October 2008 Foreclosure Stats – Sacramento Real Estate

November 18, 2008

Foreclosures In Sacramento County Decline for 3rd Consecutive Month

The rate of notice of defaults filed has declined 39% since August but, as most professionals in the bank owned home side of the industry in Sacramento homes will tell you, this is a short lived trend.

The legislation passed by the State of California has delayed many homes from coming on the market and in the next few months, we will, in all likelihood, see a dramatic increase in homes to sell.  The result of this could be a further decline in home values across the region.

The Subprime Issue

The homes being foreclosed upon are no longer just those homeowners who got bad loans or who bought more home than they could afford.  The poor economy, lead by housing, caused the unemployment rate to rise and with those resulting job losses people who wouldn’t otherwise be affected by the housing downturn are losing there homes.  I heard a quote on the news that 25% of homeowners in the U.S. are underwater.  This means they owe more on their homes than they are worth.  That, from a historical perspective, is simply astounding.

More Than a Quarter Million Homes

Over 250,000 U. S. homeowners received notices of default in October.  Filings are up 25% nationwide over last year and this trend is expected to continue unless there is some unification between the government and mortgage companies on mortgage modifications.  While the banks are now working more with sellers to modify loans, there is still more that needs to be done to “stem the tide”, so to speak, of foreclosed homes.

Sacramento County Foreclosures

The graph illustrates the cities that had 60 or more notices of default filed against them.  All other cities in the region were under 60 notices filed.

I was asked by a potential buyer yesterday what the future holds for this market, how soon will it end and what did I see on the other side of this mess.  My answer was “who knows”.  The experts have all been wrong up to this point.  Gas was supposed to be $5 a gallon this summer, it never got to that and it was supposed to stop going down at $2.20 and that hasn’t happened either.

As the values continue to trend down and the transactions continue the current pace, the inventory levels will certainly begin to stabalize.  I’m am getting the impression that housing will lead us out of this mess as it lead us into it.  It will just take time.

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Related must read?  See Forth Hoyt’s article at SacramentoRealEstateTalk.com.  It’s a good one.

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