Sacramento Real Estate; Foreclosure Prevention

Real Information For People Buying & Selling Homes In This Distressed Housing Market

If you are planning a real estate transaction in the next five years, tune in now!
Welcome to my new blog regarding real estate issues, trends and information that affect Sacramento area real estate. As we enter 2012, people are wondering what, if any changes will happen to the real estate market in Sacramento. The most current data shows some trends that suggest the bumpy road we are on is slightly less bumpy. 

Looking at Sacramento Real Estate Trends up to January 7, 2012, A few things are clear, overall prices remain under pressure. In the four county region, (Sacramento, Yolo, El Dorado and Placer), the average asking price per square foot of single family home is around $110. This is down from $118 from January 2011 and $123 in 2009. Average asking price is down at $185,000 a drop of about 5% year to year.

What might be a positive number is that the inventory of homes for sale has declined 1.1%. Inventory of homes for sale typically declines in the winter. In September 2007 Sacramento housing inventory peaked at 25,800 units. January 2012 finds the area with it’s lowest inventory levels since at 12,514. Beyond seasonal swings, fewer homes for sale could be due to many factors including streamlined mortgage refinancing which gives more homeowners incentive to stay in their homes. Regardless the reason, fewer homes for sale is key to stabilizing prices which are somewhere between stalled and still trending slightly downward,  Unfortunately these statistics and a drive down community streets do not reflect a few realities such as homes banks are sitting on and homeowners in trouble.

There are some trends that suggest plenty of challenges ahead. In particular, I think the most disturbing statistic is that the majority of foreclosure filings are on homes with a market value from $0-200k. Far less impacted by foreclosure in the Sacramento region are homes in the $200k-400k range. Homeowners in the Sacramento area in houses with market values above $400k are far less likely to be distressed or facing foreclosure.

This news suggests those in Sacramento selling homes with prices around the average median price in the region will face the most challenges due to that is where the most distressed inventory is. Conversely, this also suggests if you are looking to buy a home with a market value near Sacramento’s median price of $185K, there are plenty of deals.

In Sacramento the business of selling and buying homes slows in the winter and the inventory typically reflects this. It will be interesting if the statistics continue to trend in a manner that suggest lower inventory which will bode well for sellers. Having said that, buyers need to be prepared to buy when the home that suits them becomes available, regardless if they don’t like doing so in the winter. One reason this is important is because investors are starting to build their property portfolios up.

Think about this, if you were in the business of renting homes, this would be a great time to increase your portfolio of rental homes. Not only are prices still trending lower, but former homeowners need places to live. Remember, not everyone walks away or allows their home to foreclose because they can’t afford their mortgage. Many walk away because they don’t want to keep paying on an upside down mortgage. In many cases, former homeowners can move down the block and rent a similar house for far less than their previous mortgage payment. Investing in rental properties is also increasing because due to tighter lending practices, fewer will be able to buy homes.

Finally, I have a tip. If you drive streets looking for “For Sale” yard signs, slow down and look carefully! This tip has more to do with what is for sale than traffic safety. In particular, many banks do not post “For Sale” signs on bank owned property. The reason is that too many “For Sale” signs tends to have a negative impact on the price of homes in the vicinity. There are also some security issues that crop up if half the houses on a block have “For Sale” signs on them. In many cases you can tell if a home is occupied. Tell-tale signs of an unoccupied house include a lock box, weeds in the garden, faded community fliers on the door knob or no lights on in the evening.