SACRAMENTO (CBS13) – Home prices in Sacramento have reached the highest levels in 11 years and are expected to grow faster than nearly every other place in America this year.
Zillow forecasts Sacramento will see the second largest rise in home prices — nearly 12 percent in 2013. In fact, with the exception of Phoenix, California occupies all the top seven spots.
A shortage of houses for sale is driving up prices and making this a hot seller’s market. A home we went to in Natomas sold for $259,000 in just 48 hours to a foreign investment group.
“Any time the value of homes go up, people that own houses are going to benefit,” said real estate investor Rich Crosby.
Sacramento home values started picking up last year and the Zillow estimate of another 12 percent increase will only keep investors in the market. They’re competing with an increase in buyers for the low number of houses on the market.
“So you have low interest rates, you have down payment assistance and you have a lack of inventory, which is causing a surge in the market,” said a realtor Michael Sandoval.
Real estate analysts say the surge is more of a bounce back from the housing crash. Some Sacramento-area homes lost more than half their value. The hardest-hit neighborhoods are seeing the biggest rebound. Natomas, Elk Grove, Lincoln and Roseville top the list.
“Houses like this probably in their heyday were $450,000-$500,000. Now we’re looking at maybe $300,000, $350,000 at the most,” said Crosby.
Real estate investment companies like Rich Crosby’s are often the buyers, paying cash to rent or flip the homes. And they argue they bring up prices for the neighborhood.
“We can sell the house more than that short sale can, which inevitably brings up the value of the houses around it. It’s a win-win, really,” said Crosby.
But the investors are criticized for crowding out other buyers — even those with 20 percent down who can’t compete with cash offers. The lesson in economics 101 is simple: as long as there’s more demand than supply, home prices are expected to creep up.
In Sacramento’s case, prices will grow faster than just about anywhere else in the country.
The $259,000 sale price for the house we went to is its highest value in years, but far from what it was at the height of the market when it went for close to half a million dollars.