Share of Sacramento Area Homes Affordable for Median Income: 7.9%
Sacramento ranks as the 17th least affordable market in the country, according to the California Building Industry Association's analysis of the quarterly National Association of Home Builders/Wells Fargo Housing Opportunity Index. 50 least affordable metro areas (pdf)
"The index calculates the percentage of homes in a metro area that were sold there during a three-month period that could be afforded by a family earning the region’s median income. The index assumes buyers will finance 90 percent of the purchase price with a 30-year fixed-rate mortgage, and takes into account prevailing interest rates, property taxes and insurance costs."
More here.
24 comments:
Remember when Sacramento was touted as business friendly, in part because housing was so affordable?
It may get there again, perhaps by 2010. The web site www.housingtracker.net shows that asking prices (not selling prices, but rather median asking prices) are dropping 1% (or $5,000/mon) now. At that rate, the $414,000 median asking price will get to $275,000 by April of 2009.
It's a little easier to understand when they report the % of households that can afford the median priced home, rather than this way (the % of homes that are affordable for households earning the median income). It's backwards. Maybe they want to put the emphasis on building more affordable housing (?).
In any case, it's pretty clear that in today's market you have to be pretty high up on the food chain to afford even the smallest flat-roof house, on a postage stamp-sized lot, where all the homeless people come to sleep and urinate, without a garage, in the worst school district, next to a freeway, in Sacramento. And if you happen to be a CEO, maybe you can afford one with a garage.
Merced and Stanislaus County were right there in the top five least affordable in the Nation. The job market in these areas are can not, and will not, sustain this bubble to the point in other areas, This place, Modesto and Merced, is going to head down in a hurry!
Wow, there's that many left, 7.9%? As a Realtor®, I'm just going to have to work harder to get more people into Option ARMS and other risky financing, and encourage more sellers to list their homes for higher prices.
Well, all I can say is, I'll see what I can do. Thanks for letting me know I still have my work cut out for me.
This just cannot continue. Folks, I am no economist or accounting expert, and I struggle with the new math everyday. But the current housing market is recklessly and aggressively violating all economic laws and many accounting principles, to the point where many are daring to be caught. Think about this, common working couple are having to resort to perjury in order to obtain a mortgage. I not am talking about Kenneth Lay stuff here folks, I talking about many of our neighbors. In the universe, all things seek to be in a state of balance. If electricity did not want to be in balance, then we would not have lights or many other things. I don’t how much more out of balance the housing market could be in. We are only going to violate these laws and principles for awhile, but at some point things will change whether we like it or not.
Dreamer,
This is the scariest. You take places like the Stanislaus and Merced County where the job market and wages can not sustain the market. I know people that bought with options AMRS and there is now way they can afford the reset mortgage.
It's going to get ugly.
Doomsayers, Naybobs of Negativism, Cynics, Trollers, and No Count Gloom and Doomers ALL!
By Gosh, We are, and Goll Durnit, We will be again the primo place to be, Sacramento, and Golly GeeWhiz we deserve high prices for our fine homes.
I traded up from my $760,000 stucco two story ranchette split level Tuscan/Normandie/Spanish/Mission/Provencal/Early Tudor home on a side of a hill to a,
Million dollar Tuscan/Normandie/Spanish/Mission/Provencal/Early Tudor spead in West Sacramento right on a splendid drained wetlands, and you know, it will only completely flood to a depth of 8 foot every once and a while!
I enjoy the Fog, and the Hot Days, and the cultural life of the Asian Gangs and Home Boys!
In my humble opinion, the prices are way too low!
Hey Jack
Seen any Harajuku girls in yer hood yet !?
In third world countries it's not at all uncommon to find that housing prices cannot be sustained by the average income. Yet the prices stay up there out of the average person's reach. While the US isn't a third world country, there are many areas in California where the cost of housing doesn't have to be supported by local incomes since people own houses there as vacation homes. We are also seeing a dynamic where wealth is being concentrated more and more in the hands of a few folk.
I don't think housing will ever be as "affordable" as it was 20 years ago. It's going to be more expensive.
I'm not disputing that there is a bubble, but I also do not thing that housing needs to become affordable to everyone in order for prices to stabilize. I think the correction will be far less than predicted. Since I'm familiar with what's going on in Placer county, I'd say prices will fall another 20% or so. But that still won't make home prices affordable to the median income earner.
Today’s report on San Diego has been released!
Local Home Price Analysis
Re: Anon 10:02,
This is similar to the arguments people made to buy tech stocks in the late 90s, that p/e ratios were irrelevant, etc., and there was a new paradigm at work.
If you look at the list of the top 10 least affordable areas, you won't see many vacation/resort areas on that list. There might be a few people who want a second home in Madera, but not enough to prop up the entire housing market there. This is a bubble, dude, get over it and get out of its way.
Anon,
I think I'd much rather stay home and go to work than vacation in Sacramento, plus the in-laws live there.
Seriously, does anybody buy vacation homes in Sacramento? All I can say is watch out for serial killers on the bike trails.
Or rapists with an Asian Fetish.
Did you see the KCRA report on the poor gal that was raped by some sicko with a real mean fetish.
Gangs of all colors, horrendous traffic and out of sight housing prices? something doesn't make sense in sactown.
There are plenty of vacation homes and opportunities for tremendous vacations in Sacramento
1. Hmong Pork BarBque and Slaughter, West Sacramento
2. Homeless marathon and trek daily on K Street
3. Gangbangers Holiday on weekend nights in Old Sac
4. Tour of the "Stars" Homes in Citrus Heights and Orangevale
5. Day Sidetrip of the scenic wonders of Stockton
6. In July and August you have your "Bake a Chicken" in your car at the Arden Fair Parking Lot, or you can do the daily Noon Street, right on the pavement, egg fry
7. Also in July and August we have the fabulous drunk drownings in the American River, or one can watch the "Child die of Heat" in the parking lot of the Folsom Outlet
8. Downtown in the Fall and Winter Sacramento has the daily Fog viewing contest, also known ass Depression Alley
9. One can also go see the John Saca burial site, but one must hurry before it gets covered up.
It's not vacation homes that will prop up the market, it's investors. There's a lot of people with a lot of cash right now.
Hi all -
Are all the commenters here bitter renters or what?
Anon,
Sacramento real estate is no longer a good investment. Investors have moved on to various low rent cities like Omaha. Most smart investors don't want to wait 5 years or more before seeing any relevant return. You'd be better off buying CDs.
Simon,
Beats the hell out of being a bankrupt former homeowner. Also, I live in SF, everyone rents here.
bitter renters?
sounds like a drink...maybe Randy Paragary of his dish of a wife Stacy can make that for you at the Monkey Bar....
happyinsf,
Agreed.
Wages don't support the prices. Investors are in other markets. Why aren't we seeing a freefall in prices?
How about the Sacramento Knife and Gun club where the members regulary meet at the UCDavis Emergency Room?
Stockton blvd and Lemon Hill are known as Dodge City.
No, actually not trolling -- I had a transaction go south so I was feeling a bit ornery. Sorry.
Actually I enjoy the fact that prices are coming down insofar as it's making more stuff affordable, but we're still California, after all. One of the things I noticed was how much the CAR affordability index declined in the four years of my career. It's pretty sad, actually, especially inasmuch as my real love is first time buyers. Oh well, in practice that means I do a lot of condos.
Hi John,
I love that.."We're still California"
So were all the cheap, non-coastal, low paying cities and towns not in California 3 or 4 years ago?
Speaking of California, it is a nice place to live. But, I constantly see people trashing the rest of the country when bloggers mention leaving the state. I have traveled all up and down the west coast and east coast, and a bit in the midwest, and I'd have to say there is no magical difference between california (especially strip mall Sacramento)and most of the places I've seen. I also hear you can never come back. Why would that be the case? You may start out at a disadvantage (i.e. quite a bit better off than resident first time home buyers if you owned out of State)but that's it.
I'm not sure I get your point. Sacramento was less affordable than many areas of the country three to four years ago, and it's worse now.
California is, on average, less affordable than many other areas of the country. This should be non-controversial. See for example http://www.demographia.com/db-statehouseinc2000.htm, which ranks us as second only behind Hawaii.
It's is true, California contains two world class cities, Los Angeles and San Francisco. And all the high paying jobs and high cost of living that goes with that. It is not surprising that a large state that contains LA and SF and a whole lot of coastline is on average less afordable than farming states or states that have a couple Sac-sized cities. I guess Sacramento is now part of the "Bay Area". Strange then that a couple years ago Sac was very close to the national average. Weird, it should have always been much more expensive since it's on the BART line and all.
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