According to the June real estate reports from the Sacramento Bee , Home prices in Sacramento and Yolo County have dropped by 27% to 30% from a year ago, and this price drop has spurred a buying frenzy which has shot homes sales volume up 30% to 60% over the June 2007 activity.

But the little town of Davis, just 12 miles west of Sacramento and sitting in the heart of Yolo County, is bucking this trend. For Davis, the median price has dropped just 6% from a year ago, and maybe because of that, the volume increase seen in other areas has not hit Davis, with sales for 2008 YTD actually down 33% from the same period in 2007.

There are some circumstances that might contribute to this anomaly, so let's take a moment to talk about them;

The rest of Yolo County (Woodland and West Sacramento) and Sacramento County have been hit harder by the foreclosure mess, while Davis has not had the volume of REO's as a percentage of total home sales.

West Sacramento and Sacramento County were prime areas for real estate speculation in the earlier part of this decade. Davis escaped much of this, largely due to the fact that the Davis real estate market has always had higher prices than surrounding areas.  The majority of the "Flippers", and "no-money-down" crowd concentrated their efforts in the less expensive suburbs and high growth areas.

Now, those markets are experiencing a higher volume of home sales because many of the sales are forced sales by people caught in the mortgage mess.  The need to sell now fuels the drop in prices these markets are seeing.  With less speculation in Davis, it resulted in less REO's and so Davis does not have the added volume of homes being sold people that have to "dump this house now". There is also a lower amount of REO homes in Davis compared to surrounding communities.

That is not to say that there was not any speculation in Davis real estate or questionable loans made. There were. It was just a much smaller percentage of the overall market.

So the volume of sales for the first half of 2008 has dropped by a third in Davis, while the rest of the area has had a burst of activity. The other areas have seen the bottom drop out of the home prices (Sacramento County median home price is at a 5 year low) while Davis home prices have held up better.

There seems to be a correlation, if you drop prices by 30%, it results in an increase in sales volume. Sounds like Econ 101, eh?

Check with me next month for more insights into the unique nature of the Davis real estate market.

I'd love to hear your thoughts on the Davis Real Estate market. Feel free to add your comment below.

 

- Vicki