Sacramento Real Estate Views

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The Sacramento Regional Real Estate Market Is Shifting!

Homes for Sale Continues Increase

The total number of homes for sale in the Sacramento region has been steadily increasing all year.  Now that the federal first time home buyer tax credit is gone and the California tax credit is almost gone, buying has slowed.

Where does that leave our market?

As the inventory continues to increase, there will be downward pressure on values.  I’m seeing that in the offers I’m submitting.

I have a client who submitted offers on 7 bank owned homes in Sacramento.  Each offer was roughly 8% to 12% below the listed price but in line with the average market value.

In the past, none of the sellers would have been responded to any of these offers.  We got responses from 6 of the 7.  If they had higher offers, would they be responding to a low offer?  No they wouldn’t.

The real estate market is shifting.  The lower end investment grade homes are building up.  We could see another dip in our housing market before the end of the year.

Frankly, I’m happy to see it slow down and become a bit more balanced.  Buyers will have a greater selection of homes to choose from and prices will hold or decline slightly if everything stays similar.

Homes For Sale By Status

These percentages haven’t changed much over the last couple of months but the numbers have  increased.

Bank owned homes, or foreclosures, are just 18% of the available homes for sale.

Foreclosures are being cancelled in record numbers in favor of short sales.

Short sales occupy 29% of the market and the remaining 54% are regular real estate listings.

The number of regular real estate listings out there seems high considering there isn’t much equity left in the marketplace.  That said, it’s good to see.

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Tags: Homes For Sale, Rocklin, Roseville, short sale

Total Number of Homes for Sales Increases

Is The Sacramento Real Estate Market Slowing Down?

Every month this year the total number of homes for sale has been increasing.  With tax credits offered by both the state and federal governments, it’s been a boom for first time home buyers over the last year and a half. (they represent over 50% of the home sales over that time)

Many economists and industry experts have been saying to expect a “double dip” in the housing market with second dip still to come and eminent now that the federal tax credit has expired with no sight of there being another extension on the federal level.

Experts have also said that interest rates would be going up as the fed is all but done buying mortgage backed securities thus keeping the interest rates artificially low.

While sales numbers since the 4th quarter of 2009 have been steady, seasonally adjusted, the total number of homes for sale has been increasing.  Is this the beginning of the slow down in sales that industry analysts have been predicting?  Or is it just the seasonal increase that we see most every spring building up to the “selling season” before summer begins?

If inventory levels continue to increase and sales just stay where they are, we could see the second dip in our market that further depresses values.

Local Economy Is Slow To Recover

With unemployment in our region at or exceeding 12.5% and the state of California, the largest employer in the region, teetering on the verge of bankruptcy, it doesn’t make sense that the area would see a quick housing recovery.

Yet, many areas in the lower price ranges have increased in value and sales have been brisk throughout the region due to the affordability factor.

Now that the tax credits are coming to a close, I would expect that we’d see a slowdown in sales in the Sacramento real estate market.  That said, I don’t feel that we’ll experience another “crash” so to speak.

It feels like the dip we’ll see will be more shallow than last time, if there is a dip at all.  We’ll probably experience more of a slow down and a subsequent flattening rather than a dip.

The Sacramento region has taken a larger hit in the housing downturn than most other areas of the nation excluding Nevada, Florida and Michigan where losses have been similar to ours.

While I have no crystal ball and can’t predict anything and can only speculate like the rest of the industry analysts, I’d say that until we straighten out the economic mess in the state, the Sacramento region real estate market will be on unsteady ground.  That said, housing will plod along without much in the way of gains for some time to come.  I hope I’m wrong.

A stretch? Well…no, LOL but at least I’m here following the market and keeping you updated.  What’s your agent doing?

Thanks for visiting SREVS.com!

Tags: homes for sale sacramento rocklin roseville

Major Design Renovation

Thanks For Your Patience

For some time, I have felt that this site needed a face lift.  I wanted it to be more user friendly so that visitors could easily find what they were looking for.

Well, we’re in the process right now of the finishing touches of that overhaul but were not quite done.   In the interim, please forgive the mess and know that everything you might be looking for is here.

The video is inaccurate as it pertained to the old design, that will be redone shortly as well.

If you can’t find what you’re looking for, please let me know and I’ll direct you to the right place.

It should be about another week to completion.  Thanks much for your patience.

Thanks for visiting!

QUICK STATS – Sacramento County Homes for Sale

Short Sales, REO’s and Regular Homes for Sale

I get questions all the time about what percentage of short sales, bank owned (aka REO) homes and regular real estate listings there are in the market.

It seems like all there is out there right now is short sales but surprisingly, this isn’t the case.  What’s happening is when a home that isn’t a short sale or bank owned comes on the market, it’s snapped up so fast that most don’t see it come up.

I know in our office, when a home comes up that is regular real estate it goes very quickly.  No fuss, no muss type listings.  Very easy to get done in comparison to dealing with any bank.

As of this writing, the total number of single family homes for sale in Sacramento totaled 3854.  These are homes in active status’ in the MLS.  Only about 35% of the listings are short sales which was surprising to me as that’s all there seems to be available.  Coming in just over 20% of the listing inventory are bank owned homes or REO’s.

The remaining 45% of homes for sale are regular real estate.  But understand this – 55% of all single family homes for sale in Sacramento County are in some form of a distress sale.  Wow..

Got questions?  Feel free to contact me anytime.

Thanks for visiting!

Tags: homes for sale sacramento rocklin roseville

HUD Lifts “Flip Rule”….For Now

90 “Flip Rule” Gets 1 Year Moratorium

In an effort to protect home buyers against investors buying substantially below market and selling a home at inflated prices, HUD instituted what’s known as the “flip rule” preventing federally insured (FHA) financing on any home with 90 days of the last sale date.

Supposedly, this was to protect “unsuspecting” home buyers from paying more than the home was worth.

While it is highly unlikely that this “flip rule” did anything more than delay getting homes sold in a more expedient manner, it has been given it’s own year long moratorium unless the FHA commissioner extends it out further.

There are so many other safeguards in place to protect home buyers, like appraisers who will subvert values out of fear as they have been wrongly accused, in part, of creating the housing mess, that the flip rule was completely unnecessary and prolonged the time that a home sat vacant costing sellers money in the process.

While FHA home loans weren’t the only loans available, private lenders also followed the HUD guidelines making it difficult for investors to purchase property, repair and resell within 90 days of purchase.  This is part of the reason, among others, that all cash buyers are preferred over financed real estate transactions.

Lenders are knee jerk mode.  Getting a loan is tougher than it’s ever been so this is a welcome sign for buyers and sellers.

Moratorium Guidelines

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Tags: investment property sacramento

Bank of America – Loan Modification Shenanigans

B of A Sells Potentially Troubled Loans?

Lately, there has a been a lot of talk online through blogs, NPR and other media outlets about the morality of a homeowner walking on their mortgage holder when they find out that their home is hopelessly underwater and won’t be appreciating to what they owe for years.

My contention is the decision to walk on your mortgage is a personal, financial decision and that morality has nothing to do with and shouldn’t enter into the decision to walk or stay.  Morality, in my opinion, doesn’t apply to this situation although lenders and the government would like you to think that it does.

Here is a story from a close personal friend of mine regarding an example of how morality definitely doesn’t enter into financial decisions.

Paying On Time Got Me Sold!

I’ll call my friend Tom.  Tom calls me, in fact I’m on the phone with him as I write this, and tells me that he is financially strapped but that he’s made his mortgage payments on time and has never missed although his family is struggling.

Tom says that he contacted his lender, Bank of America, and submitted loan modification paperwork to see if there wasn’t something the lender could do to ease the financial strain that his family is under.  In the loan modification paperwork is all of their financial information to substantiate his family’s case.

45 days goes by and they receive a letter from Bank of America that their modification paperwork has been received and that they will be in touch with him.

More time goes by and there was no word from the lender as to the status of approval or disapproval.

Last week, he got a letter from Bank of America that their loan had been sold to another lender!  Bank of America, seeing that on paper they could demonstrate that Tom and his family were a good risk, sold the loan to another lender.

What Bank of America likely did was see that there was a potential for this loan to default as Tom and his family were asking for a loan modification and had their current financial situation in front of them.

Seeing that there was a potential that defaulting could occur, they sold the loan to another lender cause it looked good on paper.

While selling loans is commonplace in the secondary market, it usually happens early in the life of the loan.  The loan that Tom and his family had with B of A was seasoned.  They have had this loan for years.

There’s the morality of financial dealings.  This constitutes an immoral act by definition to some.  My take is that it’s a calculated, smart financial decision!

I wouldn’t be surprised if this is going on throughout the industry.  Lenders offing potentially bad loans to investors who are none the wiser.  Sweet!  I know who I won’t be banking with.

By the way, isn’t the image here just perfect!

As a side note, I told Tom that this could actually work in his favor as I know B of A has been brutal to deal with in this entire crisis yet post billions in profits.

Thanks for visiting!

Tags: loan modification

Underwater Mortgages: Should You Walk Away?

Over 1/3 Of California Mortgages “Underwater”

I was surfing some of my favorite blogs today and ran into an article by Lori Turoff from HobokenRealEstateNews.com.

Lori does an excellent job on her site and I’ve gotten many great ideas from her and used them here.  Go by and visit sometime.

The article, from the NY Times Online, click here,  is about how it used to be a moral question as to whether or not a homeowner, hopelessly “underwater” on their mortgage, should walk away from their home or continue to pay on an asset with little or no hope of recovering equity in the near term.  (The term “underwater” means that the borrower owes more on the home than the home is worth.)

The Scenario

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Tags: market commentary