Sacramento Foreclosure Homes Still Up, but Prices Are Rising

by Peter Vernon on cities

Sacramento foreclosure homes are still surging, but prices are rising, based on reports from the Sacramento Association of Realtors, the California Association of Realtors and research firms.

In the counties of Sacramento, El Dorado, Yolo and Placer, the percentage of mortgages in default has risen to 12.29 percent in January 2010, a jump from 11.99 in December 2009 and far above the 7.64-percent level in January 2009. The January 2010 rate was higher than the statewide rate of 11.64 percent and the nationwide rate of 8.66 percent.

All throughout 2009, the default rate increased as the unemployment rate climbed up from around 6 percent to surpass the 12-percent level. According to the California State University-Sacramento and the Chaptered Financial Analyst Institute-Sacramento, joblessness is expected to rise further to 13.5 percent in 2010.

Despite the high default and unemployment levels, the median sales price for homes in the 4-county Sacramento area rose by three percent in January year-over-year, climbing up to $174,830. The median though varies county to county, with El Dorado having the highest median at $310,000. The median price statewide was still high at $287,400 despite the still high number of California foreclosures.

Total sales of homes in the Sacramento area fell by 24.9 percent from January 2009 sales and by 29.5 percent from total sales in December 2009.

Meanwhile, according to an online real estate firm, in the city of Sacramento, sale of foreclosures still dominated the market, holding the average price level at $193,425.

It is not only the high unemployment rate that will push the number of Sacramento foreclosure homes to rise. The high percentage of mortgage borrowers with negative equity will also push more foreclosures. In the Sacramento region, more than 46 percent of all mortgaged homes in the area or 229,417 units were underwater as of the final quarter of 2009.

Sales and prices of new houses in the region were also affected by foreclosures. In February, nearly 90 percent of new house sales were priced below $400,000; 41 percent were priced below $300,000; and 45 percent were in the price range of $300,000 to $400,000. Just 12 percent were priced between $400,000 and $500,000 and no new houses were priced above $600,000.

Nevertheless, according to Metrostudy analysts, the region will recover from record numbers of Sacramento foreclosure homes more quickly than most other large metro areas. The analysts said that the problem of overbuilding is not as grave in Sacramento as in other cities.

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