'The Big Question for Sacramento'

From the Sacramento Business Journal:

While the depth of the housing slump became apparent in 2006, the housing experts' manta was clear: "The economy, the economy, the economy."

Whether it's Robert Burris, deputy director at the Sacramento Area Commerce and Trade Organization, or housing analyst Greg Paquin, the consensus is that the region's economic health will guide housing out of its current mire of falling prices and climbing inventories.
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So when will the market reverse?

A precise answer is more likely to come from a soothsayer than an industry analyst, but the predictions are generally that 2007 will be more of the same, with the upturn to follow in 2008.

The inventory of homes on the market has been falling steadily for the past three months, but that change might be seasonal. A better picture will come in spring as the traditional home-buying season heats up. Either way, observers are skeptical that there will be a run-up in prices similar to the one over the past five years.

Also from the Journal:

The depth of the housing slump remains unclear. Housing starts dropped 44 percent in the region in 2006, the biggest dip in the state. Median home prices fell roughly 4 percent across the region, with bigger declines in some areas, and are expected to continue to fall in 2007. The construction industry is down by 1,000 jobs after a record 13 consecutive years of gains.

The trickle-down from the housing slump could slow shopping center development, retail expansion and sales, though big projects on the books for years, such as the open-air centers of Palladio in Folsom and Elk Grove Promenade, are expected to start construction in 2007.

"What the housing market will do is the big question for Sacramento," said David Lyons, a labor market analyst with the state Employment Development Department. "There's also a growing question regarding restructuring at Intel because they are such a big local employer. (Those) are two areas of uncertainty that could affect job growth or decline."