Where have all of the
Sacramento home listings gone?? I have a few theories...if you look at this graph you will see that in
Sacramento in the month of May 2012, there were 1,747 closed real estate transactions. You will also see that at the end of May, there were 2,503 pending sales, and only 1,697 active listings. WOW! If you compare this data to the the
statistics for May 2011, there were 3x the number of properties available and a similar number of closed sales.
Gee, I remember when I posted
back in September 2007 when there was 15 months of housing inventory on the market in Sacramento -- now THAT was a
buyer's market! Based on these current numbers for May 2012, we have LESS THAN ONE MONTH of inventory. Wow. My jaw may have just hit the floor...but I will say that it's pretty much the current "normal" to have multiple offers on every home listing within a couple days.
So those theories of mine...
Theory #1; Homeowners are not
selling unless they absolutely have to. Let's face it.
Sacramento County has been in a declining real estate market since the end of 2005. Our current median home value is less than half of value at the peak of our
Sacramento real estate market. People have tightened their purse strings and are not looking to
sell unless absolutely necessary, even if their home is worth less than they owe...as long as they can afford the payments. Similarly, (my Theory 1B, if you will indulge me) with interest rates so low, even homeowners with
Adjustable Rate Mortgages (
ARM's) whose payments have started adjusting from their initial 3/5/7-year fixed rate period -- their payments have not yet jumped several hundred dollars per month as they did in years past when interest rates were higher. Today's interest rates are SO low (like 4% or less!) that when those mortgage payments reach their adjustment time periods, their payments are actually decreasing slightly. If, and really WHEN interest rates climb, you will see those payments increase and no longer be affordable, and those folks will need to list their homes as
short sales, or they will ultimately default and you will see those listings as
bank repos in a year or two.
Theory #2; Many folks are keeping
their first homes as
rentals and buying larger homes. If you have good credit, good income, and some money in the bank -- there are some great buying opportunities right now. Many of the "move-up" buyers I am working with are not selling their current home in order to buy their next one. Similarly, there are a lot of
investors purchasing homes right now that are not selling a home in order to buy.
Theory #3; Many folks who are good candidates for
short sales are spending (wasting) their time attempting loan modifications. It seems that in the last 4-6 months there have been several new
loan modification programs introduced by the federal government. There are a lot of homeowners tied up in this process, which will ultimately be unsuccessful, and they will list their homes as
short sales eventually. Time is running out though for some of the
state and federal debt forgiveness tax laws though, so I am hoping they don't wait too long to list their homes as
short sales.
Theory #4; Many of those folks who are attempting
loan modifications are slowing down their lender's foreclosure processes. Many lenders will slow down their
foreclosure timelines while borrowers attempt a loan modification...so many homeowners are caught up in this process right now that foreclosures are a little slower to happen. The
loan modifications will be rejected in time, and the foreclosures will eventually take place...sense my optimism that the
loan modifications will be approved (insert sarcasm here)?
Theory #5; Some
foreclosed properties are being
rented out instead of sold. I suppose it could make sense that banks do not want to sell at the bottom of the market either? There are some large
property management companies that are
leasing out foreclosed homes on the bank or asset manager's behalf. They will eventually be sold, but in 1-3 years.
Theory #6; There are many
foreclosed homes that being held off the market, that are possibly going to be a part of a large "bulk sale" movement from banks and asset managers to investment firms. UGH. We at the
California Association of Realtors (where I serve on the
Board of Directors) think this is a bad idea...it will be the largest "property flip" ever.
C.A.R. has ramped up lobbying efforts to prevent bulk sales and allow the homes to be sold on the open market to regular
home buyers. But yep...it's reality. Call your legislators if you think this idea is lame!
So anyway, it will be interesting to see what happens in the
Sacramento market with our housing inventory. I feel it is safe to say that in terms of values here in
Sacramento we are at the bottom, bumping along...as we have been for the last year or so.
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