On Tuesday, the Sacramento Association of Realtors invited Leslie Appleton-Young, the Chief Economist and Vice President of the California Association of Realtors to share her thoughts on the 2009 California Real Estate Market. Ms. Appleton-Young began her presentation with an update on the economy both in the state of California and in the United States as a whole. She then focused on the California real estate market before addressing the Sacramento Real Estate Market specifically. She made no secret of the fact that we are living in unprecedented times. We have not seen an economy like this before, nor does anyone seem to know what to expect. Though the statistics Leslie presented were sobering, she did make a few points that were encouraging for the county of Sacramento.
The economy of the United States, as Ms. Appleton-Young reported, continues to be affected and, conversely, to effect a struggling global economy. Gross domestic product, consumer confidence, stocks, home sales, home prices and number of jobs have all shown decreases in the last year. One of the silver linings offered by Ms. Appleton-Young is that it appears that we, as a country, have finally started to save our money again. Though times are tough for everyone, Americans appear to be making smarter choices about their spending.
The outlook for the California real estate market was encouraging, in that, the number of detached existing home sales went up in 2008 to nearly 440,000 units, an increase of 26.7% from 2007. Incidentally, the number of units sold in 2007 (approximately 350,000) was the low point in the number of California home sales since 1995. One set of statistics that I found especially interesting was an analysis of when regions throughout California reached their peak median price. As an entire state, California peaked at a median price of $594,530 in May of 2007. Sacramento, however, reached its peak in August of 2005 at a median price of $394,450. One of the last regions to peak in median price was San Francisco, whose median price of $853,910 was in May of 2007. The silver lining? As one of the first regions to begin the descent in median price, hopefully Sacramento County will be one of the first on its way out of the California real estate market slump.
One of the key issues to the decreasing median price in Sacramento County as well as the state of California is that the majority of the homes that are selling are in the lower end of the price range. As of the end of 2008, nearly 82% of the homes sold in California were under $500,000. Some more good news? The number of sales of existing detached homes in Sacramento County was up 88.9% in 2008 as compared to 2007. And, the number of homes sold in January of 2009 was more than double the number of homes sold in January of 2008 in Sacramento County! The other side of that coin is that the median price in Sacramento County was down 36.8% in 2008 as compared to 2007.
Where do we go from here? Who really knows? But, with prices in Sacramento County lower than ever, a decreasing inventory of unsold homes and the number of home sales increasing - what better time to buy than now?
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