Like many Sacramento area residents, my wife and I are Bay Area transplants.  We moved here from Cupertino in 1996, and for the most part, I haven’t regretted that decision.  At the time, homes cost less than the do now — believe it or not — and they cost a LOT less than in the Bay Area.  Since then, homes have gone up enough to become unaffordable here, and they’ve since come down quite a bit, though they haven’t reached 1996 standards.

Our decision to move to Sacramento because we could afford a home out here led to owning a couple of dogs.  I like that.  Man’s best friend and all.

The thing I don’t like about Sacramento, though, is the weather in July and August.  As I write this, for example, Weather Underground tells me that it’s 97.5 degrees in Sacramento (95.5 degrees where I live in Cameron Park).  Today’s forecast tells us that we’ll get up to 101 to 107.

Note for you folks out of the country:  We use Fahrenheit here.  101 to 107 is pretty darned hot, but it’s not over the boiling point of water here.  Honest.

Sacramento’s average high temperatures for July and August are a bit balmier than that — 94 degrees in July and 93 degrees in August.

Those of you who’ve lived on the humid east coast may find those numbers alarmingly high, but they’re not too bad given the dryness out here.

In contrast, 107 degrees pretty much is too darned hot either way.

The bright side:

• I don’t live in Phoenix.
• August is almost half over.

I haven’t written much in the last few days, but today is the day I get my groove back, such as it is.

There have been a few reasons why I’ve been off my usual Elite Properties web site thing of beauty feed lately.  The first reason is that recently all my blogs got hacked (read more here).

Don’t we all just love Internet criminals?  Sure we do — we love them every bit as much as regular criminals.

At around the same time that these ne’er-do-wells were making up two days of security-related work for me to do, I was disabling the comments here.  Partly I got tired of the noise-to-signal ratio, and partly I was inspired to react to the smug hyperbole of the article, Without Comments Your Blog is a Web 1.0 Website.

No, without comments my blog is an efficient content management system.  Or better yet, it’s a better blog, because now it’s a place where someone who takes credit or blame for his work writes something that may or may not be credit-worthy or blame-worthy.  Indeed, as we learn from Joel on Software, a blog is very much a blog without comments, at least according to the guy who invented them.

The most disheartening development over the past few weeks, however, has not been the prevention of anonymous drivel, but the seasonal downturn in the number of web site inquiries from real people.  Over the last week or two it seems that the number of serious inquiries has slowed to something of a trickle, so if other companies are slowing as well, I expect to see a downturn in the September numbers.  (July’s volume figures bested June’s, which I didn’t expect — the jury’s still out on how August will shape up).

It’s time to get another part time job as a Chippendales model to tide me over until next year!

Sacramento’s Arden / Arcade Creek area posted deep losses in value from July to July, with only a moderate increase in volume to show for it.  This July the average home sold for $234,387, down 45.8% from last year’s average of $432,437.  Since this year’s home was substantially smaller than last year, some of that drop is an artifact of smaller homes being sold.  On a sold price per square foot basis, Arden Arcade lost 35.4% of it’s value from July to July, starting at $264.50 per square foot last July and coming in at $170.97 this July.

60.4% of the homes that sold in July were foreclosures, while short sales accounted for another 8.8% of sales.  Unit volume is up 4.6% from last year in July.

The past few weeks have not been kind to many of my friends at  title companies.  Last week I learned that a friend of mine — the office manager for a Placer Title Branch near me who’d been there twenty years or more — had just been laid off.

This morning I met with a sales rep for another Placer Title service area who wanted to meet me after a very successful escrow one of my agents and I had done with one of her escrow officers.   This was an escrow with some real title problems that needed to be addressed — and the escrow officer did a great job on it. 

In an ironic twist, the new sales rep I met from Placer Title and the escrow officer who’d done such a good job had recently moved to Placer Title after having been laid off by Commerce Title.

To add insult to irony, while I was waiting to meet with the new Placer Title rep, I learned from another real estate broker that another company I’d worked with in the past — Citrus Heights based Financial Title — had just closed its doors in California.  You can read more about that closure here.

Some Background

As the greater Sacramento market has contracted, at least two factors have combined to make area title companies particularly vulnerable.  First, one of the mainstays of title company revenue — home refinances — have declined sharply as declining property values have eroded the equity that so many homeowners traditionally tapped.   Secondly, many of the escrows we’re doing now are REO escrows, and many of the banks with REOs to sell are sending all their escrows through a single (often out-of-state) title company.  We’ll have more on the legality of this and the impact on the buyer in a future article.

Many of the folks who are on the long-haired hippie side of the political spectrum like me will tell you that they’re pretty angry like this guy at Phil Graham for calling us a “Nation of Whiners”.

In my case, at the same time that I notice that we’re becoming a nation of poorer people than we were, I find myself trying to find some ways to “tighten my belt” and live a bit more frugally.  I’ve ordered Vonage, and I’m working on paring down my electric bill, for example.  If you’re interested in doing likewise, you might find reading Mr. Electricity to be very informative and an entertaining read, as I did.

So you might say I’m getting in touch with my inner poor person.

I remember him from back in the days when my wife and I were newly married and I’d just left grad school.

There he is again.  Hello!

Actually truth to tell I’m doing better now than I did then (market downturn notwithstanding), but now I’m more fussy.

Fiscal Responsibility

Beneath my lovable liberal exterior, I sometimes think I have the makings of a true conservative.  While I recognize that on one level, artificially low interest and an unregulated banking system are behind the housing crisis (i.e., blame it on the Chimp in the White House), on another level I see how often we as individuals cause our own suffering, and recognize a lot of the rhetoric on either side of any real estate related issue as rather bizarre.

Take, for example, Jim Wasserman’s recent article on the likely impending ban on Nehemiah.  Wasserman quotes people who believe that ending the program will “harm prospects for recovery in the housing market”.

Yet why does the housing market need a recovery?  Remember 2004?  The atmosphere then was reminiscent of an episode of Oprah with a car giveaway, only instead of cars, everyone in the national “audience” got a loan.  “You get a loan!  Yes and you get a loan!  And you’re getting a loan!”  Now with Nehemiah going away, there goes our most recent incarnation of NO MONEY DOWN.

Is that a bad thing?  Are we saying it will harm the market to not be able to provide 100% LTV?  (That’s Realtor® talk for “Loan To Value” — 100% LTV means NO MONEY DOWN).

Mom And Dad Financing

How did people buy homes in the 1990s?  That’s when my wife and I bought our house.

Wherever did we get that chunk of money to afford the down payment or closing costs we needed?

Oh yes, Kathy’s mom and dad.

We were fortunate to buy in a time of expanding prices, but we also had the good sense to buy below the upper limit of our comfort zone and to get a fixed rate loan.  (See Buying a Home? Be Conservative!)  Even if we’d had an adjustable rate mortgage in a time of declining prices, however, what would having some of mom and dad’s money in the mix have done to our willingness to default?  I’m guessing it would have made it harder to walk away from the home than if our ownership of the home was 100% based on the kindness of strangers.

Here’s an underwriting quiz:  Why are interest rates generally lower when the down payment is higher?  Did you say because there’s less risk of default?  Go to the head of the class!

Oh, Market, Won’t You Please Recover By An Amount That’s Just Right?

Everyone — especially Realtors® — would like the market to “recover”.  But what we really want is to have our cake and eat it, too!  Wasserman quotes one supporter of Nehemiah as saying “Without programs such as this, it will put the American dream of homeownership in jeopardy for a lot of first-time lower-income home buyers.”

So we want to keep Nehemiah because we want lower-income home buyers to be able to buy, and so the market will recover.  But wait a minute.  If the market recovers, doesn’t that mean that prices will go up again?  Won’t fewer lower-income home buyers be able to buy if that happens?  Nobody bought a single family home from me in 2004 for $121,000, but someone bought a single family home from me this year for $121,000.  Doesn’t the market recovery “put the American dream of home ownership in jeopardy for a lot of first-time lower-income home buyers”?

If we want poor people to buy houses, isn’t it better if prices go down even more?  That way more poor people can buy them!  As a side benefit, more people will be poor, so my inner poor person will have more playmates!

No, clearly that’s not exactly what we had in mind.

What We Really Want The Market To Do

• We want high loan-to-value loans so everyone can buy a house with NO MONEY DOWN, but we don’t want people to default on their mortgages.
• We don’t want to increase government spending, but we want NO MONEY DOWN available in combination with federally guaranteed mortgages.
• We want NO MONEY DOWN so poor people can afford houses, so that prices will go up for the rest of us, because having poor people buy houses with NO MONEY DOWN won’t impact the default rate later.  Honest.  The check’s in the mail.
• The poor people who don’t buy today while we want the poor people to buy houses will just have to wait another twenty years for the market to go up and then come down again, because we really want the market to go up, up, up.
• Why do we want the market to go up, up, up?  Well, Realtors® like me want it because the commissions are bigger!  But everyone else who’s a Good American and Not a Terrorist wants it because the chances are pretty good that we’re living beyond our means, and rising home equity is the theatrical mist on which the illusion of our standard of living is projected.
• Oh, yes, and let’s not forget.  While the market is going up, up, up, we want homes to stay affordable for first-time lower-income home buyers.

I thought I’d start reflecting a bit on the forthcoming birthday of this blog.  On July 27th, this blog will turn five years old, making it the oldest real estate blog in Sacramento, and one of the older (but not the oldest) real estate blogs, period.  This site and blog officially launched on July 27th, 2003.

You’re welcome.

Such longevity is a partially a testament to my ability to endure my own tedium, since for much of that time — since about 2005 or so — a lot of what this blog has been about has been real estate market data.  I’ve posted some 287 market updates.  It’s my second most popular category next to “The Open Sac” (another word for miscellaneous — the default category).  In fact, I’m sure if I looked through the Open Sac I’d find several market update posts where I simply neglected to check the Market Updates box.

Oops.

Here are some of the things that have happened since I’ve been blogging:

• The Market Cycle
  Homes got more expensive, then quickly got a lot more expensive, then slowly got cheaper, then quickly got a lot cheaper.  We’re still in the getting cheaper phase.  We have gotten to the point where demand is rising because of it (in Sacramento County — we’re not there yet in Placer or El Dorado County).
• The Rise of the Bubble Blogs
  Once homes started getting less expensive, people started putting up blogs to make fun of those who were hurt by the downturn, bag on Realtors® and/or blame them for the market cycle, and otherwise encourage anonymous commenters to paint a coat of semi-gloss I-told-you-so (though as it happens, they didn’t) over the rotted structure of schadenfreude.
• Two Failures By Democrats
  OK, so George Bush stole the 2000 election, but how could you let him beat you again in 2004?  The American people, no doubt feeling the need to reward the underachievement of losing to an underachiever, elected a Democratic congress in 2006 to end the war in Iraq, which they didn’t do.  This fulfilled the 1974 prophecy of Stevie Wonder:  You Haven’t Done Nothin’.
• Irreplaceable
  Beyonce Knowles released this hit single on December 5, 2006.
• The Bigdealification of Real Estate Blogging
  Somewhere around time that Beyonce Knowles was releasing Irreplaceable, give or take a Thanksgiving turkey, an increasingly large group of real estate bloggers and their vendors started making a huge fuss about real estate blogging and how something called social networking was going to create — well, something — where people would all be doing — well, something. 

  Twitter evolved as the written equivalent of the Bush Presidency.

• I Become The Anti-Blogging Blogger
  In response to the hype, and no doubt because of thoughts like those in the last bullet point, no less a luminary than Mr. Bad MLS Photo of the Day himself once declared me the anti-blogging blogger.  Or words to that effect.  I think he nailed it.

  It’s only a web site.  It’s only a web site.  It’s only a web site.

• Getting a Contributor
  Purva Brown was nice enough to start pitching in, hooray!  Actually, really early on I had a contributor, too, since my wife, Kathy, used to help out quite a bit on the Sacramento Things To Do blog that launched at the same time as the real estate blog.  

  That other effort has since petered out, but this Sacramento Real Estate Blog lives on in the Sprit of Christmas and the Hearts of Children Everywhere!