Why is it that everybody but the Sacramento media seems to know that for homes under $300,000, the Sacramento real estate market is a seller's market with buyer's market pricing? When I talked to the reporter from FOXNews yesterday, he was appalled when I gave him the stats from Trendgraphix.
First he waved a newspaper ad at me that screamed Bank Foreclosures in the headline, listing 50 or so homes. A few homes were priced under $25,000. "What about these?" he asked. "Can anybody buy this home for $25,000?"
Most likely, I answered, somebody already did. By the time you read about it in the newspaper, that home is gone. Notwithstanding, many of the homes around it may be boarded up. That home may have the copper plumbing torn out, the Romex ripped from the walls and no appliances.
The biggest problem facing buyers in the under $300,000 market in Sacramento is no inventory. There is very little for sale. If an attractively priced home in a desirable location comes on the market, it will receive multiple offers. Pricing doesn't mean much because many of the list prices are below market value. Buyers bid up that price.
It's sort of like feeding the ducks at McKinley Park. You toss a few bread crumbs in the water and 30 ducks come swimming, pecking at each other, pushing the smaller ducks out of the way as the bigger ducks jockey for the food.
An agent in my office called on Sunday to ask if I was planning to write an offer on a house her buyer wanted. She saw my card at the house. She knew the home was underpriced. Trying to be helpful, I attempted to discourage her from making a bid for her FHA buyer because my buyer was paying cash. And cash wins. There were dozens of offers on that house, and my buyer did indeed win the offer.
Take a look at the chart above. It shows the REO Market in Sacramento over the past 15 months through February. Look at what happened in February: the pending sales have surpassed the homes for sale. Pending sales in February of bank-owned homes totaled 1,377. The homes for sale are 1,339. If you want to buy a bank-owned home in Sacramento, my advice is to jump into the pond and start fighting before all the bread crumbs are gone.
The Short Sale Savior, by Elizabeth Weintraub, coming in June 2009.
Image: Trendgraphix, licensed exclusively to Lyon Real Estate agents.
---
Certified HAFA Specialist
My Sacramento Real Estate Listings
Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout the four-county Sacramento area. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. Broker-Associate at Lyon Real Estate. DRE License # 00697006.
The Short Sale Savior, by Elizabeth Weintraub, available at Amazon.com.
Lyon Real Estate is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.
Photo: Unless otherwise noted in this blog, the photo is copyrighted by Big Stock Photo and used with permission.
The views expressed herein are Weintraub's personal views and do not reflect the views of Lyon Real Estate.
Disclaimer: If this post contains a listing, information is deemed reliable as of the date it was written. After that date, the listing may be sold, listed by another brokerage, canceled, pending or taken temporarily off the market, and the price could change without notice. It could blow up, explode or vanish. To find out the present status of any listing, please go to elizabethweintraub.com.
Great post, I love it! It shows how you cannot genralize about real estate. I say "It Depends!" so often I'm thinking about getting a button with the saying that lights up!
Elizabeth - I'm very interested in how your interview will be reported. Can't wait to see it if you can get a feed of it. You don't necessarily need to live and work in Sacramento to know what's going on there because for quite some time now, Sacramento has been getting a lot of press about it's foreclosure market. If I'm not mistaken, it's still considered the #1 city in the US for foreclosures.
Although, I'm down south here in Ventura County, I'm seeing some similar signs in this market too, especially in the lower end market (<400k). Like your associate, most of my clients are FHA buyers who can not compete with all and/or mostly cash buyers/investors. It's so discouraging for my little FHA clients because all the relatively decent looking REO's are scooped up in days with multiple offers and my clients are left to bid on the run-down, dilapidated dumps that no one else wants.
These are not good properties for my clients because after spending just about everything they have to get into the house, they have nothing left to repair that dump and make it habitable. In one case, I have been able to convert the client to an FHA 203k but for the rest, they can't afford to finance the repairs into a higher loan amount and still make a competitive purchase offer.
It's funny how things change... here there is so much hysteria about how forclosures are ruining our market... but they have CREATED our market. They have definately invigorated buyers into coming out of the woodwork, even tho they face uncertain times. and now that we have a shortage of REO's due to the moratorium, buyers are getting a feeling for what it's like to not have choices. Good post!
I'm laughing as I have been saying and I think I put it in a post. That we are in a Sellers Market for short sales and foreclosures. Multiple offers, competing.
It is sorta weird, on what hand you are telling the buyers to off low and one one hand you are advising them to do "hightest and best".
The news finds the exceptions and they buyers think it applies to all properties.
Did the reporter waving the newspaper at you while being appalled make the video cut?? Now that I want to see.
Elizabeth Here in Northern Virginia 47% of the sales in February were homes under 200K. The homes over that languish - everyone wants a "deal". Karen
Elizabeth: Seeing the same thing out here in Northern VA. Thought it was just lower priced homes, but even my single family listing went under contract quickly.
I've heard you alluding to your changing market conditions before, Elizabeth, but the graphic illustration is mind boggling, and VERY impressive. No wonder the reporter had a cow! LOL
Elizabeth - Don't you just love the way the lighter green bar, and the darker green bar, are getting closer together:-) It illustrates your "Seller's Market - With Buyer Pricing" statement perfectly!
This market is really weird. I've seen downturns before in the 1970s, 1980s and back to 1991, but nothing ever like this. I believe that prices would continue to fall if we had more inventory, but there is very little available to buy. What I'd like to see is the upper-end bracket pick up, but that's just not happening yet.
What I am seeing is even in the less desirable areas of town, those areas plastered with bank-owned for sale signs, the streets are returning to normal, and the signs are coming down.
Once the moratorium on foreclosures lifts and more of the loan modifications are rejected, I imagine we'll get a bit more homes on the market.
The reporter was using "mother in law" research....taking a tiny sampling of any opinion and declaring it universal...ah but you showed him what more realtors SHOULD show...knowledge is power and you have to look at the big picture ! Blog on !
I really like the Trendgraphix reports you used here. I wonder if these are available to individual agents. Much better visuals than my home grown ones!
Hi Gay: You can contact Lyon Real Estate: (866-596-6466). I know Trendgraphix is licensed to agents in other states.
Hi Elizabeth --
I did follow up with Trendgraphix and found out that they only allow subscriptions to the broker/office, not to individual agents. Rats. So back to doing them myself.