Sonoma Housing Bubble

Pulling the cork out of Sonoma's bubbly housing foolishness

Tuesday, December 26, 2006

Missed the Memo?

Someone clearly missed the housing bust memo...

772 WILLIAM CUNNINGHAM AVE, Sonoma, CA 95476
List Price: $1,674,500
Days on Market: 221


Price Reduced: 08/31/06 -- $1,675,000 to $1,674,900
$100?

Price Reduced: 11/07/06 -- $1,674,900 to $1,674,500
$400?

Total Price Reduction: $500?


According to Norcal MLS

Sonoma County listings: 3002

ZipRealty.com claims: 1111 with prices reduced in the county

Sonoma Valley listings: 304

Ziprealty shows 150 properties in Sonoma Valley on the price reduced list and a message at the top of the search page says there are another 140 that match my criteria. The only criteria I put in was homes for sale in Sonoma Valley with prices reduced.

"The housing slump has been painful for millions of people who work in real estate or recently bought a house. For Patrick Killelea, however, this year has been one long victory lap. Mr. Killelea, a 41-year-old software engineer, has long preached that it makes more economic sense to rent than buy homes."

"He recalls shouting "Wow!" when he heard about September's 9.7% drop in prices of new homes."I didn't want to gloat," he says. "But then again, maybe I did."'

"For years, Americans who refused to buy real estate at what they considered excessive prices were ribbed for failing to profit from one of the greatest booms in history. "Are You Missing the Real Estate Boom?" needled the title of a 2005 book by David Lereah, chief economist of the National Association of Realtors."

"Now, with the housing market in a slump, renters who sat out the boom are finally getting some satisfaction."

"The jobless rate in Sonoma County unexpectedly rose in November as retailers kept a tight grip on hiring while construction companies and manufacturers continued to lay off workers, the state reported Friday."

"Typically, unemployment is near its lowest point in November and usually drops a bit more in December as the holiday shopping season peaks and retailers hire extra staff to stock shelves and assist customers.While local retailers hired 500 people in November, that is 35 percent fewer people than the preceding five-year average, according to the department."

"Friday's data marked the seventh consecutive month that Sonoma County had fewer overall jobs than a year ago, according to the state report. With several sectors slowing down, the county has lost 2,400 jobs over the last year."

"Electronic manufacturers have cut 5.9 percent of their workforce since November 2005, according to the state's data.General merchandise stores cut back on employment by 10.5 percent during the past year. Retailers have shed 400 workers following the closure of the J.C. Penney store in Petaluma and three Yardbirds home centers, one of which was replaced by a Home Depot store."

"Meanwhile, temp agencies have reduced employment by 6.3 percent. Employment agencies are often an early indicator to the economy's future, said Ben Stone, executive director of the Sonoma County Economic Development Board."

"The economy felt the strain of the housing bust and lost momentum in the late summer, with more sluggish performances expected in the months ahead."

"The economy has lost momentum all year long. The crumbling housing market, the toll of the Federal Reserve's two-year credit tightening campaign and once-surging energy prices have affected economic activity. "

"Economic growth slowed to a 2 percent pace in the July-to-September quarter, the Commerce Department reported Thursday."

"Investment in home building declined at a 18.7 percent rate - even more than previously estimated - and was the largest cut in 15 years."

"The message was loud and clear: The deepening housing slump is crimping growth."

SFGATE.com stats

Marin County Total sales as of Dec 4 ~ 68
Median price ~ $850,000

Napa County Total sales as of Nov 30 ~ 24
Median price ~ $599,000

Solano County Total sales as of Dec 4 ~ 140
Median price ~ $450,000

Sonoma County Total sales as of Dec 4 ~ 124
Median price ~ $525,000

6 Comments:

At 12/26/2006 05:31:00 PM , Anonymous TS said...

the job losses were a surprise? hmmm do ya think the foreclosures will be a surprise too? and the lawsuits coming due to the poor construction...we are going to get 4-6 inches of rain in this storm,and i have seen exposed tyvek and OSB on projects in petaluma,sebastopol,santa rosa and west county in the last two days.hundreds of units,all rotting with mold by next fall...oh,and rate will be going up,if you can get a loan at all.i talked to a smart old boy who made and lost several fortunes in real estate,and he thinks most of the money now going to real estate will just dry up like you turned the tap.well,at least "W" is in charge,and i'm sure he'll do as good a job in the coming crisis as he did in Iraq,so no worries.

 
At 12/27/2006 09:49:00 AM , Anonymous marinite said...

Go check out burbed.com. He reports an article where a 19-year-old is interviewed who says that despite what realtors say, now is not a great time to buy. When I was 19 buying a house was the last thing on my mind. This kid sounds like a lot of 19-year-olds have been buying houses. So this is how the bubble was extended so far, by marketing to kids who are clueless.

 
At 12/27/2006 11:35:00 AM , Blogger Athena said...

That is disturbing. 19? That can't be typical... can it?

 
At 12/27/2006 11:56:00 AM , Anonymous marinite said...

Well, based on my reading it is fairly clear that a far larger proportion of 20-somethings have been buying houses than was the case before all of which has gone far towards inflating present markets. This was made possible by low lending standards of course.

 
At 12/27/2006 03:07:00 PM , Blogger marin_explorer said...

ts-
Very good point. And for that matter, I wouldn't buy any house built or rennovated in the past few years, with all construction done for or by flippers.

 
At 12/27/2006 08:09:00 PM , Blogger Athena said...

well from the looks of things on the market in Sonoma there are many an FB trying to get out of the market and not having done a damn thing to their chitboxes. ugly 25 year old stoves, nasty worn oak cabinets, 30 year old linoleum... and of course they believe their piece of crap is truly worth north of half a million dollars. :-/

 

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