CoreLogic Reports Sacramento Home Prices Back at Pre-bubble Level

We know the beach cities and the Silicon Valley housing prices continue to rise but now the latest data from CoreLogic shows that the median price for resale homes in Sacramento County is 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.

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.”

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.

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