- Mortgage defaults may have peaked in the first quarter or be peaking this quarter.
- Foreclosures are likely to peak in the second half of 2008.
- Sales numbers will bottom out in California in 2008, and may have already done so in Sacramento.
What's it all mean? That's what brought Robert Kleinhenz, deputy chief economist for the California Association of Realtors to the capital this morning. He gave an hour-long overview of the economy, the mortgage market and the housing outlook to the Sacramento Association of Realtors.
His basic tone: big-time caution about the immediate future - and largely because the mortgage market is still cracking down and making it hard for many people to qualify for loans. But...like many others he is seeing a better second half of 2008 than this first half - and is using words like stabilizing.
More and more, even those like Kleinhenz who have proved overly optimistic in their previous forecasts, are offering some sense that - barring unforeseen events that bring big job losses - this year is going to see the worst of it for housing. He repeated assertions by Sacramento County Realtors that April saw a huge spike in sales - much, much higher than the typical seasonal bounce. And that could be an indicator, he said, of bottoming out.
He told Realtors that Sacramento metro area is still seeing some job growth - even if barely - which is more than most of Southern California's big counties can say. He mentioned that Sacramento County is one of the few California counties where sales were higher the first three months of 2008 than the same time last year.
He predicted slight growth in Cailifornia's economy during 2008 and cited the advantages that population growth brings to even a weak housing market. Especially the kind of growth that Sacramento will see by virtue of its growing affordability again and its inland California location.
Kleinhenz, representing an industry that resells existing homes, saw the near crash in building permits being taken out by home builders in the Sacramento region as a positive.
He said: "This is a good thing because you don't want more new-home production coming onto the market when there is so much for-sale inventory out there."
Overall, what he seemed most worried about is what the credit crunch will bring. It has spread far beyond mortgages and banks just aren't willing, he said, to lend for almost any reason until they get a better sense of the risk. Nothing can get quickly better, he said, until that sorts itself out.
Yet, overall in a Sacramento market that has seen sales plunge, sales prices
collapse and layoffs in every sector of real estate, he offered reason at least to think that this, too, shall eventually pass.
Photo courtesy of National Association of Business Economics