Home sales rising in weak market

Foreclosures and a three-year price plunge continue to drive a rise in home sales in the Mid-Valley and elsewhere in recession-wracked California.

Yuba and Sutter counties more than doubled the number of freestanding houses sold in December compared to a year earlier, according to a report Wednesday from MDA DataQuick of San Diego.

Eighty-five houses changed hands last month in Yuba County — down from 106 in November but well above the 40 sold in December 2007. In Sutter County, 103 houses were sold in December, up from 89 in November and 43 the previous December.

A glut of foreclosed homes has slashed median home prices in Yuba-Sutter and throughout the Central Valley, as defaults have mounted on high-risk mortgage loans that linked artificially low early payments to much larger ones later. DataQuick reported an 48 percent jump in home sales across California from a year earlier, to 38,000 houses and condominiums.

Median home prices dropped to $170,000 in Sutter County and $152,000 in Yuba County, extending a three-year tumble of sale prices from their 2005 peaks north of $300,000. Those values remain well below the statewide $249,000 median, itself down more than $150,000 over the past year.

Homes seized by banks from insolvent owners dominate the Mid-Valley market, accounting for 79.1 percent of Yuba County sales and 64.8 of those in Sutter County. Private sellers' need to compete with the "foreclosure price" have put banks in charge of price levels and kept them low, according to Lloyd Leighton, owner of Lloyd Leighton Realtors in Yuba City.

"The foreclosures are the market," he said Thursday. "Anyone who wants to be a seller in today's market has to be willing to compete with the foreclosures."

Subprime mortgages' role in the collapsing real estate market has radically shifted housing demand, steering it toward modestly sized and priced homes and away from the newer and larger houses that commanded a half-million dollars or more at the local market's peak.

Mid-Valley brokers reported stronger demand for houses smaller than 2,000 square feet and below $200,000, while late-model luxury homes continue to languish — partly because of lenders' unwillingness to extend "jumbo loans" above $417,000.

With the drying-up of easy loans — some of which effectively accepted borrowers' stated incomes on the honor system — that drove up home buying in the 2000s, buyers must rely more on federally backed loans that demand stricter proof of ability to make the monthly payments, said Sarah Becker of RE/MAX Gold in Yuba City.

"We're seeing a lot more homes bought with government loans, which are harder to obtain," said Becker. "Probably 80 percent of the offers are made (with financing from) the (Federal Home Administration) now. Three years ago, we wouldn't see even one FHA deal out of 100 offers."

California's 523,624 foreclosed homes were the most in the U.S. in 2008 and placed the Golden State third in the percentage of houses in default, behind Florida and Arizona, according to RealtyTrac Inc., another real estate research service.

SINGLE-FAMILY HOMES

Sutter County

• December: 103

• November: 89

• December 2007: 43

Yuba County

• December: 85

• November: 106

• December 2007: 40

MEDIAN HOME PRICES

Sutter County

• December: $170,000

• November: $170,000

• December 2007: $235,000

Yuba County

• December: $152,000

• November: $155,000

• December 2007: $217,000

PERCENTAGE OF SALES FROM FORECLOSURES

Sutter County

• December: 64.8

• November: 69.9

• December 2007: 44.4

Yuba County

• December: 79.1

• November: 72.6

• December 2007: 37.8

By Howard Yune/Appeal-Democrat