Local Home Market In The Tank

A couple weeks ago DataQuick, the excellent real estate information firm providing data primarily for the California market, came out with its July 2006 numbers.  The Sacramento Bee ran a sobering article based on the report:

July … saw the biggest drop yet in year over year sales of existing homes in El Dorado, Placer, Sacramento and Yolo counties [the broader Sacramento area].  The month’s 2,877 sales were down 41 percent froom July 2005 [bold and italics added]

Wow.  If you do the math that means that about 2,000 less homes traded hands this July compared with last.  That’s a tremendous fall off.  Not only that, but the volume fall off came with price declines of 5% in Sacramento county and 4% out here in Placer county – compared to last July and not to whenever the peak was reached last year or early this year.

Even more:

The number of homes to choose from in El Dorado, Placer, Sacramento and Yolo counties climbed to a record 15,474, reported research firm TrendGraphix, more than twice the inventory in July 2005.

………

‘If you don’t need to sell, get it off the market.  If you do need to sell, don’t wait until winter because it’s going to get wrose,’ said Mike Lyon, head of Sacramento based Lyon Real Estate.  ‘I can see us dropping 5 or 10 percent if we don’t get this inventory down.’

The fall off in volumes on price weakness and the increase in inventories are very strong indicators: demand is weak and supply is high at current prices.  In order for supply and demand to come into balance prices will have to come down. 

The same kind of analysis applies to our very local market out here in Granite Bay (95746) and East Roseville (95661).  July 2006 sales in Granite Bay were off 17.8% to 37 on falling prices: down 6.8% to $735,000.  East Roseville: 40.4% decrease in sales to 34 on a 9.6% fall in prices to $416,000.