June 2016 H OUSING N EWS R EPORT
materializing.
— breaking away from fundamentals in my opinion.”
Baristas Aren’t Buying Houses
“That market is very thin, it’s almost closed up completely,” he said of the foreclosure auctions, adding that in the past he would attend daily and sometimes purchase properties to flip at the auction. A total of 470 single family homes and condos had been foreclosed — either sold to a third party investor or repossessed by the bank — at the public foreclosure auctions in the Sacramento metro area through April 2016, according to RealtyTrac data. That’s down 19 percent from the 577 homes foreclosed during the same time period last year and 93 percent below the first four months of 2008, when 6,809 homes in the Sacramento metro area were foreclosed. Grenz noted that most buyers of his custom homes tend to be fiscally conservative, coming in with a high down payment, which he believes is a good indicator that they will not default on the loan. “A 20 percent down payment is more important than a 700 FICO score as far as I’m concerned,” he said. “None of the people who bought homes from me in the last 15 years who FHA Buyers Aggressively Bidding
Although Gove acknowledged the downward shift in the higher end of the market, he argued that any slump in home prices won’t result in another wave of foreclosures as happened in the wake of the last downturn when buyers had little or no equity in their homes and therefore were quick to walk away when the going got tough. “Is it going to be like the past? No, because we have so many cash-owned properties,” he said. “People who have loans …. They are proud of their loan, they are proud of their interest rate. They don’t want to let go.” Grenz, the broker, builder and flipper, agreed that lending is much tighter, protecting the market against another foreclosure tsunami. “Baristas don’t buy houses,” he said. “Everybody’s full vetted these loans. If you’re self-employed it’s really hard to get a loan. You really have to show everything. People are actually having to show what their income is.” Grenz pointed to continued slow sales at the local foreclosure auctions as evidence that a new wave of foreclosures is not
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SOURCE: RealtyTrac
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