One of the principles we’ve stressed over and over again here is that real estate is a very local phenomenon.  For example, we’ve written several articles on East Sacramento, showing that while the rest of the county has suffered from falling prices and high inventory, East Sacramento has continued to enjoy a prosperous seller’s market.

Of course, if real estate is largely local, and there are communities that are “winners”, at the other end of the spectrum there are also communities that have suffered the most during the market downturn.  The Franklin / Freeport area in South Sacramento (95832) is the area in Sacramento County that’s been hardest hit by foreclosures, so it’s no surprise that this area has also suffered greatly from rapidly declining prices and huge inventory surpluses.

The extent of the foreclosure problem in Franklin / Freeport is staggering.  In October, five of the six homes that sold were bank foreclosures — 83.3%.  In active inventory, the numbers are not much better.  REOs account for 41.8% of active inventory, and short sales account for another 26.8% — add them up and you get just over two thirds of all homes currently for sale in this area are either owned by a bank or about to be.

With that many foreclosures flooding the market, the rest of the numbers are none-too-friendly if you’re a seller in this area.  The sold price per square foot ratio has fallen 39% from October to October.  The median price has fallen from $356,000 last October to $200,000 this October, a sobering 43.8%. 

Admittedly, some of this is a trick of an extremely small sample size.  When we look at sales for the first ten months of the year in 2006 versus 2007 we get what’s probably a more accurate picture.   Still, even there we find a median drop of 19.1%, from $312,000 last year to $252,500 this year.

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