Do you remember when the duplex market was sizzling in 2004 and 2005? Properties were selling for $400,000 – $500,000 like it was nothing. Take 7996 Marsala Court in Citrus Heights, for example. I came across this sale recently during comp research for a duplex I appraised. In 2004 this property sold for $460,000, and then in 2005 it sold for $513,500. After going through foreclosure in 2010, it sold on the open market for $221,000 in May 2011. The price difference is down over 50% from the peak, which is a very common scenario in the Sacramento area. Take a look at all duplex sales in Sacramento County on the graph below.
There is a very wide range of sales depending on the location of the duplex and of course potential for rental income. Sales in the upper tier tend to be units in Land Park, Midtown and East Sacramento, whereas duplexes around $50,000 tend to be located in North Sacramento and other portions near South Sacramento. What do you notice from the graph above? Any insight?
Sacramento Real Estate Investment Specialist Joel Wright unpacks the market:
In the last 3 ½ months of 2008 80% of properties sold were foreclosures. During the most recent 3 months in 2011 foreclosures only represent 36% of the sales. Also short sales are happening now representing 24% of sales, which they were not 3 years ago when they only represented 8% of sales. This is a distinct shift in the market. Another distinct shift is that the average price has dropped 17.5% during that time from $186,500 to $153,500. So while the graph shows the majority of sales occurring under 200k, the ones selling recently in 2011 are almost 20% cheaper.
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