Mortgage Conditions Could Lead to Sacramento Home Bargains

By Richard Barrington
Local Lender Columnist
Jun 9, 2008
If you are in the market for a new home in the Sacramento area, you may be surprised to find that the current mortgage crisis could help you find a bargain. As home prices fall and the rate of home sales slows, it is increasingly becoming a buyer's market, especially for those with good credit.

Sacramento Housing Update

The first step to finding a housing bargain is to understand current conditions. You may know that housing prices are declining across the country, but you should also be aware that the rate of decline is even greater in California, and greater still in Sacramento.

Statewide, the median home price in December of 2007 was 16.5% lower than in December of 2006. In Sacramento, the median home price declined by 21.5% for the same period. Sales volume statewide decreased by an even greater rate -- falling by 33.4%. The decline in volume was a little less drastic in Sacramento, at 19%. In any case, slow volume may signal further weakness in prices.

Some of this weakness is due to mortgage foreclosures forcing homes onto the market under adverse circumstances, and some of it is due to fewer new buyers being able to obtain mortgages. As a backdrop to recent trends, Sacramento was already a relative housing bargain by California standards. As of December, 2007, the median home price statewide was $475,460, while in Sacramento it was only $285,140.

Know Your Buying Power

Understanding these conditions will help you know your buying power in a number of ways:

• First of all, all real estate is local, so it is important to understand the magnitude of price declines in the local market. National or statewide figures for 2007 will give you an understated view of the magnitude of those declines in Sacramento. With Sacramento prices declining by 21.5%, you can expect especially deep discounts in home prices.
• Second, volume declines mean that sellers will be especially glad to see you, giving you the power in bargaining. Be advised that sellers are making many concessions that don't show up in sale prices. If there are any grey areas -- a utility that could be replaced, or a closing cost that could be paid by the seller -- you have an especially good chance of getting your way in this market.
• Finally, if you have good credit, flaunt it. Sellers know that mortgages are tough to come by these days, so if you can qualify, make sure the seller knows it from the start of your discussions. They will be especially anxious not to let you get away.

Source:
Sacramento Business Journal

About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.