Академический Документы
Профессиональный Документы
Культура Документы
The State of investment real estate in the four county region of the Greater Sacramento Area
including Sacramento, Placer, Yolo, and El Dorado Counties; the statistics and trends affecting
single family homes, duplexes, triplexes, and fourplexes.
Prepared by:
www.WrightRealEstate.US
916.726.8308 Info@WrightRealEstate.US
Page 2 9/17/2010
Second Quarter, 2010
This work is licensed under the Creative Commons Attribution-ShareAlike 3.0 Unported
License. To view a copy of this license, visit http://creativecommons.org/licenses/by-sa/3.0/
or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco,
California, 94105, USA.
Page 3 9/17/2010
Second Quarter, 2010
Table of Contents
Overview: ....................................................................................................................... 5
New Homes:.................................................................................................................... 6
Banking: .......................................................................................................................... 9
Page 4 9/17/2010
Second Quarter, 2010
Overview:
The Winds of Change: Through an ever widening sea of economic
troubles can be seen the lighthouse that offers guidance to the weary
traveler and a change of fortunes for those who follow its call. Yes,
the difficulties are pervasive, but without them we would not have
possibly the most unique investing market & buying opportunity
of our lifetime. Never before have we seen so much trouble
storming on every side, and never before has the potential for returns
been so rich. Interest rates are at all time lows, inventory
abounds, prices are down 50%+, and buyers are hesitant! What
more can be desired than to buy at the bottom of the market and ride
the real estate wave of the century!
One thing had a very dramatic affect on the real estate market in
Q2-10: it was the Federal Tax Credit that ended in April 30, 2010.
Not only did it cause price increases (6.6% rise from March to June
Page 5 9/17/2010
Second Quarter, 2010
2010) but most of the properties that sold up to June 30 fell under
that tax incentive program. It is expected to have the opposite effect
on the market in Q3-10 as demand decreases and inventories
rise.
New Homes:
Page 6 9/17/2010
Second Quarter, 2010
Foreclosure Numbers
1.65 million homes across the U.S. received some sort of
foreclosure filing in the first ½ of 2010. That is a 5% drop from the
last ½ of 2009, and an 8% increase from the first ½ of 2009. It
appears banks are getting more aggressive in taking properties back.
Looking back to
2008 and 2009 it
appears there was
a concerted effort
on the part of
banks to hold off
foreclosure filings
and trustee sales
in an effort to
stem the freefall of
prices. By
limiting
inventory they
reduced the
number of
distresses properties on the market and by reducing supply met the
demand that existed. Prices seem to have stabilized in 2009 and
banks appear to be more willing now to foreclose and liquidate
inventory.
Page 7 9/17/2010
Second Quarter, 2010
REO (Foreclosures):
All of 2009 saw a reduction in foreclosure activity for Sacramento
County, and the numbers still have not come up significantly. In June
1,524 NODs (Notice of Default) were filed in Sacramento County,
down 43.4% from June 2009. 1,888 NOTs (Notice of Trustee sales)
were filed in June – more than 12% higher than June 2009.
Foreclosures, however, fell 38.2% to 722 in June from a year before.
The average number of days it takes for a property to be foreclosed on
in Sacramento County is 235 days (June 2010).
Page 8 9/17/2010
Second Quarter, 2010
Banking:
Between 2006 and 2007 Fannie Mae and Freddie Mac bought 227
Billion (227,000,000,000) in bonds backed by subprime loans and
Alt A mortgages. Q1-10 they required lenders to buy back 3.2
Billion, and it seems they are preparing for as much as 30 billion to
be sold back to the banks that originated the loans. This adversely
affects housing markets in an interesting way: originating banks begin
hedging their risk from potential buy backs by tightening underwriting
requirements. This exacerbates the problem by making it more
difficult for borrowers to get loans, which further reduces demand,
raises inventory, and puts downward pressure on sale prices.
Additionally the amount of return non-performing mortgage owners
receive on their investments is reduced and the companies and
individuals who purchased these investments lose substantial sums at
sale. The result is a perpetuating downward spiral.
From January to the end of July 2010 more than 100 banks have
failed, and 700+ more are designated as “problem” banks by the
FDIC. 300 banks are expected to fail before the crisis has ended.
This will overburden the FDIC with debt, which could lead to another
“unlimited taxpayer bailout”.
Page 9 9/17/2010
Second Quarter, 2010
large financial bailout pulled the largest banking institutions away from
the brink of dissolution. Part of this profit, however, can be accounted
to smoke and mirrors accounting practices that provide the perception
of stability. Unfortunately, the foreclosure environment appears to be
getting worse nationwide.
Commercial loans are typically local, where the parties involved can
get close and personal. Decision makers and owners can talk on the
phone, and if you default it is funds deposited by people in your
community that is at stake. Ultimately, it seems better solutions are
being reached that meet both the struggling owner and the bank, and
losses are mitigated in a more effective way.
Page 10 9/17/2010
Second Quarter, 2010
REO inventory rose 27% from the end Most foreclosures occur in
of the Q1 to the end of Q2. Despite this
the number of sales and sold price of REO the most affordable
stayed almost exactly identical from March neighborhoods. 40% of
to June. Compared with June 2009, sold foreclosure filings occur in
price rose 7% to $177,083 and the
the 25% most affordable
number of REO sales dropped 31% from
931 (June 2009) to 639 (June 2010). neighborhoods across the
country.
Short Sales sold for an average of
$208,105; 13% higher than Q1-10, but only 3% higher than Q2-09.
The real shift is the rise in the number of Short Sales sold. June saw
478 short sales close: a 20% rise from March (397) and a 74%
increase from one year ago (274).
Condo: The average sales price for the 400 condos sold during Q2-10
is $118,189. REOs account for 43% of these sales, with an average
sales price of $82,785. Short Sales accounted for 20% of sales, and
averaged $106,081. Equity sales averaged $179,832. Pro-Forma
analysis of Q2-10 sold condos estimates that 39.3% could provide
positive cash flow if rented.
Page 11 9/17/2010
Second Quarter, 2010
DUPLEX:
During the Q2-10 the average duplex sales price is $176,563, or
$88,282 per unit. That is a 14% increase in the average price
from Q2-09 ($154,715), but a 12.5% drop from the $201,876 average
price Q2-08.
Page 12 9/17/2010
Second Quarter, 2010
TRI-PLEXES:
The second quarter 2010 saw 11 triplexes sold, just like the first
quarter, but the average sale price dropped 17.3% from the
$242,000 in Q1-10 to $200,127 in Q2-10. Because of the location of
many of the triplexes there is large variation in price dependant upon
the area, and the condition of the property. Pro-forma analysis shows
that 81.8% of those sold projected positive cash flow.
4-PLEXES:
Four-plexes, on the other hand, are far more common and 30 sold in
quarter 2 of 2010. The average sale price dropped 14.6% from
$215,117 in Q1-10 to $183,706 in Q2-10. REOs account for 47% of
Q2 sales, with an average sale price of $164,962. The average
marketing time dropped this quarter to 55 days from 67 days in Q1.
Page 13 9/17/2010
Second Quarter, 2010
Zipcode Data:
95610 ($180,500) -48% 2% -3% -3% 95821 ($170,000) -49% -8% 13% -21%
95621 ($187,500) -54% -3% -7% -3% 95822 ($185,000) -59% 4% 3% 31%
95626 ($187,500) -61% -29% -5% 26% 95824 ($178,400) -66% -6% -6% 19%
95628 ($251,000) -51% -21% -3% 0% 95825 ($40,500) -11% 55% 54% 41%
95632 ($234,000) -59% -8% -9% -6% 95827 ($175,500) -52% -3% 0% 1%
95670 ($252,500) -61% -14% -8% -19% 95832 ($159,487) -53% 11% 17% -13%
95683 ($306,000) -49% -3% 11% 10% 95834 ($195,755) -46% -1% 18% 8%
95758 ($302,000) -59% -2% 0% 0% 95841 ($202,500) -58% -9% -13% -3%
95817 ($145,000) -53% 32% 42% 27% 95864 ($134,500) -26% 9% 33% 11%
Page 14 9/17/2010
Second Quarter, 2010
This next section contains information on the status and change over time of individual zip codes in
Sacramento County.
The Graph shows the median price of zip codes within Sacramento County. The charting begins in
February 1997 up to the present (July 2010). Each zip code is compared to the Sacramento Counties
median price for the same period of time, and geographically neighboring zip codes are also shown on the
same graph. All values are median prices for the zip codes identified. Each graph is a graphical
representation of the rise and fall of the sales price within each zip code and Sacramento county, and they
provide perspective on the volatility of the residential real estate market. The graphing of similar areas
allows for comparison between zip codes, which provides a degree of perspective on the zip code and the
market as a whole. The prices graphically rendered are every month since February.
Page 15 9/17/2010
Second Quarter, 2010
Page 16 9/17/2010
Second Quarter, 2010
Page 17 9/17/2010
Second Quarter, 2010
Page 18 9/17/2010
Second Quarter, 2010
Page 19 9/17/2010
Second Quarter, 2010
Page 20 9/17/2010
Second Quarter, 2010
Page 21 9/17/2010
Second Quarter, 2010
Page 22 9/17/2010
Second Quarter, 2010
Page 23 9/17/2010
Second Quarter, 2010
Page 24 9/17/2010
Second Quarter, 2010
Page 25 9/17/2010
Second Quarter, 2010
Page 26 9/17/2010
Second Quarter, 2010
Page 27 9/17/2010
Second Quarter, 2010
Page 28 9/17/2010
Second Quarter, 2010
Page 29 9/17/2010
Second Quarter, 2010
Page 30 9/17/2010
Second Quarter, 2010
Page 31 9/17/2010
Second Quarter, 2010
METHODOLOGY
All properties of a given type were downloaded from the MLS and
separated by Seller Type and analyzed to achieve the highest degree
of accuracy. The following assumptions and estimates were used in
the calculation:
· Appreciation = No appreciation has been included in our estimates,
though it will certainly occur.
· Cash Down Payment = 25% of purchase price
· Closing Costs = 4%
· Initial Repairs = repairs at purchase have not been factored into the
equations as they vary dramatically.
· Insurance = .4% annually (divided by 12 for monthly estimates)
· Interest Rate = 7% amortized over 30 years
· Maintenance = 10% of gross rents
· Property Management = 10% of gross rents
· Rents = projected based on our internal findings for each zip code
and adjusted based on the number of bedrooms (SFR) or number of
units. Therefore, estimated rents for Duplexes, Triplexes, and
Four-Plexes vary by property type and zip code, and SFR rents vary
by number of bedrooms also adjusted for zip code.
· Taxes = 1.2% of the purchase price annually. Although this number
varies the amount is not significant.
· Vacancy = 5% of gross rents
Page 32 9/17/2010
Second Quarter, 2010
ADDITIONAL RESOURCES
MetrolistMLS.com - to search for properties. www.metrolistmls.com
NorthState Building Industry Association (BIA) www.northstatebia.org
Rental Housing Association (RHA) www.rha.org
Sacramento Association of Realtors (SAR) www.sacrealtor.org
www.WrightRealEstate.US
Page 33 9/17/2010