Archive for the ‘Foreclosures’ Category

Sacramento County Condos – 2007 Market Year in Review

Our recent Sacramento Real Estate Year in Review article covered condos as well as other residential types like single family homes and halfplexes.  Today we turn to our attention to condos only, to see how they compare to the general category. 

When I looked at the numbers, the results were surprising given the traditional wisdom that condos are the first to fall in a down market and the last to rise in an up market.

Comparing 2006 to 2007 overall for all of Sacramento County, we find that the average condo sold in 2007 for $236,914, down 6.9% from 2006′s average of $254,370.  2007′s median price for a condo was $218,000, down 7.2% from last year’s median of $235,000.  On a sold price per square foot basis, the average condo’s value fell 10.8% during the same period, from $218.16 in 2006 to $194.51 in 2007.

As we saw for residential units overall, the numbers from December to December were more dramatic than the year to year numbers.  Sacramento County Condo values fell some 18.7% on a sold price per square foot basis from 2006 to 2007.  Though of course that’s a non-trivial drop, it’s somewhat smaller than the sold price per square foot drop of 21.8% from December to December for the residential category generally.

I suspect the traditional wisdom that condos are the big losers in a down market fails to take into effect the slight but real differences in the number of foreclosures on condos.  Among all residential categories, the number of bank owned foreclosures (REOs) sold in December was 47.2% of all sales — for condos that number was 28.1%.  Similarly in active inventory, short sales and REOs make up 55.7% of inventory for all residential units, but 46.4% for condos. 

There are two possible reasons for this.  The more obvious one is that condos are cheaper, so buyers were less overextended and therefore slightly less likely to default.  Another possibility — but I haven’t researched it so I only raise it as a conjecture — is that it’s possible more condos were owner occupied and fewer were purchased as investments. 

Whatever the reason, a slightly lower default rate has helped condos retain their value somewhat better than residential properties generally.

Sacramento County Real Estate 2007 Year In Review – Franklin / Freeport

Depending on where you focus your attention, there’s news, there’s good news, and there’s bad news.

We began our look back on Sacramento County real estate in 2007 with a look at the overall “big picture” for the Sacramento County Real Estate Market for the entire year. Later last week, we reported on one area in the county market that’s consistently held it’s value better than others and enjoy’s low inventory and brisk sales, East Sacramento.

This week we turn our attention to an area that may well be the “worst case” in terms of rising inventory and price declines for Sacramento County, Sacramento’s Franklin / Freeport area (95823). I should probably point out before we begin that I have not sampled all the MLS areas, so my sense that Franklin / Freeport may be the worst case comes from the foreclosure numbers. There may be other areas that have fewer foreclosures but more inventory or lower prices, for example.

Franklin’s decline in 2007 has been rapid. Comparing full year numbers first, the average price lost 19.2% of its value from year to year, and dropped 21.1% in terms of sold price per square foot. The median sale price in 2006 was $314,850, in 2007 it fell 20.6% to $250,000. In 2006 one per cent of sales in Franklin were foreclosures. In 2007, that number was 41.6%.

Comparing December of 2007 to December of 2006, we find that by December, the trend of selling more and more foreclosures and deep price drops had continued apace. By the end of 2006 the average sale price was $282,327. A year later the average had fallen 34.9% to $183,914. Another way to say this is that the average home in Franklin lost slightly more than 1/3 of its value in a year. On a sold price per square foot basis, Franklin closed out 2006 at $200.21 per square foot, and had fallen to $126.61 a year later, a decline of 35.8%.

The percentages of short sales and foreclosures available in Franklin / Freeport are staggering. Almost three fourths (73.9%) of inventory in Franklin / Freeport is either a short sale (35.9%) or foreclosure (38.1%). At the same time, if you needed a case study of REOs outselling short sales, Franklin / Freeport is it. Last month no short sales closed, but twenty-five of the twenty-nine closed sales in the area were bank owned properties. That works out to 86.2%, or close to 7/8 of all sales.

The contrast between East Sacramento on the one hand and Franklin / Freeport on the other shows how local real estate markets are. East Sac enjoys less than three months of inventory and a brisk seller’s market where the prices have remained flat while nationwide prices are falling, while Franklin / Freeport currently has almost two years (23.6 months) of inventory, and homes there have lost two thirds of it’s value in a year.

If you’re a buyer or seller, the right question to ask is not “How’s the Market” overall, but “How’s the Market” for your particular area. Is there an area you’re interested in particularly? If so please contact us and we’d be happy to get you specific market data or comparable sales.

Antelope Short Sales Rival REOs

One of the best things about selling real estate is that it’s constantly changing and it forces me to keep up with everything that is different about it.

So much so that I’m going to have to eat my words.

I’ve always maintained that bank-owned homes are the cheapest priced houses in any area. However, I was out in Antelope the other day and was surprised to see that the brokers listing short sales are catching the pricing bug.

Short sales in the Antelope area are now priced more competitively than bank-owned homes. Of course, as always happens with short sales (unless they are already approved by the bank, which is rare), they have to go through the process of getting approved by the seller’s lender, so the listing price is not by any means the selling price, which is more the case with REOs.

Also read Can You Actually Buy a Short Sale?

One Man’s Price Decline is Another Man’s Cash Flow

So much of the heat (and not light) that’s shed on real estate market writing contains the implicit assumption that falling prices are bad.

Are falling prices bad? Well, they are if you have no choice but to sell now, and you owe more than you own.

Falling prices are also bad if you’re buying and your position is such that you’ll have to sell while prices are still falling.

For everyone else, falling prices are much less of a catastrophe than melting ice caps, because we’re likely to see the situation turn around in a relatively short term.

Falling prices are actually good if you want an investment 1) that you can afford and 2) that provides positive cash flow.

For the longest time, I didn’t see too many properties that penciled out positive in Sacramento County. Today I stubbed my toe on a condo that seemed offhand to pencil out so well that I threw some conservative numbers such as a 25% vacancy rate at it, and I still ended up $5 per month in the black.

There’s probably an improvement of $100 per month that one could make in the vacancy rate, and you can take out the $85 per month in management fees if you want to rent it out yourself. The other thing that’s conservative about this analysis is that this is based on the list price of the home. On the flip side one should inquire about utilities and factor in an estimate for maintenance.

Granted, five bucks is not a lot of money. But lots of folks who bought when it was “a good time” because prices were going up were happy enough to be upside down by hundreds of dollars. (Like the seller of this condo — which is now bank owned? Could be!)

Cash Flow Worksheet

Sacramento County – Foreclosures as a Percentage of Total Sales

In movies, 2007 was the year of the threequel.  Sensibly enough, Beyonce Knowles was the year’s most desirable woman (I’ve been saying that since 2006, at least).  Al Gore won the Nobel Peace Prize, while the arctic ice cap melted at an alarming rate.

In Sacramento real estate, I’ll remember 2007 as the year when those of us who entered the business early in the decade learned the mechanics of selling short sales and foreclosures. 2007 was the year of the foreclosure in Sacramento County. 

This chart shows the number of foreclosures sold month by month through November of 2007 in blue.  The short sales are shown in pink.

 

image

Short Sale “Time Lag”?

About a month ago, a reader responded to my post about the dismally low closing rate for short sales by remarking that my analysis failed to account for the fact that short sales take longer than foreclosures to sell.

The chart above does not show short sales lagging behind foreclosures by the 1-3 months it takes to sell them.  It shows a steady increase in the number of REOs sold.  REOs broke the 10% barrier in April, and short sales have yet to rise above 6%.  The longest short sale I’ve done took four months — sometimes we can close them in 30-60 days.  If short sales were lagging four months behind, not just failing to close, there should be at least 18% of them closing every month by now.

Another problem with this argument is this.  Yes, short sales take longer, but the short sale step also happens before the bank owns the property.  So these sales take longer, but they also start earlier, so the longer sale should be a wash, and clearly the numbers above show that it isn’t.

You Can Write Up a Short Sale (But Can you BUY One)?

The one and only Sacramento Real Estate Gal, Purva Brown, recently called my attention to some really important information for buyers about short sales — their abysmal closing rate.

Many readers of the blog will no doubt already know that a short sale is a sale where the seller has insufficient funds to pay off the loan(s) on the property, and has asked the lender to allow the sale to continue but approve a reduced pay-off instead of going through foreclosure.  Like homes that are already owned by the bank (REOs), short sales are often discounted compared to other homes.

Unlike REO’s — however — there’s a problem.  It’s harder to tell exactly where the problem is than it is to tell you the numbers.  In Sacramento County, for example, as of late November, 2007 short sales accounted for 2,890 of the 11,053 active listings — 26.1%.  At the same time, 16.8% of all listings marked pending sale (in escrow but not yet closed) were short sales.  The pending sales data, moreover, may tend to underreport short sales, since many listing agents will continue to list the home as active until the lender has approved the sale — or even beyond this point.  (Indeed, this practice is common enough that it’s become the subject of an MLS rule prohibiting the practice).

OK, so how many of these short sale transactions are closing?  In October, the number was only 3.8% of sales — so far in November, that number has only risen to only 5.3%.

5.3% of sales, versus 16.8% of pending sales.  In other words, two out of every three short sales transactions (or more) fail to close escrow.

Why the low numbers?

  • First of all, understand that the lender doesn’t have to approve the transaction.  They can always foreclose.
  • Sometimes buyers find out in the process that short sales are not for them.  When it takes a month or two or longer to get a short sale buyer, many’s the buyer (we’ve worked with some) who’ve simply lost patience or couldn’t wait because of their situation.
  • I’ve seen cases where short sales were listed where the buyer was not even behind in their payments.  As a buyer, have your agent ask about the status of the seller.  If they’re not behind in payments, and if there’s not an adequate hardship, the chances of the lender approving the transaction trail off to something pretty close to zero.  Chances are that a large percentage of short sales shouldn’t even be listed.

Can you avoid the short sales and still get a bargain property?  Absolutely!  If you focus on the REOs — bank owned foreclosures — you’ll find homes that are typically priced below the short sales and are much easier to own.  When you look at REOs, the number of homes that close compared to the number that are for sale is actually higher, not lower.  For example, it’s not uncommon to see 12% REOs in inventory, but 25% in the sold statistics (about twice as many).

Home Shopping this Winter?

Traditionally, home shopping falls flat during the holidays. We slow down during Halloween and then Thanksgiving comes around and we hit a dead spot. This year however, I think business is going to continue, albeit at a slower pace.

If you’re considering buying a home this winter, count yourself among the lucky ones. Why?

1. Inventory is high – The number of foreclosures make for scary news for sellers because they have to compete with bank-owned homes and you, lucky buyer, have lots of homes to look at to find the perfect one! You can find a complete list of foreclosures in Sacramento county here.

2. There are no recreational sellers out there – During the big real estate boom, a lot of sellers wanted a certain amount for their home before they would sell their home. Today, if a home is on the market, chances are they want to sell and will do whatever it takes to negotiate a sale with you.

3. There are huge discounts in price – There was a time when homes had trouble appraising and hence getting a loan for the home was hard. Today, if you find a great deal, the appraisal might just come in 10% over the price you’re in escrow for. Congratulations – you just “made” 10% of the sales price by just buying the home!

So head out there and let the shopping begin. Remember, you don’t have to restrict yourself to just retail gifts this winter. Housing is selling at wholesale prices!

Three Things Your Agent Should Tell you About a Short Sale

Sometimes when I read the material on my colleagues’ web sites, I almost get the impression that the idea of doing a short sale — a sale where the lender approves a payoff amount less than the value of the loan — is being promoted to sellers almost as a normal sale.

It’s not.  To be sure, if you simply can’t pay off your mortgage and are facing foreclosure anyway, a short sale may offer some advantages, the most important of which is that it may prevent non-purchase money lenders from getting a deficiency judgement against you (refinance or home equity lines of credit are typically non-purchase money and hence the lender has a deficiency judgement as one option in a foreclosure situation).  But you should also be aware of these facts about a short sale.

You Will Be Asked to Show Hardship, and You Have to Tell the Truth
In order to approve a short sale, a lender has to believe that they’re not going to get their money any other way unless they do, and this typically means that you have to show that you can’t pay for some important reason — sickness, death of a spouse, loss of a job, or the like.  Also, if you’re paying off a $100,000 loan and you have a six figure income and good credit, don’t expect the bank to welcome your request that they take a loss.  So you’re going to have to show a hardship, and be aware:  if you lie, that’s loan fraud.

Short sales will not “Save Your Credit” (At Least Not All of It)
If a Realtor® suggests that you can save your credit with a short sale, run, don’t walk.  There is some debate over how much impact a short sale will have on your credit, and it also depends on how the bank reports it, some of which may be negotiable.  However, in general you should only go through the short sale process as a last resort.   Although a short sale may not impact your credit quite as much as a foreclosure, you should still expect to it to have a strong negative impact on your credit.  Whether it’s “as bad” as a foreclosure or bankruptcy or “almost as bad” depends on who you ask.

Once the Short Sale is Over, You May Owe Taxes
There are two possible tax liabilities to a short sale.  First, if the sale results in a gain in value of the property, you may need to pay capital gains tax, regardless of the value of the notes involved.  Secondly, if the lender accepts less than full payment, the difference may be reported to the IRS as taxable income to you.

Sacramento Real Estate Market Update – Franklin / Freeport (95832)

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.

Sacramento County Foreclosures in Active Inventory

We’ve just updated the listing database that feed the specialized areas of our web site for foreclosures, new homes, and condos.

For some time now we’ve made available the number of active foreclosures by area in Sacramento County, but one thing I didn’t like about that list is that it only gives you raw numbers of foreclosures available, so naturally this is going to tend to show more foreclosures for areas where there are just more homes. 

To give you a better idea of what the actual percentages are, I’ve put together the following table, which shows the percentages of bank-owned foreclosures in active inventory for different areas in Sacramento County.  In other words, barring any possible data import errors, this is a rough guide to the number of unsold foreclosures as a percentage of all unsold homes for these areas in Sacramento County.

Percent Foreclosures Zip Code Area Name
31.3% 95832 Sacramento Franklin Freeport Vicinity
25.0% 95830 Sacramento Florin & Vicinity
23.8% 95660 North Highlands& Vicinity
23.8% 95823 Sacramento Franklin Freeport Vicinity
22.1% 95815 Sacramento Arden-Arcade Creek Vicinity
22.0% 95817 East Sacramento & Vicinity
21.8% 95828 Sacramento Florin & Vicinity
21.2% 95838 North Sacramento Natomas Del Paso Heights
21.1% 95690 Walnut Grove
20.8% 95842 Sacramento Foothill Farms
20.3% 95824 Sacramento Elder Creek Fruitridge
20.1% 95757 Elk Grove
20.0% 95639 Hood
18.9% 95827 Sacramento Rosemont College Greens Mayhew
18.7% 95820 Sacramento Elder Creek Fruitridge
18.3% 95626 Elverta
18.0% 95843 Sacramento Antelope
17.7% 95758 Elk Grove
17.5% 95673 Rio Linda
16.3% 95621 Citrus Heights
16.3% 95632 Galt
16.2% 95822 Sacramento South Land Park Greenhaven
15.8% 95670 Ranch Cordova Gold River
15.8% 95833 North Sacramento Natomas Del Paso Heights
15.5% 95835 North Sacramento Natomas Del Paso Heights
15.5% 95834 North Sacramento Natomas Del Paso Heights
15.4% 95841 Sacramento Arden Arcade Creek Vicinity
15.1% 95829 Sacramento Florin & Vicinity
14.9% 95624 Elk Grove
13.5% 95826 Sacramento Rosemont College Greens Mayhew
13.5% 95610 Citrus Heights
13.3% 95655 Mather
11.0% 95821 Sacramento Arden Arcade Creek Vicinity
10.9% 95662 Orangevale
9.3% 95825 Sacramento Arden Arcade Creek Vicinity
9.1% 95693 Wilton
8.8% 95628 Fair Oaks
8.3% 95742 Rancho Cordova
7.8% 95608 Carmichael
6.5% 95864 Sacramento Arden Arcade Creek Vicinity
6.2% 95683 Rancho Murieta
5.6% 95831 Sacramento So Land Park Greenhaven
4.4% 95630 Folsom & Vicinity
4.4% 95816 Sacramento Downtown Midtown
3.1% 95818 Sacramento Land Park Curtis Park
2.0% 95814 Sacramento Downtown Midtown
1.6% 95819 East Sacramento & Vicinity

Home in Forelosure?

Every time I get asked how business is this year, I have to add that I have actually turned away quite a bit of it. This surprises people. The fact is, there are so many houses in foreclosure, sometimes you really have to talk to clients and tell them that if you don’t have to sell your home right now, do not put in on the market. Hang on to it for a little while longer, if you can.

The sad part is some of them cannot. So what should you do if your home is in foreclosure or headed there?

For the first part, call the mortgage company. Don’t ignore the late notices – that is worst thing you can do. If there is no communication between them and you, the mortgage company has no choice but to foreclose. At the first sign that you sense financial distress, call the mortgage company and ask them if they would be willing to rewrite your loan, or restructure your loan.

They just might. Banks don’t really want your home unless you leave them no choice.

If that doesn’t work, call a Realtor for a potential short sale. More on that tomorrow. Today, call the mortgage company.

Antelope Foreclosures Account for Nearly Half of Sales

Purva recently wrote some excellent advice for home sellers in Natomas, and nearby Antelope home sellers.  Based on October’s real estate statistics, I would suggest that nearby Antelope sellers also need to seriously consider how competitive their home is compared to the many foreclosures that are on the market.

In October, bank owned foreclosures (also called REOs for “real estate owned”) accounted for fully 47.5% of sales in Antelope (95843).   In October of 2006, none of the forty-six homes that sold were REOs.  In October of 2007, forty units sold and nineteen of them were REOs (hence 47.5%).  As in other areas, foreclosures outsold non-foreclosed properties by almost two to one.  Even though they accounted for just under half of sales, REOs constitute just over one quarter (25.7%) of the inventory.

Moreover, Antelope is no exception to the general rule we’ve that the more foreclosures there are in an area, the more prices tend to plummet.  The median sale price in Antelope dropped 20.6% in October from the previous year, from $350,750 last year to $278,350 this year.  The average sale price dropped 23.6% during this time, from $360,437 last October to $275,350 this October.  Average sold price per square foot dropped off somewhat less, since this year’s average home was somewhat smaller.   The decline in price per square foot was 18.8%, from $206.44 last year to $167.69 last year.

Currently Antelope has 12.03 months of inventory.

But Aren’t Foreclosed Properties Sold “As-Is?”  Why Are They So Popular?

That one’s easy.  Looking at what’s currently on the market in Antelope, here’s how the sold prices per square feet break down:

REO’s are listed on average for $163.19 per square foot.

Non-REOs are listed on average for $183.49 per square foot.

On a 1650 square foot home (which is about average), the difference in price works out, rounding off a bit, to $269,000 versus $303,000.  $34,000.  Ten per cent.

Buyers aren’t stupid.  $34,000 buys a lot of paint and carpet.

Natomas Homesellers Face Competition from Banks, Builders

If you are a private individual seller anywhere in the 95835 (Natomas) area, my heart goes out to you. I’ve been working with a client looking for homes in the area and in spite of having gone out to look at homes over three times this month, all we’ve seen are bank foreclosures and new home builders. There was a total of one home that fit the client’s criteria which was being sold by a private party, that is, not a bank or a home builder. It was not, however, on the client’s short list.

It’s not that I cherry-picked the bank-owned homes, it’s just that the prices are so much more competitive. These are well-maintained, upgraded homes with granite counters, hardwood floors and wonderful landscaping – 3 bedrooms, 2 baths and two stories priced at around $300,000. They don’t discount the fees of the co-operating broker and are easy to show because they are vacant. The buyer can look at the home without feeling like he is invading someone’s space. Compare that with the private sellers’ homes where you almost always have to call and make an appointment, the seller’s things are lying around, personal tastes get in the way of a buying experience and to add to that, the homes are priced higher than the bank-owned homes.

So if you’re a seller, keep in mind the stiff competition. Do everything you can to make sure the home is easy to show and looks fabulous at all times. This might include staging the home, lighting candles to make sure it smells divine (candles that smell like cookies are best!) and, of course, PRICE IT RIGHT. You have competition from banks and builders, so make sure your Realtor shows you those prices as well. A premium fee to the co-operating broker also does not hurt.

If your competition is doing it, you should try and overreach to get your home sold.

Sacramento Foreclosure Auction Coming

A colleague of mine recently published an article critical of foreclosure auctions, saying that the tendency of buyers is to overpay at them, and banks know this.  I don’t have any data on that to report one way or another, but whether you love them or hate them, Hudson and Marshall are holding another Sacramento Foreclosure Auction on Sunday, November 18th at 1:00 PM at the Radisson Hotel at 500 Leisure Lane in Sacramento.

You can also bid on properties online before the auction.  (Legal disclaimer:  I’m not advising you to do that or saying you’re going to get a “good deal” or anything of the kind  — right now I’m wearing my blogger hat, and I’m not your agent.)

On the other hand, if you’d like to secure an agent to help you identify which of these properties are good ones, preview them, and assist you with the bidding process so 1) you don’t overpay and 2) you have your own agent rather than the bank’s agent to help you with the inspections and paperwork, give me a call at (530) 672-9160 and I’d be happy to help you with it as a buyer’s agent.

Even if you don’t hire us to work on it, I’m thinking I might go to the auction and report back.  Maybe I can get Purva to go as well, but she may have family coming to town.

Foreclosure auction party?

Some people will take any excuse to throw  a party.

Let’s hope there will be dip.  I like dip.

Sacramento Foreclosure Search Improvements

I’ve made some improvements and bug fixes to the Sacramento Foreclosure Search Page, and moved the search tool to the main page of the foreclosure section.

I want to thank Daniel Kenna for his excellent suggestions, and I’ve implemented some of those.  Along the way I found a lot of bugs, too, which I’ve tried to fix.  If you see any others, please let me know!

In making the change to the main foreclosure page I did something that my colleagues would probably find counter-intuitive:  I took a lead generating form down and replaced it with a free search tool.  

However, if my experience on the rest of the site is any guide, free search is the way to go.  In the first place, over and over again buyers have told me that they called me because they liked the registration free search tools.  In the second place, I’ve noticed that when I do put up a lead generation form for email updates of foreclosure listings or the like, I get to spend a lot of time working with folks who haven’t yet used the search tool enough to be ready to do anything.

Anyway, give it a whirl and let me know if you see any problems.

Banks Finally Pricing Homes Right!

There’s definitely been a shift in the market and while all the inventory available will take a while to dry up and regain “normalcy,” I’ve begun to notice foreclosed homes being priced more competitively than six months ago. And that’s definitely having an effect. I was out with a buyer yesterday looking at homes in Natomas and of the four homes we had been considering two weeks ago, two were pending. All four were bank-owned properties.

Six months ago, the situation was different. Foreclosures were priced at 2005 values. Today, foreclosures are where the bargains are.

Banks are finally getting it right!

Sacramento Area Foreclosure Search Page

For some time now, we’ve had a Sacramento Foreclosures section where you could browse for Bank Owned Properties or Short Sales by county in El Dorado, Placer, and Sacramento County.

We’ve now added a Foreclosure Search Form to make it a little easier to:

  • Select only in the areas you’re interested in, across all three counties.
  • Narrow your selections by price range.

We’ve kept it really simple, but hopefully this basic functionality makes things a bit easier.  Please give it a try and let me know if you run into any problems!

Sacramento Real Estate Listings Updated

I’ve updated our site home lists, including the sections for:

Most of these sections are pretty much “browse only” as of now, but I plan to have a search tool in place for the foreclosures soon — probably some time this week.

A client once told me that it’d be nice to have such a thing for the new homes section as well, so I may tackle that this week as well.

Enjoy.

Listing Pages Improvements

Those of you who do real estate searches from the either our main search page or many of our other search pages have access to listings that are updated six times per week.

I’m not sure why it’s six and not seven.  Presumably it’s to give FTP a Sabbath.  The point is, it’s practically daily, so it’s about as up to date as you can get without calling a Realtor up and asking him.

In addition to the search pages, there are also a lot of pages where you can browse listings, such as our foreclosure pages, the condos pages, and the new homes pages.  These pages are driven by a separate database that we maintain, that we update once per week or so.  We’ve recently improved the import mechanism on these pages to fix a few issues, so we expect these pages to more closely match our MLS (Metrolist) as time goes along.

We just did an import as well, so we’re pretty current as of now.  Enjoy!

More Sacramento Area Foreclosure Resources

We’ve improved our Sacramento Foreclosures portion of the site this morning with two enhancements.  First, if you scroll past the foreclosure listings offer, you’ll be rewarded with a set of foreclosure “Frequently Asked Questions”.  Actually, to be perfectly frank, I think the best questions here are the ones that aren’t frequently asked — and that may keep some people from ignoring the real opportunity that buying a foreclosure represents.  We’ve tried to answer those as well.

The second improvement is that we’ve now added Placer County and El Dorado County to the areas where you can browse short sales and bank owned foreclosures.  Those links are all available from the main foreclosure page, but for your convenience, here they are again:

Bank Owned Properties:

El Dorado County

Placer County

Sacramento County

Short Sales:

El Dorado County

Placer County

Sacramento County

Placer County Real Estate Market

Like most greater Sacramento markets, Placer County has had its share of the reversal of fortunes of 2005-2007 (or make that 2005 to 2000-when?), but August’s numbers are less dramatic than others we’ve seen. The average home sold for $518,108 in August, or 96.4% of the average list price of $537,549. This year’s average home was 7.1% bigger than last year’s, so while the average sale price dropped only 0.6% from last year’s average of $521,393, the sold price per square foot dropped 7.2%, from $249.47 last year to $231.50 this year. Likewise the median price fell 8.4% from year to year, from $453,000 last year to $415,000 this year. This compares favorably to a 12.2% drop for Sacramento County from August to August, and 14.8% for El Dorado County during the same period.

Last year, of 338 homes sold, none of them were REOs (bank owned foreclosures). This year, of 275 sold homes, 40 (12.0%) were REOs. This is a huge jump in absolute terms, of course, but it is approximately similar to El Dorado County’s 11.6% REO sale rate, and much lower than Sacramento County, in which fully a quarter (25.3%) of August’s sales were bank owned.

Approximately 339 homes have sold per month over the past year, on average. There are 3242 active listings in Placer County currently, putting the unsold inventory figure at 9.7%.

Foreclosures Statistics for High-Foreclosure Areas in Sacramento County

The number of foreclosures in Sacramento has been the subject of many articles and a great deal of press attention. I thought I’d take a look at a few of the areas that are experiencing a high number of foreclosures to get a feel for how many foreclosures are currently active and what sort of discount they represent for buyers.

With this in mind, I focused my research on the three areas that are showing highest numbers in the Multiple Listing Service (raw numbers, not percentages) of bank owned properties in Sacramento County. These areas the Franklin Blvd / Freeport area (95823 — see zip code map), Sacramento Florin 95828 (map), and Elk Grove 95758 (Map). In fact, when you look at the map, you can see that the choice of calling these “three areas” or “one area” is pretty arbitrary, since they roughly border one another.

The Boring News — How Many Are There?

Let’s take them as one area of Sacramento County that’s high in foreclosures first. In these three high foreclosure areas, the number of active listings that are bank owned, is 17% of the total. At the same time, 11% of the total listings are short sales — properties where the seller’s proceeds from the sale do not cover the cost of repaying the loan. So for both types of “distressed” properties, we come up with a figure of 28%. Once again, the Sacramento Bee’s summary claim that for every two homes sold, one is in foreclosure seems to overstate the case. (I critiqued those numbers from another angle here). However, to give the bee their due, here are possible reasons for the discrepancy:

  • The Bee was reporting on August foreclosures and sales only, whereas my current report concerns active listings that have accumulated over some time.
  • As we’ve shown earlier in one market, foreclosures outsell non-foreclosures. This isn’t hard to understand — they’re cheaper. This being the case, you’d expect the “absorption rate” for short sale and REOs to be faster than for non-distressed sales.

The Interesting News — How Much Money Can You Save?

Of course, the debate about how many foreclosures there are generates a lot of heat, but not much light. A much more interesting question is, as always: “What’s in it for me?”

If you’re a buyer, plenty!

The following numbers are all expressed in list price per square foot.

In the Franklin Blvd area (95823), short sales are presently discounted 9.2% from their non-distressed counterparts. Bank owned properties are even better, discounted an average of 15.5%. In Elk Grove (95758), the average discount for a short sale is 11.9%, while for an REO it’s 17.1%. The Florin area boasts some of the best numbers of all in this respect. Short sales are discounted 12.4%, while the average foreclosure is discounted a tasty 18.3%! If you’re willing to put up with doing whatever repairs are needed yourself, that difference is huge, and it means the difference between purchasing something at roughly $320,000 and roughly $260,000. $60,000 buys a lot of carpet and paint!

Sacramento County Short Sales Listings Available

Recently I’ve been reworking the foreclosure area of the web site and — as promised earlier — I’ve added a page of links where you can browse Sacramento Short Sale Listings. If you’re unfamiliar with Short Sales, what these are are sales where the sellers are “short” in the sense of not having enough cash to sell, pay closing costs, and pay off the lender(s) they owe. So what happens is that you have to get approval from the bank, a process which is fairly time consuming.

That said, there are some bargains to be had in short sales, but (as we recently showed for Antelope and we’ll examine further in a future article), on average the discounts are better on bank owned properties.

Sacramento Real Estate Market – Antelope

Antelope’s real estate market is one where a large number of short sales and foreclosures are driving prices down. Our foreclosure list puts Antelope at number six in our unfortunate hit parade of high foreclosure areas. Between them, short sales and foreclosures make up slightly more than half of the available inventory in Antelope. There are 500 active listings in Antelope at present, of which 103 (20.6%) are bank owned, and 150 (30%) are short sales.

In August, the average home sold in Antelope fetched $302,588, 18.3% less than last year’s average of $370,212. Some of that difference was size related, with this year’s home coming in 5.5% smaller. The average sold price per square foot dropped somewhat less, therefore, 13.5%, from $215.24 last August to $186.09 this August. The median price was down 16.9%, from $361,200 last year to $300,000 this year. Units sold were down from last year’s 62 units to 46 units this year, a 25.8% drop.

Interestingly, though short sales in inventory outnumber bank owned properties, when you look at what sold, the numbers are reversed. Though bank owned properties (REOs) make up 20.6% of the inventory currently, they represent 32.6% of the sales in August. Conversely, short sales make up 30% of active inventory, yet accounted for only 10.9% of the sales in August.

This difference is not surprising given the price discrepancy. Looking at the current list price in Antelope, homes that aren’t short sales or foreclosures average $200.41 per square foot, while short sales are priced 9% less at 182.42 per square foot. REOs are priced even lower, 15.0% less, at $170.43 per square foot. In addition, most agents probably feel that REO sales are a bit less problematic, so to the (limited) extent that buyer choices reflect our opinions, that may have something to do with this as well.

To view current REO properties in Antelope, click here. We do not yet have short sale listings available yet directly on our web site (except mixed in with other listings), however please feel free to contact us if you’re interested in listings from this (or any other) custom search. To view all Antelope listings, click here. We’ll have short sale listings coming soon and will post links when they’re up.

Sacramento Bee Foreclosure Numbers

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Whenever I’m out having lunch and pass by one of those Sacramento Bee Paper boxes I like to have a peek over and see if it’s worth spending 50 cents to see what disaster has befallen me lately.  Today I glanced over and saw that foreclosures are gaining on sales.  (Here’s the online version if you want to take a look.)

For those of you who are regular readers of this blog, or anything else published about real estate in the area for the last nine months or so, this news about foreclosures should come as no surprise.  Bank owned properties are becoming enough of a phenomenon that I recently published a list of Sacramento County foreclosures so we could keep up.

The Bee’s article begins:

It’s come to this:  For roughly every two homes sold in August in the capital region, one house went into foreclosure, according to the newest sales statistics released Thursday.

The Bee’s article goes on with a bit of drama balanced with a discussion of the opportunities that buyers are finding in this market, such as lowered interest rates now compared to June.

Not bad overall.

I’ve posted similar numbers here, but it strikes me that when you compare the number of sales to the number of foreclosures, (as I’ve done as well) you arrive at a pretty scary picture, but one that ignores the fact that even in the best of times, only a fraction of the homes in any neighborhood are on the market.  Based on the quote above, it’s incorrect to say that one in 3 homes in Sacramento County is in foreclosure.

What’s the real ratio?

To get an idea, let’s focus exclusively on single family homes for a moment.  According to the 2006 Sacramento County General Plan, in 2006 there were 149,368 single family homes in Sacramento County.  In 2005, 21,103 single family homes sold through the MLS in the county.  In 2006, the number was down to 13,597.  Averaging those two years, we get 17,350, which is 11.62% of the 149,368 homes.  (Or put another way, a home turns over on average every 8.6 years).

The number of foreclosures is rising every month, but let’s take stock of where we are now, as of September 14, 2007.  How many unsold, foreclosed single family homes are inventory right now?  The answer the MLS gives is 1,724 for bank-owned single family homes in Sacramento County.  Dividing our 1,724 bank owned single family homes by our total number, 149,368, gives us 1.15%

Now to be sure, the number of foreclosures is climbing every month, and a lot of people are losing their homes as a result of either overextending themselves, predatory lending, or other factors, so I don’t want to minimize the problem.  But here’s how the opening paragraph above could be rewritten:

It’s come to this:  For roughly every single-family home owned by the bank in Sacramento County, eighty-six homes aren’t.

Of course, you’d never get dummies like me to shell fifty cents to read a horror story like that.  You call that scary?

Sacramento Foreclosure Listings

We’ve put up a new section on the web site dedicated to listings of Sacramento foreclosures. Here we have a complete list based on the MLS that we’ll update every week or so of bank owned properties (also known as REO or “Real Estate Owned”) throughout Sacramento County. Those areas with no foreclosures in inventory don’t appear here — those that do are arranged in order from the areas with the most foreclosures on top, on down.

The current page is a kind of “browse” interface, but I may also put together a minimal sort of search interface on top of this as well, probably featuring price range and area to start out with.

As far as I know this is the only complete and free list of foreclosures available in Sacramento. All the properties here are listed in the MLS and so are available to buy now.

The queries are a tad on the slow side but are not too bad. If it gets too painful I may go ahead and do some tweaks to optimize that. Let me know if you have any problems using the list — otherwise enjoy! Let me know if there’s any particular statistical data that might be useful, and if it’s not too heavy on the rocket science I’ll put it together.

Buy or Hold? For first-time buyers, it’s a no-brainer!

It’s nice to know I’m not the only person running around saying, Buy, buy, buy.

I was listening to the radio the other day and heard someone very respected for his opinions on finance (no, I will not drop names, but I will say this person is respected because he’s a self-made millionaire) say that if you are a first-time buyer you have almost nothing to lose by buying now. So what if prices fall another 10% – if you plan on holding on to the house for five years or so, you will still walk away with a nice profit, tax-free. However, if you get too cute about trying to time the bottom of the market, you will most likely miss it.

And yes, I know I get paid to sell homes. But even if I weren’t, this would be my advice: buy a home. Especially if you’re a first-time buyer. The opportunities are out there. And so are the bargains.

Sacramento Bank Owned Properties

The table below shows the bank owned properties that are currently listed in the MLS for Sacramento County, sorted by the area with the most foreclosures first. All of these have already been foreclosed on by the bank and we can assist you with the purchase of any of these homes. The average price for these real estate owned properties is given in the last column.

We will have listings available on the web site soon!

Area Name Zip Code Available
Bank Owned
Properties		 Average
Price
Sacramento Franklin Freeport Vicinity 95823 262 $233,051
Sacramento Florin & Vicinity 95828 172 $254,331
Elk Grove 95758 160 $341,492
Elk Grove 95624 145 $370,827
Sacramento Antelope 95843 143 $281,167
North Sacramento Natomas Del Paso Heights 95838 142 $194,927
Sacramento Elder Creek Fruitridge 95820 132 $182,793
North Highlands & Vicinity 95660 120 $197,152
Sacramento Foothill Farms 95842 117 $202,677
North Sacramento Natomas Del Paso Heights 95835 113 $366,614
Citrus Heights 95621 100 $236,818
Elk Grove 95757 89 $406,483
Ranch Cordova Gold River 95670 89 $246,705
Sacramento Arden-Arcade Creek Vicinity 95815 87 $179,746
Sacramento South Land Park Greenhaven 95822 84 $215,544
Sacramento Elder Creek Fruitridge 95824 72 $194,735
North Sacramento Natomas Del Paso Heights 95833 67 $273,160
Sacramento Rosemont College Greens Mayhew 95826 64 $249,733
East Sacramento & Vicinity 95817 63 $181,183
Sacramento Franklin Freeport Vicinity 95832 58 $271,711
Galt 95632 55 $293,554
North Sacramento Natomas Del Paso Heights 95834 52 $312,382
Citrus Heights 95610 49 $289,350
Carmichael 95608 45 $307,169
Sacramento Florin & Vicinity 95829 42 $387,348
Folsom & Vicinity 95630 42 $415,254
Sacramento Arden Arcade Creek Vicinity 95841 40 $218,766
Orangevale 95662 39 $302,791
Sacramento Rosemont College Greens Mayhew 95827 39 $262,569
Sacramento Arden Arcade Creek Vicinity 95825 37 $189,177
Fair Oaks 95628 35 $356,949
Sacramento Arden Arcade Creek Vicinity 95821 33 $256,943
Rio Linda 95673 33 $249,383
Sacramento Arden Arcade Creek Vicinity 95864 15 $345,000
Rancho Cordova 95742 14 $484,121
Elverta 95626 11 $227,809
Sacramento So Land Park Greenhaven 95831 11 $343,882
Mather 95655 10 $364,690
Rancho Murieta 95683 10 $456,590
Sacramento Land Park Curtis Park 95818 7 $386,986
East Sacramento & Vicinity 95819 5 $459,760
Sacramento Florin & Vicinity 95830 4 $589,825
Wilton 95693 4 $771,950
Walnut Grove 95690 2 $367,300
Sacramento Downtown Midtown 95816 2 $449,900
Sacramento Downtown Midtown 95814 2 $323,900

Sacramento Foreclosures – Listings Coming Soon

I’ve been looking into the possibility of publishing a list of bank owned properties in the Sacramento area.  It’s not a difficult task, since I have most of the data in the database that feeds our condo listings and SacramentoHomeShopper.com’s listings by zip code.  In fact, arguably it’s easier than displaying “regular” listings, since Metrolist’s export facility becomes brain-dead after a certain number of listings, but it should handle the number of REOs in a walk.

Judging from August’s real estate market update, Sacramento County buyers are favoring the bank owned properties, and with good reason — the discounts are fairly substantial.

To whet your appetite while we put this together, we should have a report on the top thirty or so zip codes in the county for foreclosure listings — coming soon to a Sacramento real estate blog near you.

Sacramento County Real Estate Market — Got REO?

Residential real estate sales in Sacramento County in August were sluggish compared to a year ago at the same time, with a noteworthy number of the sales being made up of bank owned properties. The average home that sold in Sacramento County in August was a 1717 square foot home that listed for $374,731 and sold for $364,256, or just over 97% of list price. The average sale price was down 11% from last year’s average sale price of $409,081. At $325,000, this August’s median sale price was down 12.2% from last August’s median of $370,000. Sold price per square foot was down 12.7%, from $242.92 last year to $212.15 this year.

Unit volume was down 30.4% from last year. Last August, 1216 units sold, while this August, the number had dropped to 846. The expired to sold ratio rose from 77.2% to 106.3% — i.e., more homes expired in August than sold.

All around, August wasn’t a great month.

In my opinion, the real story that stands out in August is the number of foreclosures. Last August less than one per cent of the homes that sold were REOs (“Real Estate Owned”, i.e., bank owned properties). This August that number has risen to 25.3%.

Bank owned properties are selling faster than non-bank-owned. Though REOs made up 25.3% of August’s sales, they comprise 16.2% of active inventory. So clearly they’re outselling non-REO properties, even though they’re often sold as is.

There’s a good reason for this, of course: price. Recall our average sold price per square foot in August: $212.15. If we break that down between REOs and non-REOs, we get $177.10 for the bank owned properties and $222.49 for the properties that are not bank owned.

The difference in price between REOs and non-REOs works out to something just over a 20% discount.

We have more of them.

Let’s go shopping.