped the past two months compared with levels from a year ago - the first time in nine years prices have dropped for two straight months. August's median was $577,250, a 6.7 percent drop from $619,000 a year ago, when prices peaked."
'"The housing market's been the rocket that the economy's been strapped to and now it's sort of losing steam. There's going to be a slowdown in growth with the housing downturn, but with everything else managing to pick up the slack," said economist Ryan Ratcliff, who authored the California forecast."
What is this "everything else" that is "managing to pick up the slack" he speaks of? Anyone? Anyone? Buehler? Buehler?
"The previous housing decline in Sonoma County stretched over four years. Prices fell a total of 4.2 percent in 1993 and 1994,..." (This number has been rounded off, averaged out, massaged and seasonally adjusted by your real estate experts to make it look less scary than the reality. Go ahead and zillow a bunch of properties that sold in these years and you tell me if those numbers rolling backwards amount to 4.2%)"...rebounded in 1995 and remained flat in 1996. The downturn was tied to the economic recession that hit California, including the North Coast, in the early 1990s."
'"We're starting to see price declines. The actual movement isn't dramatic because the owners' initial reaction is either to remove their properties from the listings or to hold on and not sell because they're not getting the offers they want," Leamer said."
"Instead of a rapid and painful adjustment, expect a slow and aggravating one," he said."
"Builders have been the first to react, reducing housing starts and cutting prices."
"1,681-square-foot, three-bedroom home in Rivendale's newest Santa Rosa subdivision sells for $479,990, compared with about $540,000 if it were being sold a year ago. And six homes are started each month, compared with eight a year ago, Peterson said."This is not unusual. This is not unexpected. You tighten your belt," he said."
'"Everybody's cut back their projections for closings and hence starts. There is a market there. But there aren't as many buyers in the market," said Chris Peterson, co-owner of Santa Rosa builder Rivendale Homes."'
'"We have to price our homes at whatever price the market will bear. Our homes are priced a lot more aggressively today than they were a year ago."'