Sacramento Real Estate Views

The Calm Before the Storm

There is a Glut of Inventory Coming

A week or so ago, I wrote an article on the foreclosure rate dropping 61% from August to September due to a law that the State of California created to stem the tide of foreclosures in our state.  The likely consequence of this was that foreclosures, while some will be averted, would be backlogged and the Sacramento region would be in “foreclosure constipation”.  Well, folks, that’s what we’re seeing.

Yesterday, the team that I’m on had to bring in additional people to handle all of the BPO’s (broker price opinions) that we had to get done on homes given us by the bank.  We did 55….in one day.  55 BPO’s in one day.  That is simply incredible and a testimony to the fact that government might want to think twice about intervening in this mess.  A pipe dream I know but look at what’s happening here.

An Increase in Inventory at Just the Right Time….For Who?

Traditionally, this time of year, things begin to slow down, inventory decreases and values tend to hold their own without much appreciation or depreciation due to the lack of inventory.  Not this year.  No this year, the State of California has guaranteed you that you will lose more value on your home over the holidays.  Merry Christmas!

I hate to sound pessimistic but it’s the season for it, right?   Here’s the formula:

Beginning in September, the State of California required that lenders wait 30 days prior to foreclosing on a home to encourage working with homeowners to help them stay in their homes.  How this is working out is that it just delayed the process for the majority of borrowers and didn’t have the effect that the State was hoping for.

So, there are Moses knows how many homes that were delayed in hitting the market in September.  Now, they will all hit at one time.  The wrong time for our market.  This “help” will end up having an adverse effect on the entire region rather than a positive effect as the legislature had hoped.

A glut of inventory coming on the market just before the slowest time of the year.  To encourage anyone to buy at this time of year prices are going to have to come down due to the natural, seasonal decrease in buying activity.

I’ve already seen this.  I’ve been contacted and am, as I write this, faxing off 6 offers on various homes in Sacramento for a high profile buyer who has a couple million to throw at Sacramento real estate, all of them below list price, all cash, close as soon as you can.

The result here is that our team listing inventory may quadruple over the next couple of weeks/months and there will be plenty of homes on the market for everyone to get a piece of.  Unfortunately, it will cause prices to decrease in the Sacramento region.

The Banks are in Trouble

You’ve seen the collapse on Wall Street.  The banks are wanting out of the assets to acquire additional money to lend.  Carrying assets on their books is a bad thing for the banks and they are going to want to move inventory.  In the slow time of the year, this can mean a decrease in the price that homes sell for.  I just checked a home for a client that had a $70K price decrease all at once.  When was the last time you saw that?

I just got a contract approved at $50K below list price!

Hold onto your hats folks, this could be a great holiday season for the investors and home buyers alike.  Need an aggressive agent to help you get into a home or purchase an entire city block?  Please call or email me.  I can help you as well.  Unlike many lazy agents, I work this market and will write any offer unless it’s ridiculously low.  I write them low, I just wrote 6 that way.  My team carries many listings and plenty of opportunity for buyers in every category.  Let me know if I can help you.

For more articles about Sacramento real estate, please visit my other site CapitolCityForeclosures.com.

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Tags: bank owned homes, homes in sacramento, sacramento real estate, sacramento real estate agent

This entry was posted on Thursday, October 23rd, 2008 at 3:17 pm and is filed under Real Estate Market Commentary. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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