Who Thinks Sacramento Homes are Too Expensive (Oakland, Roseville: sale, real estate)

[CityGirl72]

FOr some crazy reason - when the interest rates went down - everyone I knew (it was 2000 or 2001) started refinancing

Then the housing boom hit - which MOSTLY was due to everyone in the Bay Area moving to Sacramento

Sacramento people started selling their homes like crazy!most moved out to farther areas to get newer developments.

Then the boom has slowed - the great mortgages are gone - and homes cost too much

Things started rolling back

[inpd]

Okay, is that it. That the Sac prices increased due to people from the Bay
area moving to Sac?

Do these people now commute to the Bay area or do they live in Sac?

Originally Posted by CityGirl72

FOr some crazy reason - when the interest rates went down - everyone I knew (it was 2000 or 2001) started refinancing

Then the housing boom hit - which MOSTLY was due to everyone in the Bay Area moving to Sacramento

Sacramento people started selling their homes like crazy!most moved out to farther areas to get newer developments.

Then the boom has slowed - the great mortgages are gone - and homes cost too much

Things started rolling back

[Tim Currie]

inpd -

it's already stopped. Like I said, prices are falling, and probably will for quite a while. And after that I wouldn't expect them to start rising again anytime soon. No rush.

Did you ever check out that site I linked? All you could ever want to know...

oh btw - does it matter why exactly they were rising? You'll probably find many different answers to that. The thing is, it is a regular cycle of the market. It rose, hit peak, and now is falling.

[inpd]

Originally Posted by Tim Currie

inpd -

it's already stopped. Like I said, prices are falling, and probably will for quite a while. And after that I wouldn't expect them to start rising again anytime soon. No rush.

Did you ever check out that site I linked? All you could ever want to know...

oh btw - does it matter why exactly they were rising? You'll probably find many different answers to that. The thing is, it is a regular cycle of the market. It rose, hit peak, and now is falling.

Why it was rising gives me an indication of whether it will ever rise again steeply.
If its just a "correction" in the sense that Sac homes were cheap relative to
the commute distance to SF then that's now been fixed and it was just a one of increase.

[cw68]

Sacto homes increased not only due to the influx of buyers from the Bay and non-conventional mortgages, but also because for a larger metro area in California, housing was cheap. It caught up to the rest of the California during the real estate boom areas.

Some Bay Area buyers commute (my friend lives in the Pocket and her husband works downtown SF, picks up a vanpool in West Sac everyday), some telecommute with a couple of days spent in SF but lots of them work from home. Then the rest of them just find jobs in this area.

[BearBranch]

I was close,

This is for my old zip code 0f 95841 from city-data.com

Median household income (1999): $33,918
Estimated median household income in 2005: $41,075

and from Sacramento CA (California) ZIP codes, schools, jobs, demographics & more
45k household income for the city of Sacramento

Originally Posted by CityGirl72

Yup - just as I thought - Household Income is approx 54K

Sacramento County, California (CA) - Household income, demographics, local cities, towns and villages

And of course Roseville is higher at 58K, and it says 20% of households in Roseville make over 100K a year

City of Roseville, California - Median Household Income (http://www.roseville.ca.us/ed/demographics/median_household_income.asp - broken link)

[quasi888]

There's still a slow trickle of Bay Area expatriats, myself included. I just moved to Roseville about 4 months ago. I was continuing to telecommute most of the time, and taking Amtrak 1-2 days a week into Santa Clara. I would have been happy continuing to do that if not for the fact that the company's ability to stay afloat is now in question, so I quit before things got bad. It didn't take me long to find work locally.

I just met one of my soon-to-be neighbors (I am the first to move in to my cul-de-sac, the other houses are still nearing completion), and he is from the Bay Area too, and has already found work locally as well. (We're both in IT/software development.) According to him, one of our other neighbors will also be moving from the Bay.

[Seaharbour]

I dont understand how people can afford these 400 plus homes here, my hubby makes very good money, almost six figures and we are hoping to get a 200 grand home, in safe nice area with low crime, is that doable in sacramento???

[Evlevo]

Originally Posted by inpd

Income is important, but I think its also important to understand what drove the price
increase in the first place. When I visited SAC in 2001, things were much cheaper. So
what happened from 2001 till now and will it continue to happen or will those changes
roll back.

It was kind of a "Perfect Storm" for home price increases, and I doubt that it will come back for at least 10 years, possibly 20-50 years.

Here is what happened...

1) The interest rates were cut to almost nothing after 9/11 in an attempt to revive the economy. Since people could "borrow" more money for the same payment, people quickly started paying more now that they could borrow more. That caused prices to start to rise quickly (this part happened just about everywhere)... they have since returned to normal levels.

2) The low interest rates made home equity loans really cheap too so folks in the bay area borrowed against their $700K homes and bought new places in the Sac area as investments to rent. This also drove prices up

3) Other folks in the Bay area were priced out of that market and thus bought in Sac and commuted 3-4 hours a day. This also drove prices up.

At one point about 30%-40% of the monthly home sales were to either people from the bay or as '2nd home investment properties'

4) Since prices were rising so fast, many people leveraged themselves to the hilt to "just get into the market". That also made prices rise.

Just like a Ponzi scheme, it couldn't last forever.

Now that prices are dropping, many are getting foreclosed on (it is one of the highest in the nation).

Expecting the housing market to repeat it's previous performance is even less likely than expecting the late 90's stock market & Tech IPO craze to continue. It takes folks a long time to recover from getting burned.

[RaisedinSac]

What drove the price increase is supply and demand. People from the Bay area were selling their ridiculously priced homes, taking the equity and nearly paying for a home here outright. I know many Bay area transplants who even continued to work in that area---commuting in order to get BA wages with a Sac area price tag. I watched my home value double during that time to a price that even I wouldn't pay for it!! I'm no econ major (just an accountant) so I can't predict what happens now, but I've lived in Sac for my entire 40 years, and this is reminiscent of the early to mid 90s. I saw military families in Antelope lose their homes when McClellan announced its closing, because their mortgages were more than the value of their homes.

We live in North Highlands (our neighborhood is fairly nice, contrary to what many people on this board say about the area) and we were looking to buy up a few years ago. We make decent money, but still couldn't afford anything with a square footage of over 1400, unless we wanted to get involved with those adjustable, interest only mortgages that have caused so many of the recent foreclosures. When you can't afford a midsized home on 100k a year, I say yes, the homes are too expensive.