The first quarterly report on new-home sales in the Sacramento area during 2009 is in – and there's one good sign amid a new low of 699 sales in January, February and March.
Excess supply – houses built or almost built without buyers – are back to lows last seen in mid-2004 and early 2005, the height of the buying frenzy.
The tally as March ended was 1,159 empty houses in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties, says the report being released today by the Folsom-based Gregory Group.
That's far less than 3,226 the same time last year – and a peak of 4,598 in the third quarter of 2006.
It's evidence that builders and their bare-bones construction and sales staffs are finally getting supply and demand back in balance.
"That's not very much inventory," said Gregory Group President Greg Paquin. "If there's any uptick in sales the second quarter and certainly, the third, it's going to put more stress on what's available in the marketplace."
That would mean competition and higher prices. But builders aren't there yet.
Their $336,683 median sales price – where half the homes sold for more and half for less – fell for a 12th straight quarter to a six-year low.
The average new home price: $380,786.
The region's excesses, soft prices and abundance of buyers choosing bank repos gave ample negotiating power to early 2009 buyer Jay Cook.
Cook, an account executive with CitiMortgage, moved from Chicago to Sacramento, and last week into a Natomas house built by New Jersey-based K. Hovnanian Homes.
"What prompted us off the fence was the $10,000 (state) tax credit," he said. It gives new homebuyers like him up to $3,333 off taxes each of the next three years. Builders are hoping $100 million in state tax credits that went into effect for escrows closed after March 1 will help sell 10,000 excess houses statewide.
California's Franchise Tax Board counts Cook among 2,624 applicants statewide so far for $25.6 million in the credits after buying new homes.
Paquin said January and February sales were dismal, but builders reported many more visitors in March.
Overall, Sacramento and Placer counties accounted for 76 percent of first-quarter sales, he said. Which city sold the most? Roseville, with 22 percent of the region's sales.
Plan to Encourage Banks to Allow Short Sales
U.S. to Give Lenders Incentives for Avoiding Foreclosures
HUD Secretary Shaun Donovan, right, listens to Warren Rohn talk about how the government's plan, Making Home Affordable, helped him be able to keep his California home. (By Melissa Golden -- Bloomberg News)
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By Renae Merle
Washington Post Staff Writer
Friday, May 15, 2009
Banks could get government incentive payments for allowing borrowers to sell their home at a loss rather than go through foreclosure, under new guidelines issued yesterday for the Obama administration's $75 billion housing plan.
The program, known as Making Home Affordable, focuses on paying lenders to modify distressed borrowers' loans to affordable levels. But under this expansion of the program, lenders can also receive incentive payments even if the homeowner's loan is not modified.
In those cases, the lender could get up to $1,000 for allowing a short sale. In such deals, the lender accepts less than the value of the mortgage in what has usually been a time-consuming and cumbersome process. Under the plan, the government will also share the cost of extinguishing second liens on the property, such as those for second mortgages.
If the short sale fails, the borrower can turn over their house keys in a process known as "deed in lieu of foreclosure," transferring ownership to the lender without a foreclosure. At the end of the process, the homeowner could be eligible for $1,500 for relocation expenses.
"If a modification is not possible, we are also announcing steps to encourage the quick private sale or voluntary transfer of property, which will save homeowners money and protect their financial future," Treasury Secretary Timothy F. Geithner said. "These are critical steps in stemming the foreclosure crisis and stabilizing the housing market."
The additions to the program are an acknowledgement by government officials that not all distressed borrowers will be able to save their homes. Despite government efforts, lenders are starting the foreclosure process on an increasing number of homes. And the country's growing unemployment rate is putting more people at risk, government officials have said.
"We're not going to solve all problems, and this won't benefit all homeowners," Geithner said.
The program's expansion also includes a $10 billion feature that protects lenders from losses associated with falling home prices. If a lender modifies a loan and the homeowner redefaults, the lender faces more severe losses if home prices have fallen in the interim.
The new incentive will encourage loan modifications in places where home values have dropped severely, according to a summary of the program. It reduces "the risk of loss to lenders from modifications compared to alternatives that could result in the loss of homeownership," the summary said.
The Obama administration launched its foreclosure prevention plan in March, and more than 50,000 homeowners have been offered lower-cost mortgages. Lenders representing 75 percent of U.S. mortgages have agreed to participate, according to administration officials.
But the program has been implemented unevenly throughout the financial services industry, with some lenders lagging. And demand from distressed homeowners has overwhelmed many lenders and nonprofit organizations.
"The enhancements today will help more borrowers avoid some of the financial damage caused by foreclosure," said John Taylor, president of the National Community Reinvestment Coalition. "We're encouraged by the early numbers, but more work remains to be done to compel lenders to fully participate in the program and to modify loans before they go into default and face imminent foreclosure."
Speaking alongside Geithner and Housing and Urban Development Secretary Shaun Donovan at a news conference touting the program's progress, Warren Rohn, 70, of California, said it had "saved my bacon."
Rohn had closed his trucking business late year after work dried up. In April, his lender sent him an application for the government program and lowered his interest rate to 2 percent. "Losing my trucking business was tough enough, but I'm not sure what I would have done if I lost my home," he said.
U.S. to Give Lenders Incentives for Avoiding Foreclosures
|
HUD Secretary Shaun Donovan, right, listens to Warren Rohn talk about how the government's plan, Making Home Affordable, helped him be able to keep his California home. (By Melissa Golden -- Bloomberg News)
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COMMENT
Comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions. You are fully responsible for the content that you post.
Who's Blogging
|
Why Do I Have to Log In Again?
Friday, May 15, 2009
Banks could get government incentive payments for allowing borrowers to sell their home at a loss rather than go through foreclosure, under new guidelines issued yesterday for the Obama administration's $75 billion housing plan.
The program, known as Making Home Affordable, focuses on paying lenders to modify distressed borrowers' loans to affordable levels. But under this expansion of the program, lenders can also receive incentive payments even if the homeowner's loan is not modified.
In those cases, the lender could get up to $1,000 for allowing a short sale. In such deals, the lender accepts less than the value of the mortgage in what has usually been a time-consuming and cumbersome process. Under the plan, the government will also share the cost of extinguishing second liens on the property, such as those for second mortgages.
If the short sale fails, the borrower can turn over their house keys in a process known as "deed in lieu of foreclosure," transferring ownership to the lender without a foreclosure. At the end of the process, the homeowner could be eligible for $1,500 for relocation expenses.
"If a modification is not possible, we are also announcing steps to encourage the quick private sale or voluntary transfer of property, which will save homeowners money and protect their financial future," Treasury Secretary Timothy F. Geithner said. "These are critical steps in stemming the foreclosure crisis and stabilizing the housing market."
The additions to the program are an acknowledgement by government officials that not all distressed borrowers will be able to save their homes. Despite government efforts, lenders are starting the foreclosure process on an increasing number of homes. And the country's growing unemployment rate is putting more people at risk, government officials have said.
"We're not going to solve all problems, and this won't benefit all homeowners," Geithner said.
The program's expansion also includes a $10 billion feature that protects lenders from losses associated with falling home prices. If a lender modifies a loan and the homeowner redefaults, the lender faces more severe losses if home prices have fallen in the interim.
The new incentive will encourage loan modifications in places where home values have dropped severely, according to a summary of the program. It reduces "the risk of loss to lenders from modifications compared to alternatives that could result in the loss of homeownership," the summary said.
The Obama administration launched its foreclosure prevention plan in March, and more than 50,000 homeowners have been offered lower-cost mortgages. Lenders representing 75 percent of U.S. mortgages have agreed to participate, according to administration officials.
But the program has been implemented unevenly throughout the financial services industry, with some lenders lagging. And demand from distressed homeowners has overwhelmed many lenders and nonprofit organizations.
"The enhancements today will help more borrowers avoid some of the financial damage caused by foreclosure," said John Taylor, president of the National Community Reinvestment Coalition. "We're encouraged by the early numbers, but more work remains to be done to compel lenders to fully participate in the program and to modify loans before they go into default and face imminent foreclosure."
Speaking alongside Geithner and Housing and Urban Development Secretary Shaun Donovan at a news conference touting the program's progress, Warren Rohn, 70, of California, said it had "saved my bacon."
Rohn had closed his trucking business late year after work dried up. In April, his lender sent him an application for the government program and lowered his interest rate to 2 percent. "Losing my trucking business was tough enough, but I'm not sure what I would have done if I lost my home," he said.
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