Special to Sacramento Press

By Dena Kouremetis

It may seem like an anomaly, but it really comes as no surprise to REO expert and Re/Max agent Ray Ponce.  Housing in Sacramento’s ‘grid’ – surrounded by freeways in all directions, has simply not become a casualty of foreclosure crisis.

“It’s just a matter of supply and demand,” says Ponce. “There has always been, and will continue to be a demand for housing in this area.  Most of the homes in this area were built during the 30’s, 40’s and 50’s during a period of time when quality of craftsmanship and individual style were important for homeowners.  These homes are built well and possess charm and character that today’s modern homes simply do not have.”

Ponce adds, “Since there is no more open space for builders to come in and throw up massive subdivisions of homogenous tract houses, the supply has remained relatively stable, even in these hard times.  You may have noticed that the areas of Sacramento with the largest number of foreclosures are the areas that grew the fastest during the boom years -- places like Elk Grove, Natomas, and Lincoln.  Most of this was caused from over-building and over-pricing.”

Another factor protecting grid homes from the foreclosure glut is the fact that many of the homeowners in East Sac and downtown are original owners or are heirs of original owners, according to Ponce, making them debt-free and lien-free as well.  Fewer liens mean fewer foreclosures. 

A snapshot of foreclosure activity, in mid April from Foreclosure Radar,for example,  reveals approximately 115 active foreclosures in the Elk Grove area as compared to only four in the grid area. The contrast has not changed significantly since then.

According to Ponce, other types of home owners in the grid tend to be young professionals; doctors, attorneys, and business owners, who could afford to put 20-50% down when they bought these homes.   “They purchased homes within their means and probably took out fixed rate loans.  The buyers who purchased in the new subdivisions may have been the victims of variable rate loans, since homebuilders’ in-house lenders tended to make qualifying easier for cash-strapped buyers.”

The grid area holding its own is consistent, judging by a story reported several years ago in the Sacramento Business Journal. In it, staff writer Michael Shaw found that homes in East Sacramento were selling handily while homes in other areas three times the size of the diminutive East Sac footprints were sitting on the market for at least six months at the time. “Homes located in East Sacramento, one of the city's venerable neighborhoods, along with others such as midtown, Land Park and Curtis Park have in many ways resisted the ravages of the housing downturn,” reported Shaw.

Rapid growth areas are traditionally hit hardest, reminiscent of the saying, ‘the bigger they come, the harder they fall ‘ The 2007 Sacramento Business Journal investigation revealed that Sacramento's strongest neighborhoods, however, have been landlocked for years, resulting in little new construction.  This makes them a smaller commodity, forcing prices to stay stable or even increase over time when other areas suffer.

The beauty of downtown-close neighborhoods isn’t all about economics, however.  The proximity to the downtown job core is a big draw for buyers, along with the area’s tree-lined streets, neighborhood shops and eateries and entertainment venues.

Instead of three car garages, you get charm,, instead of strip malls you get sophisticated Downtown Plaza, and instead of freeway gridlock, you get light rail, a few bus stops or a 10-minute drive.

Even though the grid area is resilient, however, it is certainly not immune.  “Just as in Sacramento as a whole, the inventory of homes for sale in core neighborhoods has crept up over the past two years,” reported Shaw, adding that multiple offers are not commonplace.  But homes within Sacramento’s coveted grid have been and always will be a draw, no matter how you slice it.