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Existing home sales in the Sacramento region started the traditional winter slowdown in November. Sales for the month were 24% lower than October but 76% higher than in November 2007. Pending sales decreased 10% from October to November. Available inventory is 32% lower than November of 2007.

Foreclosed homes continued to dominate with 70% of the sales. Price per square foot dropped under $100 for homes selling for less than $200,000 in Sacramento county. Sac county is the center of foreclosure activity as indicated by the prices per square foot. Neighboring Placer, El Dorado, Yolo and Nevada counties have much fewer foreclosure sales and the average price per square foot ranges from $156 to $197 in those counties.

As I have written in the past, I believe median sales prices are meaningless as long as sales of bank owned properties are a significant percentage of sales. I believe that the bankers are rapidly lowering the prices they will accept just to move the inventory off the books. This is very damaging for the real estate markets, but who ever heard of a banker doing something that would be a benefit to their community. Here is an anecdotal story from a personal friend in Las Vegas:

Liz found a foreclosure, a stunning 4 bedroom ranch with a Hollywood pool on a 1/2 acre.  We saw it when it appeared on the MLS on a Thursday night, looked at it on Friday, and put in our bid (full asking price of $284,900) on Monday.  Bank asked for “best and final on Tuesday as there were three other competing bids on Wednesday and we upped the bid by $12,000.  The house sold for $354,000 cash - damn.

The bank severely under-priced the house to move and it did in 3 days. Think about how much money these bankers are leaving on the table.

Another interesting Las Vegas tidbit. In November home-builders filed for permits for only 180 new homes! Even in this terrible market the builders have sold almost 10,000 new home in Las Vegas this year. It is pretty obvious they are stepping off the declining home price ladder. The recent national data on new homes show the same trend.

The bad mix of high levels of foreclosures plus stupid bankers does not bode well for any stabilization of prices (aren’t these the same institutions that made the stupid loans in the first place?) but at some point the combination of low mortgage rates, low prices and declining inventory will turn the housing market.

Note: Thanks to Lyon Real Estate and Mike Lyon for adding me to their mailing list for the TrendGraphix Monthly Real Estate Report.