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The foreclosure limbo game in Sacramento

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I’m reminded of limbo when thinking about distressed sales in Sacramento County. Both short sales and foreclosures used to absolutely dominate the market several years ago, but nowadays they just keep going lower and lower and lower (like limbo). Let’s digest some market trends together below.

Short sales and foreclosures in Sacramento County - by Sacramento Appraisal Blog

Bank-owned sales used to represent over 70% of the market five years ago, but now they are only 4.7% of all sales in Sacramento. That is an amazing shift, don’t you think? Short sales have also seen a rapid decline as they have decreased by nearly 19% over the past 12 months so they now only make up 15.3% of all sales.

Short sales and foreclosures in Sacramento County - by Sacramento Real Estate Appraiser

It still sounds alarming to think that 1 in 5 sales in Sacramento County is either a foreclosure or short sale, but this is a significant improvement from five years ago when 84% of all sales were distressed (in the entire county). This is a good reminder that change takes time.

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Question: I’ve been seeing quite a few short sales sell VERY low. What are you seeing out there?

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Sacramento real estate sheds more foreclosures

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If the housing market was a reality TV show I’d say it was The Biggest Loser. Do you know that show? It’s the one where contestants weigh in at say 436 pounds and then shed a few hundred of those pounds to become very trim over time. Well, that’s sort of like what has happened in the Sacramento market – except we’re talking about distressed sales instead of pounds.

Foreclosures and Short Sales in Sacramento County - by Sacramento Appraisal Blog

The foreclosure rate used to be close to 50% several years ago, but now less than 5% of all sales over the past two months in Sacramento County are foreclosures. On top of that, short sales have also been trimming down as they’ve diminished by roughly 10% over the past year.

Foreclosures and Short Sales in Sacramento County Chart - by Sacramento Appraisal Blog

The Inventory Story: Despite distressed sales seeing a decline, housing inventory has been on the rise lately. This essentially means equity sales are what is driving the uptick in housing supply. Whether these are flipped houses that used to be foreclosures (or short sales) or home owners that were waiting for the right time to list as the market recovered, it’s nice to see more property owners in the “black” testing the market again. Ultimately inventory is still very low, but buyers can definitely feel the difference or shift that happens when a few hundred extra homes hit the market.

Inventory in Sacramento County - Graph by TrendGraphix

Any thoughts, questions or stories to share? Comment below.

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