Lengthy Housing Slump Expected

April sales of new and existing homes decline.

Here's the forecast from two more experts on the housing market: The slump is likely to continue through the rest of this year and most of 2008.
April sales numbers show little reason to doubt them.
For the second year in a row, April escrow closings for new and existing homes fell below March levels in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties. That means the much-wished-for spring rebound in home sales has again failed to materialize.
The slowdown comes as another 1,500 homeowners put up "For Sale" signs in El Dorado, Placer, Sacramento and Yolo counties in April. The 14,000 existing homes now for sale, according to Sacramento-based TrendGraphix, portend more downward pressure on home values.
"I think we're going to be dealing with this all the way through 2008," Countrywide Home Loans Executive Vice President Jack Haynes told Sacramento home-building industry representatives Wednesday.
"We think it's going to take until mid to late 2008," Timothy Sullivan, president of San Diego-based Sullivan Group Real Estate Advisors, told the gathering. The two spoke at a downtown Sacramento seminar about the economy and the housing market, and how home builders can weather it.
The assessments came the same day La Jolla-based DataQuick Information Systems reported that capital-area escrow closings in April dipped to their lowest levels since 1995. DataQuick reported similar drops in metropolitan Los Angeles and the Bay Area.
Still, median sale prices of all homes managed to rise slightly from March to April in Amador, Nevada, Placer, Sacramento, Sutter and Yolo counties. But the median prices -- the point at which half the houses cost more and half cost less -- remained below April 2006 levels in all but Amador County.
Median prices for new and existing homes ranged from $288,500 in Yuba County to a high of $458,500 in Nevada County. Sacramento County's median price of $341,500 compared with $367,250 a year ago; Placer County's median of $450,000 was down from $477,000 last year.
Foreclosure activity, too, showed a downward trend in most of the eight-county region in April, according to Fair Oaks-based Foreclosures.com.
DataQuick's statistics showed 2,875 buyers received keys to new and existing homes in April in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties. That was well below the 3,223 homes that changed hands in March.
The same happened last year. April sales fell below March levels and derailed the real estate industry's dreams of a spring rebound. Indeed, the sale of 4,571 homes in March 2006 proved to be the year's peak for monthly sales.
DataQuick statistics show this April's closings are the fewest for the month locally since 2,166 in April 1995. That came as a prolonged housing slump rooted in job losses and recession began to bottom out.
April escrow closings generally represent sales begun in February and March. This year those were months when lenders tightened credit standards to address rising numbers of mortgage defaults. Many in the real estate business have said the loss of 100 percent financing and some riskier subprime loans for people with spotty credit histories has eliminated up to 30 percent of would-be buyers.
Nationally, April housing starts rose 2.5 percent from March. But requests for new construction permits fell nearly 9 percent. That's the sharpest drop since 1990 and evidence builders aren't confident about sales prospects.
Sullivan of Sullivan Group Real Estate Advisors blamed the market slowdown on tighter lending rules as well as the lack of urgency among other buyers. "Right now there is fear about housing," he said. "There is fear you can't win at housing."
Would-be buyers may be scared, Folsom real estate agent Mark Solich said, but they'll buy "if they feel they're getting the right product for the right price."
DataQuick statistics indicate that prices for existing homes are now falling at a gentler rate than last year. Year-over-year declines were 2.1 percent in Sacramento County and 6.5 percent in Placer County, the two biggest segments of the area's housing market. Yolo County posted a 4.2 percent gain in sales prices, the region's only year-over-year increase.
That reflects price appreciation in Davis, said Mike Lyon, head of Lyon Real Estate. Lyon said Davis and older neighborhoods like Land Park, Curtis Park and McKinley Park have seen prices rise up to 6.7 percent from this time last year.
"I'm putting location, location, location back in my vocabulary," he said. "Go where you don't have to drive far to work."
New homes, though, continue to show double-digit annual declines of 22.3 percent in Sacramento County and 12.5 percent in Yolo County.
In Placer County, new-home prices were down 7.5 percent from last year. Analysts such as Greg Paquin, president of the Folsom-based Gregory Group, say more builders are lowering prices rather than using last year's strategy of solely offering financial incentives.
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Written by Jim Wasserman - Bee Staff Writer