Sacramento Real Estate Views

Buzz Word of The Year in Sacramento Real Estate

Last Year it was “R-E-O”

With all the moratoriums (I didn’t know how to spell “moratorium” until recently ) on foreclosures both in the state of California and nationwide, the amount of foreclosed homes has increased but not many of them are coming on the market.  Most of the REO/Bank Owned listing specialists inventories have been dramatically impacted by the banks holding onto homes rather than putting them up for sale.

Why?

In most areas of Sacramento, vacant but unlisted homes are everywhere.  Some streets more than others and some cities of the region more than others but they are there.  Why are the banks keeping these homes off the market?  Where is the flood of homes coming up for sale that will further depress the values in the Sacramento real estate market?

What would happen if they did put these homes on the market this year?  It wouldn’t be pretty, this much I know.

In California, the property taxes are reassessed when the property transfers ownership.  Proposition 13 limits the amount a home can be taxed to 1%, reassessment of no more than 2% per year on any given home. (Click here for more information on Proposition 13.)

I’ve not seen a property tax rate, just ad valorem taxes that is, higher than 1.01%.

With another significant increase in homes to sell, the values would surely drop.  This drop in values would mean that the cities, counties and state of California would receive less, much less, tax revenue.

Additionally, the banks who own these homes would lose even more than they have already.  The financial system could be dealt a crushing blow and the loss in tax revenue would be a financial disaster for the state who is already in financial crisis.

What’s the Solution?

All the carnage could be avoided with this years new buzz term.

“Bulk Sale”

According to a local title company, in bulk sales the value of any given property is usually hidden as the home is sold in bulk without a specific value attached to the single home.  Unless I’m very wrong, which is possible, the taxes would most likely be assessed at the last market sale recorded.  This would preserve tax revenues for the government and rid the banks of unwanted, non performing assets.

Additionally, the bulk sale would keep these home off the open market, lower inventory levels, create demand and the result of which would be an increase in values.

(Inventory levels are down 6% from the beginning of the year.)

An increase in values will make people feel like they have more money. When people feel that way, they spend.  This could help the economy recover.

It sounds simple but I’m sure it isn’t.

Being on one of the largest REO/Bank Owned real estate teams in the country, we’ve had many discussions about bulk sales and putting one together for investors.  We think this is going to be the year to do it.

Got questions?  Please feel free to call or contact me.

Thanks for visiting.

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Tags: real estate bulk sales, sacramento bulk sales

This entry was posted on Thursday, March 12th, 2009 at 7:49 pm and is filed under Foreclosure Statistics, 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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