Investors swoop in and purchase homes on the cheap, squeezing out would-be resident-owners. Unable to flip properties for enough profit they must rent. Renters move in and don’t take care of the neighborhood as if it were their own. Perhaps at times like this it is better for those would-be home buyers to sit on the sidelines and rent an apartment instead of renting a home from the investors who squeezed them out of the housing market. Then, wait out the housing market until it is favorable for resident-owners. Just a thought. Take a look at the article and draw your own conclusion.
Homeownership in Sacramento plummets to lowest level in 40 years
Homeownership in Sacramento County has plunged to its lowest level in 40 years after last decade’s catastrophic housing crash and the mass purchase of foreclosed homes by real estate investors.
The trend has been especially acute in working-class areas, and is raising concerns about neighborhood stability among residents, civic leaders and housing advocates.
“It’s a combination of people losing their homes to foreclosure, first-time buyers not being able to get loans, and investors swooping in and taking over neighborhoods,” said Kevin Stein, associate director of the California Reinvestment Coalition, a statewide group that advocates for low-income communities on housing and banking matters.
“It raises the question: Is this good for communities in Sacramento, and if it’s not, what’s going to be done? It’s a phenomenon that’s going completely unchecked at this point.”
Sacramento, an affordable city by California standards, traditionally has been a bastion for homeowners, with ownership rates more akin to Indianapolis or Dayton, Ohio, than San Francisco and Los Angeles. But those rates have fluctuated with the region’s successive boom and bust cycles since the 1970s.
In 2000, during a relatively stable period in the housing market, about 79 percent of detached single-family homes in Sacramento County were occupied by their owners, U.S. census figures show.
Prices rose steeply for the next five years as more residents joined the ranks of homeowners, thanks partly to relaxed lending standards. The result was a bubble in housing prices of unprecedented proportions and a spike in homeownership.
By late 2007, as the region’s real estate market began its five year free-fall, about 83 percent of detached homes in the county were owner-occupied, according to property tax records.
Today, after years of foreclosures and short sales, only about 77 percent of county residents own the houses they live in. That’s the lowest figure dating back to 1970.
Lower-income areas were hit hardest by the trend. Old North Sacramento saw the proportion of homes occupied by an owner drop by 13 percentage points from 2007 to 2014 – more than twice the county average. Other areas hit hard include parts of south Sacramento and Meadowview.
Homes in these areas were selling for rock-bottom prices just a couple of years ago, but families hoping to buy and live in them either couldn’t get a loan or were consistently outbid by investors.
There are signs the trend could abate soon. Foreclosures have slowed to a trickle, and the proportion of homes bought with cash, a giveaway that an investor is likely involved, has fallen sharply.
Even so, 85 percent of the county’s ZIP codes saw the proportion of detached homes occupied by owners fall from 2012 to 2014, according to property records.
Councilman Jay Schenirer, who represents some of the hardest hit areas, said the city is looking at options to boost homeownership in neighborhoods such as Oak Park. North Oak Park has the lowest rate of homeownership in the county at 58 percent.
The city has been in discussions with nonprofits such as the NeighborWorks Homeownership Center in Oak Park and Habitat for Humanity to address the issue, but no conclusions have been reached, Schenirer said.
“It’s really about the ownership of neighborhoods,” Schenirer said. “When people own their homes, they have great pride in their neighborhoods and you have neighborhoods that take ownership of a panopoly of items, (such as) community gardens and the business sector.”
In the Del Paso Heights area of Sacramento, 45-year resident Fran Barker said she’s never seen so many houses change hands as in the past few years. Many of her neighbors lost their homes to foreclosure. In their place came vacant homes and, more recently, renters.
“When I moved here, we all owned our homes. We knew each other. We walked down the street, talked to each other and established friendships,” said Barker, who heads the Del Paso Heights Improvement Association.
The investors who bought homes in her neighborhood tended to spruce them up, but tenants sometimes let them fall back into disrepair, she said.
“If owners are desperate, they don’t always choose the right people” as tenants, Barker said. Renters sometimes “are not really committed to the community. They say, ‘We are just renting it out.’ ”
Whether the new ranks of renters will choose to become homeowners anytime soon remains questionable. Some had such bad experiences during the housing crash that renting may seem preferable. “There are certainly people who got burned once and are going to say, ‘Once is enough. I’m out of here. I’m not going to trust it again,’ ” said William Rohe, a professor of city and regional planning at the University of North Carolina at Chapel Hill.
Rohe and a colleague wrote a paper last year titled “Reexamining the Social Benefits of Homeownership after the Housing Crisis.” It asked, after a massive wave of foreclosures, whether the “bloom is off the rose of homeownership.”
Their conclusion was that “the impact of the housing crisis seems to have been short-lived even among those who have either direct or indirect experience with mortgage foreclosure. Attitudes toward buying a home have rebounded at a remarkably fast pace.” Rohe likened it to investors returning to the stock market after a crash.
Americans still see owning a home as one of the best ways to accumulate wealth through equity, and as a means of providing stability for themselves and their children, he said: “There are too many benefits of homeownership for people to continue to stay away from it.”
Note: This story was updated at 9:45 a.m. on 5/12/14 to fix the homeownership rate for 2000. The headline and first paragraph was also updated to reflect the homeownership rate from 1970.
Call The Bee’s Hudson Sangree, (916) 321-1191.