Sacramento Real Estate Blog

Sacramento’s Churchill Downs Area, 95829, is an area where you can find good values on relatively newer homes.  Many of the homes here were built in the late 80s and through the 1990s, so the neighborhoods are established yet the homes don’t really feel dated.

Prices here have been hit hard, and the average sold price per square foot is running somewhat lower than the county average.  This July the average home sold for $133.59 per square foot, down 36% from last July’s average of $208.70.  With many foreclosures selling (only 12.2% of homes selling in this area were non-distressed), the ratio of selling price to listing price this July was 100.5%.  In other words, homes are selling on average for about $1,350 more than they’re listed for.  We’ve seen similar results for Antelope — another area with many recently built foreclosures and large numbers of recently built homes.

Though the absolute numbers look small since this is only one zip code with not all of the land devoted to high density use, demand this year has climbed 192.9% compared to last year, with 41 units selling this July versus 14 last July.

Sacramento’s Pocket Area (95831) has held its value better than the Sacramento County average, with fewer foreclosures.  That said, the area has still declined in value in the 2007-2008 period.

In July, the average home sold in the Pocket area for $388,500, up 4.5% from last year’s average sale price of $371,716.  This increase reflected a larger average sized home, however, so the net result in terms of price per square foot was a decline of 16.9% over the same period, from an average of $231.25 in July of 2007 to $192.13 in July of 2008.

Short sales and foreclosures together make up only about enough inventory for 1.5 months of sales in the Pocket area.  Overall, there are only 3.3 months of inventory in this area.

Non-distressed sales accounted for 65.5% of all the sales in July, with the one closed short sale accounting for a measly 3.4% of the 29 total units that sold, and foreclosures making up the remaining 31%. 

The Natomas area of Sacramento includes the following zip codes:  95833, 95834, 95835, 95836 and 95837.  Like many areas, Natomas has been experiencing falling prices and increasing demand compared to last year, with the result that inventory is now fairly low by recent standards at about six months worth.  (6.8 months if you use the last 12 months absorption rate, or — because sales have picked up so much this year — 5.2 months if you use the past six months to get the absorption rate).

Last July, only 21.5% of all sales were either short sales or foreclosures in Natomas.  This July, that number has risen to 82.6% of all sales.   Approval and closing of short sales continue to be sluggish in Natomas, with only 6.8% of all sales closing in July being short sales — even though they currently make up 51% of active listings.  In contrast, REOs (bank owned foreclosures) accounted for 75.8% of all sales in July, yet make up only 25% of active listings.

In July, the average Natomas home sold for $132.93 per square foot, down 31.4% from last year’s average of $193.63.  The average sale price was down 28.8% from the July 2007 figure of $340,676, with the average home in selling for $242,496 in July of 2008.

The number of buyers for homes in Natomas has increased dramatically, almost tripling from the 73 homes sold in July of 2007 to a figure of 207 homes sold in July of 2008.

Related Links:

Homes Available Now in Natomas

Last Month’s (June’s) Market Report for Natomas

Property Listing Email Updates

About once per week I update the listings from Metrolist to my web site database.  This database serves several web site features such as my foreclosure listings, condo listings, and investment properties listings.

As time goes on, I’ve also started to write a number of proprietary reports to this database that help me publish my market updates periodically.

I write these reports month to month, but whenever I update the database I can’t help but wonder how we’re doing now.  This morning when I took my usual sneak peak, some of the numbers surprised me.

Prices Are Up, Non-Distressed Sales Are Up

First of all, average sold price per square foot rose slightly (1.7%) between July and August.  In July it was $140.48 per square foot, and so far in August it’s $142.98 per square foot.  We may see it dip again later in August (for some reason I’ve noticed the entries posted later in the month sometimes do this), but so far, so good.

The other interesting fact about August so far is that the number of non-distressed homes (as a percentage of all sales) was 22.2% in July, but rose to 26.6% in August.  Of course, if you know about the price increase, a shift away from foreclosures makes sense, because non-distressed homes are listed and sell higher.  The more interesting question is:  why is this happening?

Yes, I Do Feign Hypotheses (But I’ll Let You Pick Your Own)

I don’t really know why the data did what it did in August, but here are some possible explanations:

1. It’s a Fluke
   All the data’s not in for August, and by the end of August the data won’t look like it does now.  Much as I’d like to see prices turn around soon, this wouldn’t surprise me too much, since I’ve often seen the end-of-month data surprise me.  Most real estate bears will probably want to opt for this one more wholeheartedly.
2. The Market Recovery is Well Underway, and Prices Will Rise Steadily From Now On
   I don’t really believe this, but I do believe the next one.
3. The Market Is Close To Reaching Price Equilibrium
   I don’t expect the market to suddenly start rising after falling for so long.  What I do expect is several months where the market just sort of sits there and behaves ambiguously — rising in one month and falling in the next.  So, for example, declining foreclosure sales in August means more foreclosure inventory available in September, so we may see prices fall again in September.Moreover, we’ll probably also see some more seasonal drops in the winter months even if we have already entered a more or less steady increase in prices.
4. Foreclosure Inventory Got Low After the huge sell-off in March to July.
   I think this partially accounts for the increase in sales of non-distressed homes, but only when coupled with the next point.
5. The Most Motivated Non-Distressed Home Sellers Are Starting to “Get It”
   The market has now been down enough, long enough, that more and more sellers are starting to understand that they need to get pretty competitive on their prices or their home is just going to sit there.

To some people who aren’t in the business, this talk of real estate inventory can sound a little weird at times.  It’s not as if we have shelves with houses on them and we can order new ones from the factory, and I can personally guarantee you that no temporary workers are running around the streets with little handheld barcode scanners looking at the open house signs.

Still, real estate inventory is a key concept that helps us to understand how the market is doing.

What is Inventory

Inventory is simply the number of homes that are for sale now, expressed in terms of the average number of homes that sell every month.  Sometimes we call the number of homes that sell every month the absorption rate.  To get the absorption rate, simply pick a time period (the last six months, for example, or the last year), and divide.  If 120 homes sold in the last year, then the absorption rate is 120 divided by twelve, or ten homes per month.  So, in that same market, if there are 30 homes for sale, then the inventory is 30/10, or "three months of inventory".

By now you may be thinking, ok, that’s fine, number of homes for sale divided by the number of homes that sell every month.  That’s great, but why should I care?

In the first place, inventory gives you a snapshot into the state of the market.  For example, did you know that the traditional definition of a seller’s market is one that has less than six months of inventory, whereas the traditional definition of a buyer’s market is one that has more than six months of inventory. 

More concretely, inventory is also an expression of how much competition there is with you when you’re buying or selling.  Let’s say you’re selling, and you’re looking at homes that sold like yours and trying to see where your home should be compared to the average.  In that case you can generally get a higher price for your home if there are two months of inventory than if there are twelve months of inventory.  Conversely, if you’re buying, twelve months of inventory gives you more leverage with your price, but if there are two months of inventory, be prepared to be in a bidding war.

Finally, looking at the inventory numbers can tell you which way the market is moving.  For example, in Sacramento County, generally inventory is falling at present, which is partly seasonal and partly the result of the huge upsurge in demand in 2008 over 2007.

So knowing the inventory numbers can help you understand not only where the market is now, but where it’s going!

Carmichael and Fair Oaks are established Sacramento County communities to the east of the City of Sacramento.  Both typically demand slightly better than average prices, and have lower than average foreclosure rates.

Of course, in this market, lower than average doesn’t work out to be low in absolute terms.  39.6% of the sales in Carmichael in July were bank foreclosures, and 9.4% were short sales.

The average home that sold in July in Carmichael fetched $305,353, down 26.7% from last July’s average selling price of $416,588.  Sold price per square foot is down 23.3% during the same period, with the average home sold in July, 2007 working out to $241.69 per square foot, versus $185.40 per square foot in July of 2008.

Demand for Carmichael homes is up from last year, with unit volume rising 47.2% from July to July.  There are approximately six months of inventory in Carmichael.

Along with East Sacramento (95818) and downtown (95814, 95816), Sacramento’s Land Park area commands prices over $300 per square foot.  Until recently, the low foreclosure numbers in these areas had kept prices high.  What we’re seeing now (for the most part — Downtown being an exception this month) is that these areas have slowly falling prices and somewhat sluggish sales compared to last year.  In the case of Land Park, however, the declining sales have not yet seriously hurt the inventory figures, which are a comfortably low 4.2 months.  This is true even though the figure for unit sales in July (13 homes) is only half that of last year’s 26 units sold.

This year’s average home sold for far less than last year’s but because it was (on average) much smaller, most of that drop is an artifact of the difference in size.  Thus, average sold price fell 29.1%, while average sold price per square foot only fell 5.6%.  The average home sold this July in Land Park fetched $402,146, or $313.20 per square foot.

Bank foreclosures made up only about 8% of the sales in July.  Along with short sales they comprise about 20% of the active inventory in Land Park.

Does real estate have "fun facts" — or is it just arcane trivia?   Well, either way:  did you know that — along with downtown — East Sacramento boasts the highest sold price per square foot of any local area, including Granite Bay and El Dorado Hills?

Up until recently, this fairly pricey community seemed immune to the price erosion in the rest of the area.  In the last few months, however, we’ve sometimes had to report price drops for East Sac.

In July, for example, the average sold price per square foot in East Sac was $324.61, down 12.5% from last July’s average of $370.84.  This year’s average East Sac home was about 1557 square feet in size and sold for $505,656.  This average selling price was down 7.3% from last July’s average of $545,422.

With homes in East Sacramento selling for more than twice the price of homes in surrounding communities, demand for homes in East Sac has slackened from last year, with unit volume down 33.3%.  While most areas have seen huge demand and falling inventory fueled by bargain foreclosure prices, East Sac’s inventory has actually risen over time.

The number of homes that have sold in Sacramento County through August 19th have already beaten 2007’s year-end numbers.  According to our MLS data, year wide home sales in Sacramento County in 2007 totaled 10,698 units.  As of August 19th, 2008, we’ve already sold 11,132 units, and we still have more than a quarter to go.

Looking at it on a month by month basis, sales volume was up from the previous year in each month of 2008 so far except January (which was down .4%).  The increase was modest in February at 1.6% over the previous February, but grew to a high of 134.3% in May, when 1,879 units sold compared to only 802 in May of 2007.  The average increase in each month over the same month the same year is 57.3%.

So far as of August 19th we have 864 units reported sold this month, beating the month end figure we have for last August of 846 units.  By the end of the month we are likely to see at least a 50% increase over last year’s numbers, especially since it generally takes several days for all sales to be recorded.

If Downtown Sacramento breaks is the exception that proves the rule about falling prices and increasing demand, then Antelope is one of many areas we can point to and say, "See, THAT’s the rule I meant!"

Homes in Antelope lost 21.5% of their (sold price per square foot) value from July of 2007 to July of 2008, with the average home fetching $175.99 per square foot last year and $138.07 per square foot this year.  With more demand for the smaller homes (no doubt a reflection of having more smaller sized homes in foreclosure), average sale price fell more dramatically, 35.3%, from $343,354 in July of 2007 to $222,219 in July of 2008.

Driving the declines were above average sales of foreclosures, with short sales and foreclosures accounting for 85.4% of all sales in Antelope, versus "only" 30% in July of 2007.  Buyers grabbing these opportunities in huge numbers, inflating unit sales 122.5% over last year, with 40 units selling in July of 2007 and 89 units selling in July of 2008.  As a result, currently there are only about 4-5 months of inventory in in Antelope

21" long.

7 lbs 9 oz.

Sierra Brown was born Thursday, August 14th, 2008 at 3:45 AM.  Congratulations and we can’t wait to see the gorgeous new bundle of joy!  Sierra and her mom (AKA Sacramento Real Estate Gal, Purva Brown), are doing fine.  Congratulations Purva and James!

Landscaping, gardening?  Those must be the lame, pre-labor, post-to-future articles.  OK, so they’re not that lame, the point is:

We want pictures.

We want pictures.

Oh well, good things come to those who wait.

About three or four times per month, I get to say the following: real estate is local.

To me, this is what makes writing about "the" real estate market much more interesting than it would be otherwise.  You see, there is no "the" real estate market — there are just lots of little local markets.  A given market at a given time may behave differently than how you would expect.  The reason may be either that it’s too small to be statistically significant, or because it just flat out doesn’t follow the rules (or both).

Based on my background writing about greater Sacramento County, I generally expect that most local markets around here will have

• Declined in price between 2007-2008.
• Increased in demand between 2007-2008.

In the Downtown Sacramento area (95814 and 95816), in contrast, what I find for July is that the market:

• Increased in price between 2007-2008.
• Decreased in demand between 2007-2008.

To be sure, the average sale price did drop 5.3% from July to July, from $486,849 in 2007 to $460,809 in 2008.  However, a more accurate indicator of price, sold price per square foot increased 4.8% from 2007-2008 downtown, with the average home fetching $284.53 per square foot in July of 2007 and $298.19 per square foot in July of 2008.

While most of Sacramento County was losing value from July to July, downtown Sacramento was gaining value, but losing buyer interest.  This year only eleven units sold in July, down 42.1% from last July’s 19 units.

Citrus Heights is one of many areas in Sacramento County where falling prices has fueled increased demand, and as a result, inventory has fallen to seller’s market levels (even if prices have not yet started to increase in response).

The average Citrus Heights home sold in July for $203,616, down 30.9% from last year’s average of $294,564.  Sold price per square foot fell somewhat more moderately, 25.5%, from $192.06 per square foot in July of 2007 to $143.00 in July of 2008.

In response to falling prices, some 82.5% more buyers purchased a home in July than a year ago, so last July’s unit sales of 63 homes climbed to 115 homes sold during July of 2008.  With increased demand over the last few months, Citrus Heights now enjoys low inventory numbers — 5.5 months if you base your average monthly sales on the last twelve months, or 4.4 months if you’re inclined to pay more attention to the last six months of sales.  Either way, having inventory as low as it is is a good thing — but we’ve yet to see the low inventory start to have an impact on prices.

I found a great buy on a four bedroom condo in Sacramento for a client recently.  Unfortunately, like many great buys, this one already had an all-cash, over-full price offer.  Probably a good future article would be one about what you should do if you’re looking for a bargain (and who isn’t?).

Here in the meantime are the condo I sent my buyer and two others for your consideration.  As always, please give us a call if you have questions at (877) 735-5657.

Four Bedroom Near Sac State This is the unit that had the over full priced offer, a four-bedroom, 1518 square foot condo listed for $129,000, which works out to be only about $85 per square foot.  This is on La Riviera Drive near Sac State — putting it just a few doors down from another condo the same client bought a couple of years ago. A lot of the units in this area are rentals to Sac State students.  Indeed, this is what first got my client interested in the area, because she had a daughter attending Sac State and was looking for a unit where her daughter and her roommates could stay. In addition to the low price, this unit also has fairly reasonable HOA dues at $165 per month.
Three Bedroom in Natomas This condo is one of the few I was able to find currently active that’s bank owned in Natomas, at a very popular condo Bella Rose subdivision on East Commerce Way.  Built in 2004, this condo is listed at $129,900 and features granite counters, 3 bedrooms and 2 baths, with two parking spaces (one covered, one not).  The subdivision features a pool, spa, media room, and a gym. The HOA dues on this unit are $204 per month.
Three Bedroom in Gold River Another good buy is this three bedroom unit in Rancho Cordova / Gold River, listing for only $106,500, or only $76.84 per square foot.  This is another good area where I’ve had investors buy in the past, and the prices have come down nicely in recent months, making it a better investment than ever.  HOA dues on this unit are $194 per month.

Like many Sacramento area residents, my wife and I are Bay Area transplants.  We moved here from Cupertino in 1996, and for the most part, I haven’t regretted that decision.  At the time, homes cost less than the do now — believe it or not — and they cost a LOT less than in the Bay Area.  Since then, homes have gone up enough to become unaffordable here, and they’ve since come down quite a bit, though they haven’t reached 1996 standards.

Our decision to move to Sacramento because we could afford a home out here led to owning a couple of dogs.  I like that.  Man’s best friend and all.

The thing I don’t like about Sacramento, though, is the weather in July and August.  As I write this, for example, Weather Underground tells me that it’s 97.5 degrees in Sacramento (95.5 degrees where I live in Cameron Park).  Today’s forecast tells us that we’ll get up to 101 to 107.

Note for you folks out of the country:  We use Fahrenheit here.  101 to 107 is pretty darned hot, but it’s not over the boiling point of water here.  Honest.

Sacramento’s average high temperatures for July and August are a bit balmier than that — 94 degrees in July and 93 degrees in August.

Those of you who’ve lived on the humid east coast may find those numbers alarmingly high, but they’re not too bad given the dryness out here.

In contrast, 107 degrees pretty much is too darned hot either way.

The bright side:

• I don’t live in Phoenix.
• August is almost half over.

I have a new friend in Toronto, Andrew LaFleur.

Andrew was good enough to give me a blog roll link and he sent me a nice note.  He’s the author of two blogs. In one, he focuses primarily on New Condos in Toronto.  I hope that’s going well — I know the whole preconstruction condo thing here became somewhat emblematic of the market downturn.  But the thing about the Canadians is — well, who knows?  They have their own country up their and everything.  So again, I hope things are going well, since Andrew LaFleur is my new friend in Toronto.

Andrew also blogs about Toronto real estate on BlogTo, and you have to go check out this post on a home that’s not in Brooklyn, but instead is the smallest house in Toronto.  This is pretty cool!

I wonder where the smallest house in Sacramento is.  I’ll have to go searching…

I was hoping to find a Youtube video about this year’s California State Fair in Sacramento, but what I happened upon instead was the clip above from an earlier State Fair with Wierd Al living in an Amish Paradise.

I don’t know if that’s better or worse.

The State Fair will be happening from August 15th to September 1st.  For more details and prices, check out the State Fair web site.

And here’s a State Fair Video you can watch from the Sac Bee.  The Bee tells us the Fair this year faces hot weather and a cool economy.  Well, the economy part is a bit beyond our control, but as a tip to the Fair people:  you always face hot weather.  If you held the Fair in October you’d have better results!

Your friend,

John Lockwood

Realtor® & Weather Consultant

I haven’t written much in the last few days, but today is the day I get my groove back, such as it is.

There have been a few reasons why I’ve been off my usual Elite Properties web site thing of beauty feed lately.  The first reason is that recently all my blogs got hacked (read more here).

Don’t we all just love Internet criminals?  Sure we do — we love them every bit as much as regular criminals.

At around the same time that these ne’er-do-wells were making up two days of security-related work for me to do, I was disabling the comments here.  Partly I got tired of the noise-to-signal ratio, and partly I was inspired to react to the smug hyperbole of the article, Without Comments Your Blog is a Web 1.0 Website.

No, without comments my blog is an efficient content management system.  Or better yet, it’s a better blog, because now it’s a place where someone who takes credit or blame for his work writes something that may or may not be credit-worthy or blame-worthy.  Indeed, as we learn from Joel on Software, a blog is very much a blog without comments, at least according to the guy who invented them.

The most disheartening development over the past few weeks, however, has not been the prevention of anonymous drivel, but the seasonal downturn in the number of web site inquiries from real people.  Over the last week or two it seems that the number of serious inquiries has slowed to something of a trickle, so if other companies are slowing as well, I expect to see a downturn in the September numbers.  (July’s volume figures bested June’s, which I didn’t expect — the jury’s still out on how August will shape up).

It’s time to get another part time job as a Chippendales model to tide me over until next year!

Sacramento’s Arden / Arcade Creek area posted deep losses in value from July to July, with only a moderate increase in volume to show for it.  This July the average home sold for $234,387, down 45.8% from last year’s average of $432,437.  Since this year’s home was substantially smaller than last year, some of that drop is an artifact of smaller homes being sold.  On a sold price per square foot basis, Arden Arcade lost 35.4% of it’s value from July to July, starting at $264.50 per square foot last July and coming in at $170.97 this July.

60.4% of the homes that sold in July were foreclosures, while short sales accounted for another 8.8% of sales.  Unit volume is up 4.6% from last year in July.

Here is the latest breakdown of real estate prices for all residential homes (including condos), in Sacramento County, Placer County, and El Dorado County.  Figures cover approximately the last 45 days of sales and are based on Metrolist data.

Sacramento County

Placer County

El Dorado County

Background:  The Foreclosure Prevention Act

On July 30th, President Bush signed H.R. 3221, also known as the Foreclosure Prevention Act of 2008, into law.   There are a ton of provisions in this legislation.  Before we get into the tax credit, let’s briefly look at some of the less buyer friendly aspects.  The bill eliminates down payment assistance programs like Nehemiah effective October 1, 2008.  (Though as I wrote about earlier, Nehemiah was something of a mixed blessing even when it was around, since often buyers getting the down payment assistance were competing for  low-priced, bank-owned homes with other buyers who were financing less than 100% or paying all cash).  Another bill, H.R. 6694, seeks to undo these provisions and restore down payment assistance programs like Nehemiah and AmeriDream.

In addition to eliminating third party down payment assistance programs, the bill raises the down payment for FHA loans from 3% to 3.5%, but (fortunately), allows the down payment to be gifted or borrowed from a relative.  (If it’s borrowed and secured against the home, it has to be in subordinate position to the FHA loan, and the total amount secured cannot exceed 100% of the value of the home).

The Tax Credit — An Interest Free Loan From The IRS

While on the one hand taking steps that make home ownership somewhat more difficult, on the other hand H.R. 3221 had at least one provision that’s great news if you’re a first time buyer buying between April 9, 2008 and June 30th, 2009.   First time buyers who buy during this period will be eligible for a tax credit of 10% of the value of their home (up to $7,500).  Since almost all single family homes and many condos in our area cost more than $75,000, most buyers will be eligible for the full $7,500 credit.  The credit must be paid back over 15 years, but since you only have to pay back the amount of the credit, what this means in effect is that you get a 15-year, interest-free loan from the IRS.

The National Association of Realtors® has put together an excellent FAQ that goes into the first time buyer tax credit in detail.  I think this FAQ will answer most questions you may have about this credit, but if you need additional information, please call us.

Can You Use This as a Down Payment?

One of our web site visitors inquired the other day whether there’s any way to use the tax credit as a down payment.

One answer to this is no, not really.  However, those of you who are buying the way my wife and I did — with help from the First National Bank of Mom and Dad — may note that a tax credit of $7,500 next year is pretty close to the amount of a 3.5% down payment on a median priced Sacramento County home this year.  In other words, if mom and dad will give you the interest free loan for year one, the IRS will give you an interest free tax credit the following year to pay them back with, and then you can pay the IRS back over the next 15 years.

For additional reading on H.R. 3221, see the following links:

Key Provisions of H.R. 3221

H.R. 3221 Overview (With Links to Summaries and Full Text)

Elk Grove is one of those areas with many foreclosures, where the competition for these low priced homes has become very fierce.  In July, for example, the average home sold in Elk Grove for $272,767, slightly above the average list price of $271,974.  Foreclosures are in short supply at about 1.5 months of inventory, and it is bank foreclosures that made up the lion shares of the sales in Elk Grove in July at 74.3% of the total.

Homes are selling below the Sacramento County average in Elk Grove, coming in at an average of $130.36 per square foot, which is down 32.6% form last year’s average of $193.51.  Sales have more than doubled since 2007, rising 150% from 126 units sold in July of 2007 to 315 units sold in July of 2008.

Below we have volume and price data for Elk Grove:

Unit Volume Data

 Price Data

 Inventory (Based on 12 months of prior sales)

 Inventory (Based on 6 months of prior sales)

Though not immune to the overall market downturn, sellers in Folsom are in a much better position than their counterparts elsewhere in Sacramento County.  Non-distressed sales still made up some 71.1% of all sales in July — more or less a mirror image of Sacramento County as a whole, where non-distressed sales comprised only 22.3% of the total.

Partly as a result of the relatively low number of foreclosures, prices in Folsom have fallen off less dramatically than in other areas of the county.  Sold price per square foot fell 11.1% in Folsom from July to July, from $229.38 in 2007 to $203.89 in 2008.  This July the average home sold in Folsom for $440,997, down 11.6% from last July’s year’s average of $498,793.

Although the increase in demand this year has been less dramatic than in other areas, unit volume has still increased 12.2% in Folsom, from 74 units sold in July of 2007 to 83 units sold in July of 2008.  Even without a huge upswing in demand, however, buyers in Folsom have kept the inventory trimmed back nicely.  Currently there are 5 months of inventory (based on 12 months of absorption), or an even more healthy 4.3 months of inventory if you look at the absorption for the last six months.

Sacramento County’s market continued to be characterized by strong demand for bank owned properties and falling prices as banks continue to discount homes to move them off the books.  Once again, prices are down sharply from last year, but sales are up sharply. 

The average home sold in Sacramento County in July for $228,656, down 38.3% from last year’s average price of $370,770.  On a sold price per square foot basis, homes lost 35.5% of their value county-wide, averaging $217.74 per square foot in July of 2007 versus $140.53 in July of 2008.

Compared to last July, sales have more than doubled in Sacramento County.  996 units sold in July in 2007, versus 2024 (reported so far) for July of 2008, an increase of 103.2%. 

This is the sixth month in a row that our unit volume has increased substantially over last year.  Indeed, with today only August 4th, Metrolist affiliated agents and brokers have already reported 10,338 sales for Sacramento County this year, so we’re on track in the first couple of weeks of August to have sold more homes than we sold in the whole calendar year of 2007 (10,698 homes).

Inventory in Sacramento County is currently at 7.1 months (or 5.5 months if you use the more recent sales for the last six months as representative).

Some of the data on which this report is based is in the tables below.

Unit Volume Data

Price Data

Inventory (Based on 12 months of prior sales)

Inventory (Based on 6 months of prior sales)

The past few weeks have not been kind to many of my friends at  title companies.  Last week I learned that a friend of mine — the office manager for a Placer Title Branch near me who’d been there twenty years or more — had just been laid off.

This morning I met with a sales rep for another Placer Title service area who wanted to meet me after a very successful escrow one of my agents and I had done with one of her escrow officers.   This was an escrow with some real title problems that needed to be addressed — and the escrow officer did a great job on it. 

In an ironic twist, the new sales rep I met from Placer Title and the escrow officer who’d done such a good job had recently moved to Placer Title after having been laid off by Commerce Title.

To add insult to irony, while I was waiting to meet with the new Placer Title rep, I learned from another real estate broker that another company I’d worked with in the past — Citrus Heights based Financial Title — had just closed its doors in California.  You can read more about that closure here.

Some Background

As the greater Sacramento market has contracted, at least two factors have combined to make area title companies particularly vulnerable.  First, one of the mainstays of title company revenue — home refinances — have declined sharply as declining property values have eroded the equity that so many homeowners traditionally tapped.   Secondly, many of the escrows we’re doing now are REO escrows, and many of the banks with REOs to sell are sending all their escrows through a single (often out-of-state) title company.  We’ll have more on the legality of this and the impact on the buyer in a future article.

June was a good month for Sacramento’s Pocket Area (95831), with a combination of strong sales volume and low inventory.  Of course there’s the usual background of a declining market to talk about, but the Pocket’s June numbers compare favorably with the county as a whole.

In June, the average home sold in the Pocket area for $355,027, down 8.8% from last year’s average of $389,110.  Sold price per square foot fell more sharply, down 16.3% from last year’s $221.95, to an average of $185.82 per square foot this year.  Some 54.3% of all sales in the Pocket area were non-distressed in June, compared to 25% for the county at large.

Even though the Pocket area has held its value well from June to June, it still posted a respectable 59.1% increase in sales volume from year to year.  Of course, the Pocket area is not all that huge, so statistical significance is low.

The other good news for the Pocket area is that there are only 3.9 months of non-distressed inventory, and only 3.7 months of inventory overall.

The tables below give more information on the Pocket area.

Unit Volume Data

Price Data

Inventory (Based on 12 months of prior sales)

Inventory (Based on 6 months of prior sales)

With slightly fewer foreclosures than Sacramento County overall, Fair Oaks has seen prices erode somewhat less swiftly.  In that respect, it’s behaving much like Folsom or many areas in Placer County or El Dorado County.

In June, volume rose just slightly (3.1%) from last year.  This June, 42.4% of sales were non-distressed sales, versus 12.1% short sales and 45.5% REOs.  The average home sold for $345,991 in June, down 19.5% from last year’s average of $429,625.  On a sold price per square foot basis, Fair Oaks homes lost 18.6% of their value during this time, selling for $230.91 per square foot on average in June of 2007 versus $187.93 on average in June of 2008.

Inventory in Fair Oaks is rising over the last few months, and currently there are 7.5 months of inventory overall.

The real estate market in East Sacramento rallied somewhat in June.  The average home sold in East Sac in June for $574,158, up 8.2% over last year’s average of $530,568.  Sold price per square foot was down 10.3%, however, from $373.14 in June of 2007 to $334.79 in June of 2008.   The news is not all grim, however, since June’s figure has increased since May, when sold price per square foot came in at $299.79.

Non-distressed sales continued to predominate in East Sac, accounting for 77.8% of all sales in June.  In active inventory, short sales and foreclosures make up about 11% of the 97 available homes in East Sacramento.

East Sacramento is not a huge area, so few homes sell in the best of times.  However, unit sales are definitely down this year, with eighteen homes selling in June versus 19 the year before.  Moreover, average sales over the last six months have been more sluggish than over the last year, at thirteen units on average versus sixteen, respectively.  Inventory, which was low when we reported on it last year, is now up to about 7.1 months.

Related Articles:

East Sacramento Real Estate Market (Update for May 2008)

First Quarter 2008 East Sacramento Real Estate Market

North Sacramento and Del Paso Heights (95815 and 95838) are areas hit hard by foreclosures, which have experienced huge price declines over the last year.  Sold price per square foot fell fully 44.4%,  from $184.73 in June of 2007 to 102.74 in June of 2008.  This year’s average home sold for $122,860, down 48% in a from last year’s average of $236,061.

With the huge drop in prices, unit volume has increased 213.9% over last year’s figure, with 113 units selling this June versus only 36 last June.  Nevertheless, inventory is still high at 8.2 months, so with short sales and foreclosures making up some 81% of outstanding inventory, I expect to see additional price cuts going forward.

REOs (bank foreclosures) made up 85% of all sales in June, with short sales comprising an additional 3.5%.

Along with Natomas and Antelope, Elk Grove is one of the areas that has been hard hit by foreclosures, and where prices have dropped dramatically in response.  Paradoxically (or maybe not), it’s also one of the areas I expect to see on the leading edge of the market recovery. 

Sold price per square foot has fallen 29.4% over the last year, from $193.70 in June of 2007 to $136.68 in June of 2008.  The average home sold for $283,840 in June of 2008, down 32% from last June’s average of $418,937.

With the huge price cuts, demand is up 88.5%, with 139 units selling in June of 2007 versus 262 in June of 2008.  With the increase in demand (especially on the better priced REOs), homes are selling quite close to list price, with the average discount from list price being only about $900 (or 1/3 of 1%).

Distressed sales, which accounted for less than 20% of sales in 2007, now account for 81.7% of all sales.  There are 1.6 months of foreclosure “inventory”, and enough short sales to support sales for about another three months.

Related Articles:

Calling The Bottom

Antelope Stampede — Are Prices Bottoming Out?

Natomas Real Estate — Sales Up 130% with Heavy Competition