The gaudy numbers look familiar – giving long time Sacramento residents a case of real estate deja vu; home prices have risen by 26% compared to the same time last year. Those are the kind of white-hot appreciation numbers the region enjoyed during the boom, from 2003-2007, as Sacramento was one of the fastest appreciating markets in the country. Now, after so much has happened with the real estate boom and bottoming of the market, it claims the top spot again. According to a survey by the well-respected and conservative CoreLogic Case-Shiller Index, Sacramento’s year over appreciation numbers are the highest of all 380 markets in the country.
Las Vegas trailed Sacramento at #2, with 25% appreciation; Oakland was #3 with 24%, and San Jose and Los Angeles also in the top 5. Those appreciation numbers dwarfed the nationwide average of 10% during the same period.
We certainly look at those numbers and glean that the market, formerly one of the most distressed in the nation with a rash of foreclosures, short sales, and defaults following the mortgage crisis, has found its equilibrium. But if the past teaches us anything, it’s that white-hot appreciation isn’t always healthy in the long run, either. But analysts expect the region to see a gradual cooling over the next year to numbers more in line with the national average. Since last November, inventory is up 71%, median asking prices are up 21%. Investors have taken a step back from the over-saturated rental market as prices rise and REO’s and distressed sales are harder to come by, and new homes are being built at a faster clip.
That all adds up for a leveling of the appreciation rate to normalized, healthy levels, but for now, Sacramento still wears the crown for #1 in the nation.