SACRAMENTO (CBS13) — For the first time in 14 years, Sacramento home prices are nearing where they were prior to the market crash in the mid-2000s, which has some worried it could happen again.
Experts say the numbers are the same but tell a different story.
“Prices are inflated. They have gotten a lot higher because of 7.5 years of low-interest rates,” said appraiser Ryan Lundquist.
Lundquist has been appraising homes since 2003. He sees home prices in Sacramento and West Sacramento nearing what they were prior to when the real estate market crashed 14 years ago.
According to the Sacramento Association of Realtors, the median sales price in June 2019 was $390,000, just a few thousand dollars shy of what it was in August 2005. It was soon thereafter the bubble burst and homes lost half their value, forcing foreclosures and short sales. But for those worried this real estate bubble will burst, Lundquist says have no fear.
“Our bubble in 2005 was built on rampant fraud and investor speculation. It was a market that went way too high too quickly. That rate of appreciation wasn’t sustainable,” said Lundquist.
Real estate broker Erin Stumpf agrees, saying we are nowhere near that point when you consider how the value of money changes over time.
To adjust the $390,000 price for inflation to look at apples to apples, you need to see a median price hit $510,000,” said Stumpf.
Both admit there is no crystal ball
“Everybody talks about the desire to time the market perfectly but very few pull it off,” said Lundquist.
The best way to approach it is to know that all markets are cyclical. And buyers, although more cautious recently, still have interest rates below four percent in their favor.
“If you purchase your home you have more control of your circumstances. Plus, where do you want to ride out the next market?” Stumpf said.
The market has slowed down a bit. We are not seeing 7-8% growth like in the last couple of years, but 2-3%.
We have had 2,800 fewer sales this year in the region than last year. But that could change experts say historically August figures higher than June.