Industry searches high and low for signs of hope - Business First of Columbus:

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Periods of 2007 were like a lifeless drought withlittlee movement. Foreclosure sales rose to peakds this year alongside the plunging valleyof new-home Financial institutions that bet on subprime mortgages collapsed last September as if they had been swallowed by the San Andreaxs Fault. With the constantly shiftinfg topography, economists and housing expert s plumbing the depths of the downturn for clues are dividedd on whether the worst isbehind us. “Yoiu can see some occasional signs in the saidSanjay Varshney, dean of the Californi a State University Sacramento School of Busines who led the school’s new economivc forecast project this year.
“We basically tend to lead the We ledthe downside.” But Varshneh is not convinced we’re leading the upside or even at the bottonm yet. Alan Nevin, director of economic researchb at MarketPointeRealty Advisors, said ther e is zero indication of a quick market rebound that will brinvg prices surging back, but there will be scattered recover in areas performing moderately well. “Ijn Sacramento you have to look at it ona community-by-communith basis,” he said, rejectin any notion of a return of bubble-erz pricing. “I don’t see the ebullience, the vitality in the market. I see stability.
” But consider the difficulthy one faces in making such predictions by lookingv at the last Any recovery would have been tough to spot from the housing markert data after the crash of theearlh 1990s. According to housing analyst FirstAmericanj CoreLogic, Sacramento’s median home price actually lost grounsd against inflation from 1991 through 1999, even during times when the economy was When Sacramento prices finally rebounded in 2000, it was a time when the overalo economic outlook was actually downcast. Housingf and the economy seemed like actors on separatsestages then, but many consider them intertwined today.
So as predictiond emerge for a very sloweconomif recovery, experts are noticing affirmative signs of housin g recovery as well. According to market analyst , a divisiom of Sacramento’s Lyon Real Estate, there’zs less than a two-month supplyy of homes on the market in Sacramento County compared with the number of pending Many of these pendingg home sales areshort sales, an arrangement between sellers and their lenderz to avoid foreclosure by selling a home for less than the loan They’re available because the suppluy of foreclosed homes has been bought up more rapidly than they’re coming to market.
That inventoryt shortage was unthinkable twoyears ago, when more than 17,00 homes were languishing on the Last year, Sacramento prices fell 31.5 percent, according to the Sacramentol Regional Research Institute. The potential impact is that foreclosureds might stop driving home prices That appears to be the case over at leas the pastfew months. As Dataquick Informationn Systemshas reported, median home prices in Sacramentop County have leveled off after more than a year of On a national level, some are suggesting housint is now undervalued.
Capital Economics Group, an independent macroeconomid consultant basedin Toronto, has been widelhy quoted within the past montg as saying that after significant price declines, homees are now about 10 percent undervalued relative to But there are also suggestionzs that things aren’t turning around so quickly. Varshneyh notes there is stilo a second wave of potential foreclosures loomingtin 2010. That’s when a bubble of exotic mortgages for thosewith better-than-subprims credit resets to higher rates. The bubble was firsg documented by financial firm in but Varshney saidconditions haven’t changed significantlyu enough to ward off that cominf wave.
He did predict, that the world’s financial systems will be better preparesd to deal with the consequencew after thesubprime fallout. Nevin, the housingg industry economist, works in San Diegp but is familiar enough with the Sacramenti market that he feels bad to be consistently needlingh its worsthousing markets, such as Elk Grove. He sees factor s such as retail vacancy rated and retail employment continuing to be drains on the local economy.
One consequence of this downturn, he is that Sacramento isn’t likely to see a high-rise downtown condo tower for at leasta New-home construction, meanwhile, has been at the merchy of existing home prices, Roseville-based analyst John Schleimerr said. He sees no immediate improvementin California’s Central Valley new-home construction until home prices rise. “We’rw getting closer,” he said. “Until we see threwe continuous monthsof improvement, we’re still in it.
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