The first six months of 2013 brought a remarkably fast recovery to Sacramento’s real estate market.
Figures from DataQuick, a San Diego real estate information firm, show median single-familyhome prices jumping anywhere from 15 percent to 50 percent across much of the four-county Sacramento region.
“I don’t recall anyone predicting prices would rise this much” in so short a time, said DataQuick analyst Andrew LePage.
There were a few exceptions, mainly in the region’s most sought-after residential areas. The college town of Davis, the leafy neighborhoods near downtown Sacramento, and the upscale foothill communities of Granite Bay and El Dorado Hills held their value better in the crash, LePage said. Those areas saw more moderateprice increases during this year’s rebound, he noted.
“The spectacular appreciation tends to be in areas where prices got beaten down the most during the downturn,” LePage said.
Parts of south Sacramento, West Sacramento,Tahoe Park, North Sacramento, North Highlands and Arden Arcade were among the places that saw the biggest leap in prices, with appreciation of about 50 percent over the same period of 2012, according to DataQuick.
The median price is the point at which half of homes sell for more and half sell for less.
Most of the rise in median home prices has been driven by an increase in values, as more buyers compete for a relatively small number of homes for sale, LePage said.
Investors paying cash and snapping up cut-priced homes for rentals spurred the upward price pressure, he said. The realization that the market had hit bottom and turned upward also unleashed a wave of pent-up demand from mid-level and high-end buyers, he added.
Combined with a record-low inventory of homes for sale and record low mortgage rates, it pushed prices skyward.
“In six months people went from thinking prices might fall to thinking they would go up,” LePage said.
Another big factor was a sharp drop in the number of foreclosed homes on the market. There was a huge decrease in foreclosure resales in the first six months of this year compared with the first six months of last year, LePage said.
In Sacramento County, for example, the number of homes on the market that were foreclosures dropped from 41 percent in the first half of 2012 to 16 percent in the first half of this year. El Dorado, Placer and Yolo counties also saw the percentage of foreclosures on the market drop by more than half.
Whether such huge price gains can continue is another question. Rising mortgage rates and rising prices could moderate demand, LePage said.
“It’s easy to imagine a temporary pause where people have to think more carefully because (those factors) are affecting affordability,” he said.