Sac Bee's inclusion of Amador County housing numbers

For the longest time, the Sacramento Bee has only provided housing information (sales, prices, etc.) for the four county region of Sacramento, El Dorado, Placer, and Yolo. Granted, the Sac Bee's numbers usually come from one of two sources, San Diego-based DataQuick or Folsom-based The Gregory Group.


Recently, I've begun seeing DataQuick's numbers include additional counties, including Amador:

"March escrow closings for all homes in the region totaled 3,223, beating January and February, but still a "tepid" opening to the spring sales season, said Andrew LePage, an analyst with La Jolla-based DataQuick. The numbers were down from 4,571 recorded the same month last year in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties.

March closings represent sales started in December, January and February before extensive publicity about imploding subprime lending firms and tougher new lending rules."

I have to play a little devil's advocate here, but are the year-over-year comparisons looking at this year's 8 county numbers versus last year's 8 county numbers, or just last year's 4 county numbers? Next, if the YOY comparisons are correct, does the inclusion of the additional counties improve the numbers in favor of market conditions deteriorating or improving?

As a frame of reference, I first started noticing the 8 county figures in a Sac Bee article noting the spike in foreclosures at the start of the year (2007).

Lennar (LEN) 2007 Q1 Profit Sharply Drops

Well, it was starting to happen and now it's prevalent: National Homebuilders have lower profits and see no home price stabilization in sight. From Marketwatch, Lennar reported first-quarter net earnings of $68.6 million, or 43 cents a share, for the three months ended Feb. 28, down 73% from the $258.1 million, or $1.58 a share, earned in the year-earlier quarter. Revenue overall dropped to $2.79 billion from $3.24 billion as revenue from home sales fell about 10% to $2.62 billion. Orders were down nearly 30%

In a maverick move and one in which I applaud, Lennar withdrew its previously (read Jan '07) stated target of topping 2006 numbers, and going as far as not issuing new guidance. I applaud this move because with the housing bubble bursting, instability of home prices, unknown land impairments, increased difficulty for buyers to qualify for loans, and increasing inventory, any homebuilder trying to issue numbers would be trying to pin down a moving target.

Math & Methodology of Housing Numbers

Doug Kass' article, The Simple Math of Subprime's Slide:

It is truly remarkable how the slightest provocation (last week's "solid" home-sales headline) had the media and other permabullish types declare that the housing market has finally bottomed (again!) and that the impact on the subslime mess would be contained.

Nicholas Yulico's article, Home-Sales Data Debated:

The Commerce Department reported much-worse-than-expected new-home sales data for February, with sales dropping 3.9% from January and inventories hitting fresh highs.

The news comes after seemingly positive housing data last week. The National Association of Realtors reported Friday that sales of existing homes climbed nearly 4% in February, beating economists' estimates.

My observations later...

Buy a House, Be a Contrarian (Yeah, Right!)

This morning on CNBC, 30 minutes after the Commerce Department reported single-family new home sales were down 3.9% in February versus January and down 18.3% compared to year ago levels, David Michonski (president/CEO of Coldwell Banker Hunt Kennedy) squared off against Dean Baker (Economist and co-director of CEPR) to discuss if now is a good time to buy a house. Could you guess who took which side?

While Dean Baker pointed towards the newly release sales numbers and the general psychology of buyers believing prices could go lower, Michonski was expectedly upbeat about the housing market. If fact, Michonski stated that the median price for a single-family home was up 1.1% in 2006, slightly lower than the historic 4%. He ventured that median prices were slightly down last year, but should return to the the historic 4% in 2007. He further followed the REIC mantra by saying it's hard to be a contrarian and buy a house now, and that now is a good time to buy a house and that a 6-month inventory is a balanced buyer and seller market. Even the host of CNBC asked Michonski if he is doing a disservice to his customers by saying that kind of thinking out there if the face of economic indicators and sales numbers that show housing weakness.

To Dean Baker's credit, he didn't get into a cat fight with Michonski. He pointed out that these are monthly numbers and can only suggest a trend, but he did nail Michonski for the median sale price rising 1.1% in 2006 comment as being disingenuous. Baker has read the tea leaves (indicators/numbers) and is not paid to selling homes as Michonski is.

It's a perfect time to buy!

I have to give the folks at Sacramento Land(ing) credit for digging up this research nugget posted on March 3rd from Jimmy Castro, Team Leader/Owner (and Snake Oil Salesman for the Re/Max Gold in Sacramento).


Here are a few choice quotes from the article:

JC & Associates with RE/MAX Gold keeps its fingers on the market's pulse-and its latest assessment gives the 2007 market a big thumbs up. JC & Associates, in fact, sees current conditions as "virtually ideal" for buying now.

In addition, there is an unprecedented array of low-rate mortgages available to finance a home purchase, including loan programs that require no down payment. The market climate for finding and affording that dream home may never again be this favorable.

Not only have prices stabilized at attractive levels... (with this chart at the top of the article)

Real estate activity has picked up in the last few months and we expect the pace of home sales to quicken even more as the traditionally busy spring market gains steam. Given this uptick in activity, making a home purchase sooner in 2007 rather than later may well prove to be the savviest financial move you could make this year.

Honestly, I could have put up the entire article as it is filled with these senseless quotes. Somehow having a real estate license allows people to start proclaiming they are experts.

Jimmy may want to revise his article since many of the sub-prime lenders are going kaput and the major mortgage originators are becoming more selective in their loan approvals by reducing/eliminating 100% LTV (loan-to-value) financing, piggyback 2nd mortgages, and many of the loans classisfied as sub-prime.