As home prices continue fall, low-end buyers turn market busy
By Rick Daysog
The Sacramento Bee
© Copyright The Sacramento Bee. All rights reserved.
Published: Wednesday, Aug. 17, 2011 - 12:00 am | Page 1A
Home prices in Sacramento have dropped so much that more and more people can't resist the bargains.
Researcher DataQuick reported Tuesday that the number of single-family homes sold in Sacramento County jumped 12.5 percent in July from the same month a year ago.
Sales in El Dorado, Placer and Yolo counties also posted double-digit percentage increases last month, DataQuick said.
Buyers continue to crowd the lower end of the market, where falling prices have made it cheaper to own than to rent in many cases. Prices are now 50 percent below their 2007 peak.
"It's all bargain shopping and bottom feeding because prices have come down so much," said DataQuick analyst Andrew LePage.
The local sales numbers run counter to statewide results for July. The number of homes sold in California dropped 1.4 percent from July 2010, and in the Bay Area – usually a key barometer of Sacramento's housing market - sales dropped 1.7 percent.
According to DataQuick, the median price for a single-family home in Sacramento County was $161,000 last month, a 10.6 percent decline from the year-earlier period.
Median prices in El Dorado County fell 18.6 percent to $250,000 in July while the median in Placer County was down 10.4 percent at $259,500. Yolo County's median was off 8.1 percent at $221,500.
Those low prices present opportunities for investors hoping to rent out properties and flip them when the market improves.
They've also attracted renters like Adam and Monica Stark, who earlier this month purchased a two-bedroom, one-bathroom ranch-style home in Tahoe Park for $90,000.
Monica Stark, a freelance writer, and her husband, an architect, are paying about $630 a month on their mortgage. They used to pay $790 a month to rent a smaller home nearby, said Stark, who is expecting her first child in January.
"The home has a lot of the charm and character you find in east Sacramento without having to pay for the ZIP code," she said, adding, "It was like 'Why not buy?' at these prices."
According to DataQuick, a big chunk of the sales activity was in the low-end of the market.
More than 45 percent of all single-family closings in July were for homes that sold for $150,000 or less. A year ago, 27.4 percent of the sales were for homes in that price range.
The local real estate market has a long way to go before it recovers. But Eric Pine, senior executive associate with Lyon Real Estate's Folsom office, said the lower end is beginning to resemble a seller's market.
Pine said that one of his clients submitted an offer last week for a three-bedroom home in Folsom, only to find out that the seller had seven other offers.
"Buyers are starting to come off the fence," he said.
Doug Covill, a Realtor with Coldwell Banker Residential Brokerage, said he's not ready to say the market has hit bottom, but there are plenty of buyers in its lower reaches.
Even though prices are down, Covill said, the market is hardly suffering from a glut of homes for sale. In fact, he said, a lack of inventory is preventing more sales. Covill is president of the 5,500-member Sacramento Association of Realtors.
According to figures compiled by the association, the housing inventory is enough to last only 2.3 months.
Too many homes are tied up in foreclosure and haven't been put on the market by lenders, Covill said.
"The longer we have those houses sitting there, the longer it drags out our economic downturn," Covill said.
Researcher DataQuick reported Tuesday that the number of single-family homes sold in Sacramento County jumped 12.5 percent in July from the same month a year ago.
Sales in El Dorado, Placer and Yolo counties also posted double-digit percentage increases last month, DataQuick said.
Buyers continue to crowd the lower end of the market, where falling prices have made it cheaper to own than to rent in many cases. Prices are now 50 percent below their 2007 peak.
"It's all bargain shopping and bottom feeding because prices have come down so much," said DataQuick analyst Andrew LePage.
The local sales numbers run counter to statewide results for July. The number of homes sold in California dropped 1.4 percent from July 2010, and in the Bay Area – usually a key barometer of Sacramento's housing market - sales dropped 1.7 percent.
According to DataQuick, the median price for a single-family home in Sacramento County was $161,000 last month, a 10.6 percent decline from the year-earlier period.
Median prices in El Dorado County fell 18.6 percent to $250,000 in July while the median in Placer County was down 10.4 percent at $259,500. Yolo County's median was off 8.1 percent at $221,500.
Those low prices present opportunities for investors hoping to rent out properties and flip them when the market improves.
They've also attracted renters like Adam and Monica Stark, who earlier this month purchased a two-bedroom, one-bathroom ranch-style home in Tahoe Park for $90,000.
Monica Stark, a freelance writer, and her husband, an architect, are paying about $630 a month on their mortgage. They used to pay $790 a month to rent a smaller home nearby, said Stark, who is expecting her first child in January.
"The home has a lot of the charm and character you find in east Sacramento without having to pay for the ZIP code," she said, adding, "It was like 'Why not buy?' at these prices."
According to DataQuick, a big chunk of the sales activity was in the low-end of the market.
More than 45 percent of all single-family closings in July were for homes that sold for $150,000 or less. A year ago, 27.4 percent of the sales were for homes in that price range.
The local real estate market has a long way to go before it recovers. But Eric Pine, senior executive associate with Lyon Real Estate's Folsom office, said the lower end is beginning to resemble a seller's market.
Pine said that one of his clients submitted an offer last week for a three-bedroom home in Folsom, only to find out that the seller had seven other offers.
"Buyers are starting to come off the fence," he said.
Doug Covill, a Realtor with Coldwell Banker Residential Brokerage, said he's not ready to say the market has hit bottom, but there are plenty of buyers in its lower reaches.
Even though prices are down, Covill said, the market is hardly suffering from a glut of homes for sale. In fact, he said, a lack of inventory is preventing more sales. Covill is president of the 5,500-member Sacramento Association of Realtors.
According to figures compiled by the association, the housing inventory is enough to last only 2.3 months.
Too many homes are tied up in foreclosure and haven't been put on the market by lenders, Covill said.
"The longer we have those houses sitting there, the longer it drags out our economic downturn," Covill said.
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