Fewer empty new homes means supply, demand in balance

Home Front: Fewer empty new homes means supply, demand in balance

By Jim Wasserman jwasserman@sacbee.com

Published: Friday, Apr. 10, 2009 - 12:00 am Page 1B
The first quarterly report on new-home sales in the Sacramento area during 2009 is in – and there's one good sign amid a new low of 699 sales in January, February and March.
Excess supply – houses built or almost built without buyers – are back to lows last seen in mid-2004 and early 2005, the height of the buying frenzy.
The tally as March ended was 1,159 empty houses in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties, says the report being released today by the Folsom-based Gregory Group.
That's far less than 3,226 the same time last year – and a peak of 4,598 in the third quarter of 2006.
It's evidence that builders and their bare-bones construction and sales staffs are finally getting supply and demand back in balance.
"That's not very much inventory," said Gregory Group President Greg Paquin. "If there's any uptick in sales the second quarter and certainly, the third, it's going to put more stress on what's available in the marketplace."
That would mean competition and higher prices. But builders aren't there yet.
Their $336,683 median sales price – where half the homes sold for more and half for less – fell for a 12th straight quarter to a six-year low.
The average new home price: $380,786.
The region's excesses, soft prices and abundance of buyers choosing bank repos gave ample negotiating power to early 2009 buyer Jay Cook.
Cook, an account executive with CitiMortgage, moved from Chicago to Sacramento, and last week into a Natomas house built by New Jersey-based K. Hovnanian Homes.
"What prompted us off the fence was the $10,000 (state) tax credit," he said. It gives new homebuyers like him up to $3,333 off taxes each of the next three years. Builders are hoping $100 million in state tax credits that went into effect for escrows closed after March 1 will help sell 10,000 excess houses statewide.
California's Franchise Tax Board counts Cook among 2,624 applicants statewide so far for $25.6 million in the credits after buying new homes.
Paquin said January and February sales were dismal, but builders reported many more visitors in March.
Overall, Sacramento and Placer counties accounted for 76 percent of first-quarter sales, he said. Which city sold the most? Roseville, with 22 percent of the region's sales.
More feel homes affordable
The crash in housing prices has hugely changed public sentiment on whether it's a problem finding a house they can afford in Sacramento.
An estimated 23 percent of area residents say it's a big problem. Just three years ago with home prices at their peak, 51 percent felt that way.
"Always, it's been a big problem, complaining for years and years. This is the first time it's been so low," said Amy Liu, director of the sociology graduate program at California State University, Sacramento. "It's because the prices have dropped so much."
The findings are in the eighth annual Sacramento State Annual Survey of the Region being released today.
In the past, the survey has shown how one-third of Sacramento-area residents considered leaving to find less-expensive housing. But with median prices down more than 50 percent from 2005 highs in Sacramento and Yolo counties and down 40 percent in Placer and El Dorado counties, almost six in 10 believe buying this year would be a good investment.
Only 30 percent believe buying stocks in 2009 would be a good investment.
As always, affordability depended on the respondent's vantage point. Seventy percent of area residents earning less than $30,000 a year say affordable housing remains a problem for them.
"A big segment of the population in our region can't afford a house even with these reduced prices," said Liu.
The telephone survey of 1,353 adults from Feb. 14 to March 4 in El Dorado, Placer, Sacramento and Yolo counties has a margin of error of three percentage points. To see the full survey, go to www.csus.edu/ssis/. Click on the link to the Sacramento State Annual Survey of the Region.
House winner to get keys
Readers may remember Jennifer Draa, the state worker from Citrus Heights who won a free house in Lincoln last October.
Today, she gets her keys. Arizona-based home builder Taylor Morrison has scheduled an 11 a.m. media event to show off the $250,000 house, which features lots of new technology and free furnishings.
Draa beat out 638,000 entrants in a Taylor Morrison contest promoting its Innoventions Dream House at Disneyland last summer.