Placer County median sales take a hit in 2009

Region hits eight-year low as foreclosures and short sales clog the local real estate market
By: Andrew DiLuccia, Journal Real Estate Editor
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If you were a real estate agent working in foreclosures and short sales in 2009, it was a good year for you — and that can pretty much sum up Placer County real estate. Some say the end of the first decade in the 2000s should be known as the “decade of lost equity” after the median home price dropped to an eight-year low of $260,000 according to the Placer County Association of Realtors. Auburn ended 2009 with a median of $266,000, a drop of more than $20,000 from 2008 for the same time period. “It’s interesting. You either had a really good year, or really bad year. There really wasn’t a middle road,” said Jo Barragan, a Realtor with Connect Realty in Downtown Auburn and a member of the Placer County Association of Realtors board of directors. “If you were working with REO (real estate owned) and bank owned, you had a great year.” Short sales, banked-owned and real-estate-owned properties dominated a large part of the market in Placer County in 2009 as 2,164 trustees’ deeds were recorded (the signal for homes lost to foreclosure), according to La Jolla-based real estate statistics news service DataQuick. Last year also had the highest number of notices of default — the first step in the foreclosure process — according to HomeTown Realtors of Auburn owner Sue Thompson. “I think we’re going to lose 10 to 15 percent (in home values) this year. I think we’ll lose more in some markets and less in others — depending on location,” Thompson said. “We’re already starting to see inventory come on that prices very low.” The county’s median home price, the number where half the homes sold for more and the other half sold for less, dropped nearly 20 percent from 2008, when the ending median price for the year was $323,000. The drop in value is astonishing after the heady days of October 2005 when median home prices in the Auburn/Newcastle region came in at $630,000, as reported by the Placer County Association of Realtors. “Now people have said we have seen the bottom, but I just don’t know that we have,” Thompson said. While many homeowners in the region have seen their equity disappear over the last few years, 2009 has turned out to be a big year for first-time buyers and investors — both doing their part to drive the market. The Placer County Association of Realtors reported 358 closed escrows in December ’09, an increase of 8.8 percent from the previous month, and the number of new escrows moved up to 247 in December, an increase of 9.3 percent. “We’re in about 2001 pricing, if I had to compare with what home prices are selling at right now,” Barragan said. As tax credits, historically low interest rates and plenty of distressed properties have left the entry-level market abuzz with activity, the move-up buyer faces challenges, as they must compete in a price range crowded with foreclosed homes and short sales, according to Barragan. This chain of events can lead to people not moving up to larger, more expensive homes, thus hurting upper-end market values. “As soon as the financing seized, as soon as that went away — you lost your upper (end market),” Thompson said. She explained that homes once worth as much as $1.5 million, now have a value between $400,000 and $600,000 — depending on the situation. “When FHA became more popular, that hurt the upper end,” she said. As 2010 matures, local agents see some possible stabilization, but more short sales could be on the horizon as some banks are pushing away from foreclosures. But with short sales, there could still be decreases in values. “I think 2010 is basically about reconciliation and coming to terms with a different market and finding solutions in that market,” Thompson said. Despite lower home values in 2009, and the possibility of lower prices in 2010, the silver lining in the market, is affordability is back. “When you see 30 new listings and 30 new pendings, you know that’s a good thing,” Barragan said. “If you have 50 new listings and 10 pendings, that means that the market is slowing.” Andrew DiLuccia can be reached at __________ Placer County Association of Realtors December 2009 statistics Median home price in Placer County: $260,000 Average home sale price in Placer County: $327,586 Auburn/Newcastle region median price: $266,000 Auburn/Newcastle region average home sale price: $316,848