Sacramento Home Prices Back At Prebubble Level

Dated: 05/30/2017

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The Sacramento Bee | Sacbee.com

REAL ESTATE NEWS

APRIL 19, 2016 5:35 PM

Sacramento home prices back at pre-bubble level

BY HUDSON SANGREE

hsangree@sacbee.com

It’s official: Homes in the Sacramento area now are worth about the same as before the housing bubble expanded and collapsed last decade.

The latest data from CoreLogic show the median price for resale homes in Sacramento County approaching $300,000. The last time it was that high was in the fall of 2007, after which prices fell by nearly half over the next five years.

Put another way, housing values are approximately back to where they were in mid-2004, before easy credit and rampant speculation fueled an ultimately disastrous 25 percent surge in prices by August 2005. A similar trend has played out in El Dorado, Yolo and Placer counties, where median home prices are also at mid-2004 levels.

 

“We’re roughly back to where we were before the sharpest part of the run-up,” said CoreLogic analyst Andrew LePage. “We could easily break the $300,000 mark this year.”

If that happens, it would be the product of four years of tight inventory, growing consumer demand and rising prices since the housing market hit bottom in late 2011 and early 2012.

At that time, the median home price in Sacramento County had plummeted to $155,000, about half its current level. Institutional investors such as Wall Street’s Blackstone Group scooped up homes by the hundreds in Sacramento and beyond for single-family rentals.

$295,000Median resale price for a home in Sacramento County last month

In 2013, there was a steep recovery as the price of undervalued homes values jumped by about a third. That trend slowed, and home prices since have been gradually rising, generally by less than 10 percent annually, since the middle of 2014.

March’s numbers seemed to break that trend to some extent. The median price for a resale home in Sacramento County rose to $295,000 last month – an 11 percent increase from March 2015.

Experts caution, however, against thinking we’re in another bubble. Area home prices are still far below the overinflated peak of August 2005, when the median sales price for an existing home in Sacramento County was $374,000.

At that time, home prices had risen beyond the point of reason. Buyers took advantage of practically nonexistent lending standards to snap up houses. And even with hundreds of new homes hitting the market each month, prices continued soaring, upending the basic rules of economics.

“That’s not the case now,” said Greg Paquin, head of the Gregory Group, a real estate information and consulting firm with offices in Folsom. “It’s much more of a supply-and-demand-driven market, an economically healthy market.”

$155,000Median resale price for a home in Sacramento County in early 2012

The inventory of new and existing homes for sale remains relatively tight as buyers seek to move up to larger houses or downsize to smaller ones, he said. Mortgage rates still hover around 4 percent, a historically low number. And job growth in the Sacramento area is steady.

Paquin said he’s also starting to see the return of Bay Area buyers to the Sacramento market, which hasn’t happened for a decade.

The difference between Bay Area home prices and Sacramento home prices is huge, and some Bay Area residents are starting to cash out and buy homes here, Paquin said. They often want to be closer to their grown children in the Sacramento area or have enough space to raise children of their own, he said.

“People are saying, ‘I can go to Sacramento and have a great lifestyle,’ ” he said.

New-home construction has picked up, too, Paquin said. A number of upscale infill projects in central Sacramento are selling briskly, such as the Mill at Broadway, he noted. And home building has resumed in largely middle-class North Natomas after the lifting of a building moratorium imposed over flood concerns.

+ 

The federal government approved levee upgrades last year, allowing construction to continue in what was once Sacramento’s fastest-growing new community.

In the first few months of 2016, builders sold 123 new homes in North Natomas, compared with 23 last year, Paquin said. The average price of those new homes was $340,000, well within the budgets of many middle-income families.

Pat Shea, president of Lyon Real Estate, said another factor driving up median prices in the four-county Sacramento area is people buying more move-up homes, in the $350,000 to $750,000 price range, and luxury homes north of $900,000.

The median price is the point at which half the homes sold cost more and half cost less, so a greater number of high-priced homes sold can bump up the median.

“The move-up market is solid right now,” Shea said.

The inventory of homes for sale has increased since Easter, as it often does in the spring, but so has the number of potential buyers, Shea said. Depending on how things play out, home prices driven up by tight inventory could fall again, he said.

“If we get a seasonal rise in inventory, we might see a relaxation,” Shea said.

Hudson Sangree: 916-321-1191,@hudson_sangree

SACRAMENTO REGION MARCH 2016 HOME SALES

Data for closed escrows each month. New homes data are for detached houses and condos combined.

Resale detached

Sales

Yr/yr % chng

Median price

Yr/yr % chng

Amador*

77

83.3%

$272,500

21.7%

El Dorado

266

4.3%

$382,500

14.2%

Nevada

171

12.5%

$393,050

14.6%

Placer

570

-9.5%

$395,000

5.3%

Sacramento

1,573

2.9%

$295,000

11.1%

Sutter

95

20.3%

$225,000

-6.3%

Yolo

187

21.4%

$342,500

9.8%

Yuba

95

-6.9%

$235,500

27.0%

Resale condos

Sales

Yr/yr % chng

Median price

Yr/yr % chng

Amador

n/a

n/a

n/a

n/a

El Dorado

6

n/a

$274,000

n/a

Nevada

10

233.3%

$378,050

129.1%

Placer

50

2.0%

$227,500

3.4%

Sacramento

185

-3.1%

$175,000

15.1%

Sutter

3

-25.0%

$50,000

7.5%

Yolo

14

-30.0%

$280,000

25.7%

Yuba

1

-50.0%

$82,000

41.3%

New homes

Sales

Yr/yr % chng

Median price

Yr/yr % chng

Amador

1

n/a

$345,000

n/a

El Dorado

37

146.7%

$561,000

8.9%

Nevada

3

-50.0%

$375,500

42.6%

Placer

127

30.9%

$459,250

7.1%

Sacramento

192

47.7%

$389,500

-1.7%

Sutter

3

-25.0%

$232,000

-41.1%

Yolo

34

36.0%

$472,000

3.2%

Yuba

19

137.5%

$285,000

9.6%

All homes

Sales

Yr/yr % chng

Median price

Yr/yr % chng

Amador

78

85.7%

$275,000

22.8%

El Dorado

309

14.4%

$418,000

19.3%

Nevada

184

14.3%

$389,000

13.8%

Placer

747

-3.7%

$400,000

6.7%

Sacramento

1,950

5.4%

$295,000

11.3%

Sutter

101

16.1%

$220,000

-8.3%

Yolo

235

18.1%

$360,000

13.9%

Yuba

115

2.7%

$249,500

27.9%

*Includes resale condos


Source: CoreLogic



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