Irvine-based RealtyTrac said Wednesday that sales of Sacramento foreclosures soared 23% during the third quarter, according to a new report.

Of more interest to those who are selling out of desire rather than need is the fact that the average price for a foreclosure property was 28.9% below the average price for homes not in foreclosure, RealtyTrac said.

More than 50% of all homes sold in the Sacramento region during the third quarter were in some stage of the foreclosure process.  

Here in Folsom 316 homes are currently either Bank Owned (REO) or at auction.  Perhaps an even better indicator is that approximately 60% of all actively listed homes in the Folsom zip code are Short Sales, a percentage of which will likely go to foreclosure, further fueling the number of foreclosure sales and continuing to push home prices downward. 

Zillow is predicting home prices across the US will decline by 2.7-3.2% this year.

While Zillow still anticipates home values to fall an additional 2 to 4 percent before reaching a bottom, there is light at the end of the tunnel. "Encouraging precursors to a true stabilization of home values are falling into place as the new year begins," said Zillow Chief Economist Dr. Stan Humphries. "Home sales will show a more consistent upward trend this year, slowly reducing the amount of vacant housing inventory. This increased demand will eventually start to put a floor under home values later this year."

The full forecast and further commentary can be found on the Zillow Real Estate Research page.

California home sales rose for the third consecutive month in December, marking the highest level since January 2011, according to data from the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). Sales also were up from a year ago, marking the sixth consecutive annual increase.

"With the economy slowly improving, home buyers - investors and first-time buyers alike - took advantage of affordable interest rates and made a push to close escrow by the end of year," said C.A.R. President LeFrancis Arnold. "Robust sales over the past few months signal the housing market is treading above water on its own in the first full year without the government stimulus that has helped housing in the last couple of years."

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 520,940 in December, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. December's sales were up 3.3 percent from November's revised pace of 504,420 and were up 0.1 percent from the revised 558,840 sales pace recorded in December 2010. The statewide sales figure represents what would be the total number of homes sold during 2011 if sales maintained the December pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

Median prices increased 1.8% last month to $285,920, from November's revised $280,960.  But prices were down 6.2% from December 2010's revised median of $304,770, the association said.

"Fourth quarter sales were stronger than we expected, thanks to recent improving consumer confidence and an economy that's slowly showing signs of growth. As a result, sales came in slightly above our fall projection," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. "For 2011 as a whole, sales reached a preliminary 497,860 homes sold statewide, up 1.1 percent from the 492,290 homes sold in 2010. However, the statewide median price declined 6.3 percent for the year, to reach a preliminary $285,950, down from the revised $305,010 recorded in 2010.

"Home prices are stabilizing for the distressed market, where we see robust demand, but we continue to see downward pressure on home prices in some higher end markets," said Appleton-Young.

Other key facts of C.A.R.'s December 2011 resale housing report include:

*     Housing inventory remains tight throughout California, with the Unsold Inventory Index for existing, single-family detached homes declining to 4.2 months in December, down from 5.0 months in November and down from a 5.0-month supply in December 2010. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

*     Thirty-year fixed-mortgage interest rates averaged 3.96 percent during December 2011, down from 4.71 percent in December 2010, according to Freddie Mac. Adjustable-mortgage interest rates averaged 2.79 percent in December 2011, compared with 3.31 percent in December 2010.

*     The median number of days it took to sell a single-family home edged up to 58.7 days in December 2011, compared with a revised 58.0 days for the same period a year ago. 

With so many Folsom area homes worth less than the balance of their mortgages I've been getting more calls from people asking about simply walking away, a process lenders call "strategic default."

For many there is a double edge sword; guilt and morality are one side, and objective financial analysis is on the other. 

Strategic defaults are on the rise across the country.

A survey last year by two Northwestern University finance professors found that roughly 30% of mortgage defaults in 2010 were by homeowners who could afford to make their payments, up from 22% from 2009.  A trend that is very worrisome to mortgage lenders.

Over the past year, borrowers and many industry analysts have held out hope that a housing recovery would reverse the rising tide of "negative equity." But even in a desirable location like Folsom, home prices have dropped 7.5 percent over the past year, leaving more homeowners underwater than before.

When prices do stabilize, underwater borrowers could very well face a long wait before they have sufficient equity to sell their homes without having to bring money to closing to cover a shortfall.  Nationally,  many economists are forecasting prices may bottom out in 2013, but that house prices won't recover their 2006 peak until 2023, if ever.

Many homeowners simply can't or don't want to wait that long.

In the early stages of the housing crisis, the main causes of defaults included unemployment or other financial setbacks and adjustable mortgages that reset to unaffordable levels.  Now, five years into the housing recession, strategic defaults are growing as financially healthy borrowers learn of friends or family who have decided to walk away.

Researchers point to a number of forces that are driving borrowers to walk away from their mortgages. At the top of the list is borrowers don't feel any personal connection to their lender, and, the mortgage lending industry's widespread reluctance to modify loan terms has changed attitudes about walking away.

Given all of this, I continue to advise the majority of home owners who find themselves in a negative equity position, and, who are unable to make their payment, to go the route of a short sale rather than strategically default. Here's why.

In a short sale both you and the lender often come out better than if you simply walk away, or, wait for the bank to force you out via foreclosure.

Federal and state law prohibits lenders from trying to collect from a borrower any money they forgive in a short sale.  California recently passed a that prohibits junior lien holders from doing the same.  Both laws now make it possible for home owners to Short Sale their homes without worry of having to pay back any monies to their lenders after their Short Sale closes. 

In a short sale you are eligible to buy another home much sooner than if you strategically default or go through a  foreclosure, and in most instances your credit rating will heal faster, which is important in the short term as renting is more difficult with a default on your record.  With so much to learn and know about short selling your home I've put together an entire web site full of information that will help you better understand the process.

As we turn the page to another year, many economists are in general agreement that we have not yet hit bottom in regard to declining home values.

"It's unlikely prices will rise next year in most markets," said Jed Kolko, chief economist at real estate information site Trulia. Stan Humphries, chief economist at real estate research company Zillow Inc., said in a related story "The unabsorbed pool of housing supply, dragging levels of consumer confidence, high unemployment and negative equity will continue to put downward pressure on the housing market, pushing our expectation for a potential recovery into late 2012 or early 2013."

This is certainly not good news if you are thinking of selling your Folsom home.

On the bright side, in Sacramento County, home sales are up and inventory is shrinking, but the reason the median price is declining is that more buyers are flocking to less expensive homes.

Reports show an average of just 4.2 months supply of homes currently on the market, a 31% decline from a year ago. In the most desirable areas of Sacramento, inventory is as little as two months.

The numbers are very similar in Folsom.

Across all price ranges there are only 2.1 months of inventory, down 49% from the 4.1 months of inventory we had this time last year.

Sales of entry-level homes in Sacramento have increased 23 percent, while sales of those priced higher than $250,000 increased just 2 percent.

Sales of entry level homes in Folsom below the same $250,000 price point are up 36% from this time last year, while sales of plus $250,000 homes are only up 4%.

Those of you who are selling out of desire rather than necessity should take a careful, and objective, look at your home's current market value before you enter the fray. It could end up saving you needless aggravation and wasted time if your price is not shared by the market.

Those of you who are selling out of desire rather than necessity should take a careful, and objective, look at your home's current market value before you enter the fray.  It could end up saving you needless aggravation and wasted time if your price is not shared by the market. 

The median sales price for homes in ZIP code 95630 in Folsom from Sep 11 to Nov 11 was $281,750 based on 290 sales. Compared to the same period one year ago, the median sales price decreased 7.6%, or $23,250, and the number of sales increased 2.1%. Average price per square foot for homes in 95630 was $156, a decrease of 4.3% compared to the same period last year. There are currently 292 resale and new homes in ZIP code 95630 on Trulia, including 453 homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. The average listing price for homes for sale in 95630 was $343,044 for the week ending Nov 30, which represents a decrease of 2.1%, or $7,180, compared to the prior week.

The following article was recently posted on Sacbee.com. 

By Rick Daysog
rdaysog@sacbee.comThe Sacramento Bee

Housing prices in Sacramento have fallen to pre-boom levels as more than half of homes in the region are now worth less than their mortgages, a new report said.

Zillow, the Seattle-based real estate website, said its index for Sacramento home prices for the third quarter dropped 11.2 percent to $200,000 compared with the year-earlier quarter.

The price decline comes as 50.9 percent of all mortgages in the region are now underwater, which is nearly double the national average, the company said.

In September, foreclosure sales represented nearly 40 percent of all home sales in the Sacramento region, and nearly half of all local resales went for a loss.

"We're clearly dealing with a crisis of confidence that is keeping potential buyers on the sidelines, fueled largely by high unemployment and more general economic uncertainty," said Stan Humphries, Zillow's chief economist.

SACRAMENTO, Calif.--(BUSINESS WIRE)--California's program to provide mortgage assistance to homeowners struggling to remain in their homes is making it easier to become eligible for help.

"This expanded eligibility will allow more families to qualify and receive greater assistance"

Keep Your Home California, a federally-funded program administered by the California Housing Finance Agency, announced today that it is removing the "cash out" restriction from all four programs and will allow homeowners who own additional properties to qualify for much-needed assistance. Additionally, the length of time unemployed homeowners may receive mortgage assistance has been extended and the amount of money available has been increased.

"This expanded eligibility will allow more families to qualify and receive greater assistance," said Claudia Cappio, Executive Director of the California Housing Finance Agency. "We are continuously evaluating our experience so far and making adjustments like these based on the initial results of the Keep Your Home California program."

Keep Your Home California is a $2 billion effort established under the U.S. Treasury's Hardest Hit Fund to offer mortgage assistance to low and moderate income homeowners who are delinquent or facing imminent default on their mortgage. There are four programs that make up Keep Your Home California, all of which have been developed to address different aspects of the current housing crisis and help homeowners facing financial hardships.

Nearly 8,000 homeowners have benefited or are in process to receive funds from the state-run program, which was fully implemented in February.

The primary changes are:

• Removing the "cash-out" restriction from all four Keep Your Home California programs. Homeowners were previously not eligible for the Principal Reduction Program if they had consummated a cash-out refinance on their home. This exclusion has now been eliminated under all four programs.
• Allowing homeowners who own additional properties to qualify for Keep Your Home California. Under the new policy, homeowners can own additional properties, which will help address situations where homeowners were additional signers on a home for a relative.
• Increasing mortgage assistance for unemployed homeowners from six months to nine months. Out-of-work homeowners will now be able to receive as much as $3,000 per month for up to nine months to cover mortgage, tax and insurance payments through the Unemployment Mortgage Assistance Program. Homeowners must be receiving benefits from the California Employment Development Department to be eligible.
• Increasing maximum funding from $15,000 to $20,000 to reinstate past-due mortgage loans. The Mortgage Reinstatement Assistance Program allows homeowners who have faced a financial hardship to reinstate their past-due mortgage loans, basically catching up on their loan payments.

"Homeowners who might have been found ineligible before are encouraged to contact Keep Your Home California again to see if they qualify under these new guidelines," Ms. Cappio said.

In addition to the Unemployment Mortgage Assistance Program and the Mortgage Reinstatement Assistance Program, Keep Your Home California also offers a Principal Reduction Program that will lower the amount owed on mortgages by as much as $50,000 in an effort to achieve affordable monthly payments for the homeowner. The Principal Reduction Program requires the mortgage servicer to match the amount on a dollar-per-dollar basis, so the maximum benefit to a homeowner could be a $100,000 reduction in principal.

A fourth program, the Transition Assistance Program, provides as much as $5,000 in relocation costs for homeowners who have decided to transition out of homeownership through a mortgage servicer-approved short sale or deed-in-lieu of foreclosure.

In order for homeowners to qualify for any of the four Keep Your Home California programs, their mortgage servicers must be participating. Almost 50 mortgage servicers now participate in the program; these servicers cover more than 85 percent of the mortgages in California. For a list of servicers and the programs they participate in, visit www.KeepYourHomeCalifornia.org/participating.htm.

Homeowners seeking information about the program are encouraged to call 888.954.KEEP(5337) between 7 a.m. and 7 p.m. weekdays and 9 a.m. to 3 p.m. Saturdays, or visit www.KeepYourHomeCalifornia.org (a Spanish-language site is available at www.ConservaTuCasaCalifornia.org).

Even if you've been told 'No' dozens of times, you may move into the 'Yes' category with a program called Keep Your Home California (KYHC).

A small but growing number of distressed homeowners in California are keeping their houses because of a state program funded with $2 billion in federal stimulus money. 

KYHC is a free federally funded program for California homeowners who have suffered a financial hardship, to help them stay in their homes, maintain an affordable mortgage payment and avoid foreclosure.   KYHC offers three programs to assist homeowners:

· Mortgage assistance of up to $3,000 per month for six months to cover home payments and associated costs for homeowners who are collecting unemployment benefits and are in imminent danger of defaulting on their home loans.

· Funds to help homeowners who have fallen behind on their mortgage payments due to a temporary change in a household circumstance. The program will provide up to $15,000 per household to reinstate mortgages to prevent foreclosures.

· Money to reduce the principal owed on a mortgage for a home where the homeowner is facing a serious financial hardship and owes significantly more than the home is worth. This program requires lenders to match any assistance provided by Keep Your Home California.

Each of these programs is funded by the U.S. Treasury Department as part of its "Hardest Hit Fund," specifically designed to assist states most affected by the foreclosure crisis.

In order to apply to KYHC, your financial situation must meet specific requirements. All six requirements must be met to qualify.

1.  You must have suffered a financial hardship that puts you at risk of default on your mortgage due to changes in household circumstances such as death, illness, disability, unemployment or loss of income.

2.  You must own and occupy your home as your primary residence.

3.  Your home must be located in California.

4.  You must NOT own any additional properties or have co-signed for a family member or friend on any additional properties.

5.  The current amount you owe on your first mortgage must not exceed $729,750

6.  Your current mortgage must be through a participating servicer OR through a servicer that has signed an agreement with CALHFA MAC. A homeowner cannot receive assistance if their servicer has not signed an agreement with CALHFA MAC.

7.  Sacramento County household income cannot exceed $90,100.

Those who qualify for assistance are not required to make payments; however, if you sell your home or fail to maintain your loan in good standing for three years from receiving the assistance, the lien becomes a loan and you may be required to pay it back at time of sale.

If you are among those struggling to remain in your home, I encourage you to review the Keep Your Home California web site www.KeepYourHomeCalifornia.org and determine if you qualify for one of the programs.

The most recent Zillow Median Home Value Price Per Square foot Index for Folsom California ending the week of August 31, 2011 shows the values of all homes in the Folsom area are still falling. This index calculates the median value of all closed sales in a particular geographic area.