Foreclosure grip tightens in region

The regional 2008 real estate season opened in the winter cold and stayed there: January saw nearly as many people lose their homes as buy them.

A near-tie between foreclosures and home sales represented the grimmest indicator yet for a housing market now 30 months past the peak of a five-year boom in which loans came easy and home prices doubled.

January saw 1,815 closed escrows in Amador, El Dorado, Nevada, Placer, Sacramento, Yolo and Yuba counties, DataQuick Information Systems of La Jolla reported Thursday.

But in a financial phenomenon that most analysts believe is unprecedented, 1,782 households in the same counties lost their homes to lenders. Figures for Sutter County were not available.

Every business day in the region an average of 85 people lost their homes to lenders, near double the number of foreclosures from June, according to Fair Oaks-based Foreclosures.com, a Web site for real estate investors.

The foreclosures have forced home prices down. According to DataQuick, the median sales prices for all new and existing homes combined – where half the homes sell for more and half sell for less – have returned to June 2003 levels in Sacramento County and to December 2003 levels in Placer County.

Analysts said the still-rising numbers of bank repossessions collided head on with what's typically one of the slowest months on the real estate sales calendar.

Home sales typically rise in February and March, but foreclosures are expected to rise, too. The surge mirrors the rise of risky loans a few years ago, they said. Many mortgages taken out then are resetting today, or homebuyers who took out the loans are having trouble even with their original payment schedule.

"I don't think we are seeing the worst of these numbers," said Robert Kleinhenz, deputy chief economist for the California Association of Realtors. Kleinhenz and others said they expect high foreclosure numbers to continue for at least another six months.

So many foreclosed homes – more than 10,000 last year in the eight-county capital region – are fast pushing down median sales prices. As banks heavily discount their foreclosure inventories and more buyers and investors gravitate toward houses in the $200,000 price range, the median sales price in Sacramento County has taken the steepest fall over the past year of all California's urban counties, according to DataQuick.

Andrew LePage, a DataQuick analyst, said the free-falling median price sounds worse than it is. He said the combination of January's low sales numbers and their high proportion of less expensive bank-owned properties "probably speaks more to problem areas than the overall market."

The dive in prices is stressful for people who have to sell their homes, but it's a growing advantage for people who until now have been shut out of buying.

Casandra Leon was one of the fortunate ones.

Leon, 26, a Sacramento County public employee, paid $235,000 for a three-bedroom, two-bath bank repossessed home in Elk Grove on a street she thought she could never afford.

"Three years ago we would never have thought we could purchase a house like this," Leon said Thursday. She said the bank paid closing costs and did the deal without a complication.

"A lot of these foreclosures are not being purchased by investors, but by first-time buyers and people who want to live in them a long time," said Chris Saizan, a real estate agent in Elk Grove.

Bank discounts and low interest rates are sparking multiple bids now for houses priced from the $100,000s to the $800,000s, said Kevin Coates, president of Sacramento-based Avalar Real Estate and Mortgage Group.

"The reality is that $700,000 house was a million or a million-one when this started," said Coates.

Prices fell all over:

• Sacramento County's median sales prices for all new and existing homes are down 26.8 percent from January 2007, the firm reported. The county's $253,000 median sales price is down now 34.6 percent from the August 2005 high of $387,000.

• Placer County's $360,500 median sales price for new and existing homes combined is down 14.9 percent from a year ago, and 31.4 percent off its August 2005 peak of $525,000, DataQuick reported.

• Prices are down 9 percent in El Dorado and Nevada counties since January 2007.

• Yolo County median prices dipped to $307,500 in January and are down 21.2 percent from a year ago.

• Yuba County has seen a 17.1 percent drop in prices over the past year.

Solano, Riverside and San Bernardino counties – inland urban California counties that experienced the same housing boom that swept over the capital region from 2001 through 2005 – also have seen their median sales prices decline 20 percent in the past year.

Home sales reached 20-year lows for a January in the Bay Area and Southern California, but the decline in the Sacramento region didn't push the records back that far.

Sacramento County's 1,077 closed escrows for new and existing homes were the lowest for January since 1996. The 354 home sales in Placer County were the lowest for a January since 1995.

About the writer:

• Call The Bee's Jim Wasserman, (916) 321-1102.