Bay Area cities have been a thriving part of California due to businesses like Google, Facebook and Apple flooding the area with cash for quite some time. As a result home prices in San Francisco, Palo Alto and other cities are seeing home prices nearing or exceeding the record highs reached in last decade’s housing bubble. A little known fact though is that these price spikes are spreading to outlying areas.
The Bay Area’s real estate booms and busts have affected Sacramento for decades. The past three booms, starting in the late 1970s, arrivals of Bay Area buyers drove up Sacramento home prices to heights out of whack with local incomes. From 2001 to 2005, almost 150,000 people migrated from the Bay Area to the Sacramento metropolitan areas resulting in surge of 80 newcomers a day. During that time more people came from the nine Bay Area counties than all other counties in the state combined.
Suburban communities such as Pleasanton and Fremont are seeing bubble-era prices return. The attractiveness of short commutes to work and good school districts are raising prices just a few percentage points off their all-time highs set in 2005 and 2006.
Bay Area companies have relocated to the area to take advantage of better housing and employment conditions. The job growth has been good for the area, but if these trends continue the Sacramento housing market will see the same thing that is currently happening in the Bay Area market featuring a scarcity of homes for sale despite rising demand.
A wave of homeowners is expected to list their houses starting in February to take advantage of the sky-high prices. Many will cash out and move to the Central Valley where home prices remain about 40 percent below the heights that were reached during the bubble.
People will be stunned by what they can afford in locations like Granite Bay and Rocklin counties. Many homes are half the price of those located in San Francisco with the same features like great school districts and quiet neighborhoods.
The difference between now and the trends in 2004 to 2007, is that then people were coming to Sacramento to buy the biggest house possible with their money and now people are purchasing more conservatively. They want to be able to travel and not have large tax burdens.
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