More Pain Ahead for Sacramento Real Estate

From the Sacramento Bee:

"I would just emphasize that all real estate is local and there will be markets in this country that will continue to experience some pain in 2007," said David Lereah, chief economist of the National Association of Realtors. "It may be a 2 percent drop, a 5 percent drop. Maybe it even gets to be an 8 percent drop in that area."

Lereah said about 25 percent of the country falls into that category.

Local experts say that includes the Sacramento region, where year-over-year prices have fallen up to 14 percent in Placer County alone and 2006 sales of all homes and condos are running 14,000 behind the same time last year.

Sacramento-area sales prices are expected to keep falling, up to another 10 percent during 2007 before stabilizing, according to predictions last month by Mike Lyon, head of Sacramento-based Lyon Real Estate...In the Sacramento area, Lyon has predicted a 7 percent increase in existing home sales in 2007, an indicator of bottoming out in a region that was among the first U.S. markets to unravel after the housing boom.
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Folsom-based home-builder consultant Greg Paquin has predicted sales of 9,500 to 10,000 new homes in 2007, lowest since the 1990s and well below 17,155 sales in 2004. Paquin also recently told the Roseville-based North State Building Industry Association he doesn't expect significant price hikes for new Sacramento-area homes until 2009 or 2010.
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A year ago, Lereah and Seiders were among housing economists nationally and in California who provided outlooks for a market that in hindsight proved to be overly sunny.