Sacramento Bee Foreclosure Numbers
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?
