Tuesday, June 06, 2006

Valley Shooting Stars "Fading Fast"

Last week, the Office of Federal Housing Enterprise Oversight released their 1st Quarter house price index report (pdf). You can look at past reports here. Here's how the Sacramento housing market fared:

  • quarter change: -0.24%
  • 1-year change: 13.18%
  • 5-year change: 112.23%
As commenter Garth pointed out, Sacramento is one of the few major markets to have a negative quarter change. Now the question is will the markets that shot up the highest also fall the hardest? As the Sacramento Bee explains, the Central Valley markets (along with Florida) dominate the top 25 metro areas with the most appreciation over the last five years.
The housing boom may be fading fast on the long inland plain stretching from Bakersfield to Redding, but its residents now enjoy some of the country's biggest five-year gains in home equity, according to a new federal study.

The 19-county Central Valley, along with Florida, enjoyed the nation's strongest housing appreciation since 2001 through March 31 of this year when measured in percentage gains, says the U.S. Office of Federal Housing Enterprise Oversight.

Ten Central Valley metro areas, including Sacramento, placed among the nation's top 25 cities for rising home values during the past five years, according to the office's newest quarterly report...

Fresno County, with a recent median home price of $310,000, posted the nation's biggest five-year gain of 145 percent, followed by Bakersfield at 142 percent. Sacramento ranked 25th nationally with a 112 percent increase...

"We're not super affordable anymore," said Sharon Telles, president of the Placer County Association of Realtors. "The Sacramento area has always been quite a few steps below the Bay Area or Los Angeles or San Diego. But in the last five years the amount of difference in our prices has lessened."

The federal figures arrive as Sacramento-area housing values already have fallen well below their 2005 peaks and other Valley cities report slowing sales and growing inventory of real estate listings...

Fueled by low interest rates and new adjustable rate mortgage products, the Valley's surge in home values also spawned a sustained consumer-spending spree. Homeowners in El Dorado, Placer, Sacramento and Yolo counties alone borrowed and opened equity lines of credit for $21.9 billion from 2002 to 2005, according to DataQuick Information Systems, a La Jolla-based property researcher.

The rankings also confirm how the Central Valley quickly has become one more expensive California region for thousands of would-be homeowners. Employers have reported more problems luring job candidates. Moody's Economy.com recently ranked Stockton, Chico, Redding, Merced and Fresno among the nation's 20 most financially stressed cities for homeowners.

"There is generally a feeling of an improving economy in the region, but if you are working in the Valley and working for Valley wages the impact of this has been to elevate the price of housing out of your reach," said Carol Whiteside, president of the Great Valley Center, a Modesto-based think tank.

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