Ssshh! The Show is Starting...
Remember how so many blowhards quoted in the Sonoma County excuse for the press touted that the only other downturn of significance was in 1993 and 1994, when prices dropped a total of 4.2 percent over those two years? And they advised reluctant buyers to not wait for more prices to drop because it wasn't going to happen?
August was the 14th consecutive month of median home price drops in Sonoma County.
Darlin' we are only singing the national anthem of this ball game. Make yourself comfortable, and stay away from falling knives. You ain't seen nothin' yet!
"In Sonoma County, home sales tumbled 24.8 percent in August, compared with a year ago. The price for a typical Sonoma County home dropped to $505,000 in August, down from $550,000 a year ago, an 8.2 percent decline. The figure includes new and resale houses and condominiums."
"Housing's downturn has hurt Sonoma County in particular because of a widening gap between incomes and home prices, pushing more first-time buyers out of the market. Increasingly stringent loan qualifications are taking out even more buyers as lenders tighten the money supply with mortgage defaults soaring."
"Slowing sales mean homes are sitting on the market longer. In Sonoma County, supplies have risen to their highest levels in more than a decade."
"Mortgage defaults, the first step in the foreclosure process, are at their highest level in Sonoma County since at least 1992, according to DataQuick Information Systems, a La Jolla firm that tracks real estate trends."
"The soaring number of foreclosures is forcing more homes onto the market as banks attempt to sell houses. Foreclosure resales accounted for 6 percent of all home sales in the county in August, up from 1.5 percent a year ago."
Between April and June 2007, Sonoma County homeowners who lost their homes in foreclosure proceedings were up 806 percent from a year ago.
"A year ago, 88 percent of homeowners in default were able to avoid foreclosure by bringing their payments current, refinancing, or selling the home and paying off what they owe. Today, only 55 percent of homeowners in default are able to hold onto their houses, DataQuick reported."
Even with the decline in median price, it still outstrips incomes of many buyers, making the county one of the nation's least affordable regions.
Facts at a Glance
* The typical monthly mortgage payment for Sonoma County buyers in August was $2,251.
* The median price of a home is still unaffordable for more than half of Sonoma County families.
* The approximate median family income in Sonoma County in 2005 was $58,330.
* Around Sonoma County, an entry-level home is $525,970. The minimum qualifying income for that is $105,960 -- with a minimum of 10 percent down.
Percentage of Sonoma County home buyers choosing some form of I/O, Negative amortizing and adjustable-rate mortgages (this includes subprime, Alt-A & Prime)
2003 - 36.8%
2004 - 59.4%
2005 - 69%
Prices doubled for the typical Sonoma County home between 2000 -2006. But the mortgage meltdown has turned a spotlight on the role loose lending standards, greed, stupidity and pixie dust financing played in the buying frenzy that drove up home prices. Market value for your Sonoma County $hitbox did not rise. Speculation and Greed fueled the ponzi scheme that has been the housing market.
Welcome to the real world, Baby.
* Employment peaked in Sonoma County in 2001 at the end of the tech boom when the county had 196,700 payroll jobs.
* By 2003, the economic downturn had wiped out 7,600 of those jobs. (we were already in a recession in 2003, yet the housing bubble continued to boil with greater fools still rushing in, and the surge in exotic financing due to the unaffordability of prices is proof in the pudding)
* Through 2005, only 2,400 jobs had returned.
* As of the end of 2006 Real Estate accounted for 13% of the jobs in Sonoma County. 40% increase from 5 years ago. During the last 5 years tech and manufacturing were losing jobs. We are still below the number of jobs in 2001 and the non- real estate related jobs we have gained have been lower paying mostly service sector jobs.
* The Press Democrat study found that 58 percent of the new jobs created between 2003 and 2005 paid below the average wage.
* By October 2006 the county lost 3,100 jobs
"Plunging sales led to construction layoffs and job losses in real estate, financing and other housing related areas.
"It seems like Sonoma County is one of the weakest economies in the Bay Area. There's hardly any job growth to speak of. That's essentially the basic building block of the economy," Steve Cochrane, an analyst with Moody's Economy.com said."
Unemployment in Sonoma County climbed to 4.6 percent in July 2007 -- its highest rate in two years -- as the local economy felt a loss of jobs in the real estate and home loan industries.
'"We may be seeing some early signs of layoffs in the financial area," said Ben Stone, who heads the Sonoma County Economic Development Board."
"At the end of July, National City Mortgage laid off 40 workers at its Santa Rosa call center. Another 60 company employees will lose their jobs by September. The layoffs followed earlier cuts at National City and other Sonoma County mortgage centers."
"The housing sector slowdown led to a loss of 450 financial services and construction jobs in Sonoma County in the first half of 2007, according to Moody's Economy.com, which tracks local employment."