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More Competition For Low-Priced Foreclosures

Rich Pedroncelli / Associated Press
 

Rich Pedroncelli / Associated Press

2016 was a tough year for people trying to buy their first home in Sacramento.

The median home price in Sacramento last year was $330,000. Daren Blomquist with ATTOM Data Solutions says that was up 8 percent from the previous year.

"The takeaway here is the market, nationwide but particularly in Sacramento, continues to be a very strong seller's market," says Blomquist. "Buyers are at disadvantage."

Disadvantage because of competition. Especially for foreclosures which are typically priced for less than non-foreclosed homes.

Blomquist says 45 percent of the foreclosures sold at auction last year in Sacramento went to third-party buyers, or investors who usually turn them into rentals or flip the properties and resell at a higher price.

"That 45 percent is the highest we've seen going back to 2003," says Blomquist. "Even though there's fewer foreclosure properties, there's a lot of interest in those homes. People are coming with cash to buy at that foreclosure auction."

Stockton saw an even larger share...

"...with over 50 percent of the properties sold at the foreclosure auction going to the third-party buyers," says Blomquist. "And that was, in Stockton, an all-time high going back to the year 2000. And in Reno it was even higher - 52 percent of the properties sold under the foreclosure auction are going to these investor, third-party buyers."

He says there's increased competition at those auctions because fewer homes are in foreclosure. In Sacramento last year 12 percent of all homes that were sold were in some stage of foreclosure, down from 15 percent the previous year and a 21 percent dip from two-years ago.

Blomquist says the increase in third-party buyers is making it harder for first-time buyers to enter the market. He says it'll continue to be a seller's market unless we see some dramatic shifts in interest rates in 2017.

Meanwhile, Sacramento area homeowners who sold in 2016 likely made out pretty good. Blomquist says homeowners saw an average profit of $94,000.

"That's the highest average home seller profit we've seen in Sacramento since 2006," says Blomquist. "And when we rank it among the metro areas nationwide, which we looked at 201 metro areas, Sacramento ranks number 20 in terms of that average profit."

San Francisco, San Jose and Santa Rosa saw the biggest average profits nationwide. 

 real estaterealtytrac

Steve Milne

Morning Edition Anchor & Reporter

Steve is the voice of Capital Public Radio News as anchor of Morning Edition and Insight. He covers stories on a wide range of topics including: business, education, real estate, agriculture and music. Steve also produced stories for CapRadio.org.   Read Full Bio