This past year has been marked with incredible ups and downs, good fortunes and bad. Many lost their homes while many others bought their first home.
New home-buyers got tax credits while at the same time borrowers worked to get loan modifications to remain in their homes. New terms came into the housing market such as "strategic default", "underwater" and "phantom inventory". While some home builders had to let go employees other firms were able to expand and purchased more land.
Not only was it another year of winners and losers, but it was a year of establishing the building blocks of recovery.
Foreclosures
While foreclosures were high in 2009 it was still better than 2008. In Sacramento the foreclosure count was just above 13,000. California's unemployment continued to grow all year and passed 12 percent. Both public and private-sector employees took big pay cuts which added prime-rate borrowers to the loan crisis.
Short Sales
Short sales, in which lenders accept less than what is owed a home in order to prevent the property from going into foreclosure, turned into a welcomed safety valve that prevented foreclosures and helped borrowers get out of their loans which netted a better result on their credit report. Short sales climbed steadily throughout 2009 and for the Sacramento area they were 21.5 percent of November's home sales in Sacramento County and West Sacramento which is quite high compared to May when it was just 14.5 percent.
Interest Rates
When 2009 began 30-year fixed-rate mortgages averaged 5.10 percent which was the lowest rate in almost 40 years, but they fell even further and stayed below 5 percent for 22 weeks of 2009. These historic low mortgage rates were a reflection of the government's efforts to stimulate home buying and the economy as a whole.
Home Building
Sales of new homes in California were the lowest seen in decades. For Sacramento new homes averaged 9 percent of that area's closed escrows compared to 25 percent back in 2005. This year a couple of national building giants, Centex Homes and Pulte Homes, merged into what people are now calling a "Super Builder" and they are now claiming almost 20 percent of the market share for Sacramento.
Sales Prices
Median home sales prices in California dropped dramatically in 2009, but some areas have begun a slow climb back. Sacramento County's median home sales prices dropped to $160,000 back in February but they too have been climbing and as of November they are at $175,000. Thankfully, the dreaded tidal wave of foreclosures that was widely expected in 2009 to completely destroy home values luckily never materialized.
Government Stimulus
The government's $8,000 tax credit for first-time homeowners brought thousands of buyers into the housing market after going into effect back in February. Then, just a month later, California added its own $10,000 tax credit for buyers of new unoccupied homes. California's tax credit was so popular that the first $100 million allocation ran out in just four months. Close to 11,000 buyers got to buy a new home this year. Builders tried so hard to get the tax break extended, but the California Legislature failed to follow through. Since its introduction, the federal tax credit helped the housing market here in California and nationally as well. As a result the federal credit was extended and expanded well into 2010.
Summary
2009 has proved to be an exhausting and trying year for home buyers and real estate professional alike. With the extension and expansion of the federal tax credit and an improving economy we see good things happening in 2010.