Home Sales Continue to Grow in Sacramento, The Heart of Foreclosure Activity

There is a lot of interesting data in the following Sacramento Bee article in spite of the scary headline, "Sacramento County median home price falls to $195,000". From my point of view, the continuing strong sales numbers are still the top bullet point. Sales in the Sacramento region made their 7th consecutive month of strong year-over-year sales gains with sales 68% higher than in October 2007 and only 4% below very strong September numbers.

There are 7 counties in the Sacramento region and Sacramento county has been the heart of foreclosure activity pushing the median sales price down 35% in the last year. Two thirds of all sales in Sacramento county were foreclosed properties. The other counties in the region saw sales prices decrease from only 7% to 34%.

The strong sales numbers are approaching the levels of activity in early 2006. Available inventory is now down to less than 3 months supply, but the amount of bank owned property is the unknown variable. If government and lender programs to reduce the amount of foreclosures are successful, this market will turn around in a hurry. I think this quote sums up why sales activity is so strong:

The bad news is there’s a lot of foreclosures in the market. The good news is they’re selling,” said Pat Shea, Sacramento regional manager for Prudential California Realty. “Teachers, policemen, nurses – they can all buy houses now”.

Disclosure: None

Comments

[Urbane Gori...:]

I don't know Tim. You've been calling a bottom for several months now. Sacramento property values are still tanking every month and the list of foreclosures keeps growing.

I've stated in the past that I own property in Sac as well. All I see is a smaller and smaller 'Sold Listings' in the Sunday Sacramento Bee, Smaller and smaller prices every month and lately a spate of Foreclosure Auction Seminars. By the way; Did you hear about the 'Auction Tours'. They'll even drive a bunch of potential buyers around to look at these places.

Oh yeah! And Sacramento runs second to Stocton... See, Sacto can't even get that right.

jegan

2008 Nov 25 06:50 PM

[Urbane Gori...:]

Forgot to add.... You can get the local free paper 'Sacramento News and Review'. It carries a 2 page listing of foreclosures with the photo, the last property valuation **and** the base price now. Nothing like seeing a 4 bedroom home off of Florin, valued at $340,000, with a base price of $62,000.

jegan ;-)

2008 Nov 25 06:52 PM

[Tim Plaehn:]

I have not been calling for a bottom. I have noted the strong increase in sales over the last 7 months and have stated the bottom will have arrived when the median price stops falling. While nationally existing home sales are still falling places like Las Vegas, So. Cal and Sacramento are selling homes at twice the rate of a year ago.

The median sales price is skewed by the amount of foreclosed properties being sold. With 70% of sales as foreclosures in some areas, there is no way to calculate market values for homes of individual sellers. The banks are dumping properties at the best price they can get right now to the first qualified buyer.

Until foreclosures become a minority of sales median prices will probably continue to fall.

2008 Nov 26 01:11 PM