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.
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