New data released today by foreclosure listing firm RealtyTrac shows that banks took back fewer Sacramento area homes in February. Local foreclosure activity fell 20% from the month before and it was 19% lower than February of last year.
But RealtyTrac's Daren Blomquist says the drop off wasn't because of a rebound in the housing market.
"The primary reason is just continued fallout from the foreclosure processing controversy that continues to dog the lenders."
…also known as the "robo-signing" controversy, when banks allegedly failed to verify foreclosure documents. Blomquist points out - the banking industry is in the midst of a major overhaul.
"The foreclosure processing issue is creating kind of an exaggerated trough in these numbers. We still expect to see those numbers bounce back a little higher in the coming months."
The anticipated ramp up means a glut of bargain priced, bank-owned homes on the market.
Right now, the proportion of bank-owned properties in the Sacramento area is nearly 45%, according to the home-price tracking firm Clear Capital.
"And when you have almost one-in-two homes selling as a distressed sale, that's naturally going to weigh down the entire market overall."
Clear Capital's Alex Villacorta says local home prices are on the verge of reaching new lows as soon as next month.
"Sacramento is very near that double-dip threshold. In fact, prices today are about 4.4% above the lowest point that they were back in the early part of 2009."
RealtyTrac's Daren Blomquist says with all the distressed properties on the market, it'll take several years before the Sacramento area sees a more normal rate of foreclosures.