Sacramento County’s median home price leaped in March by the largest margin in nearly a quarter century and broke the $200,000 barrier for the first time in five years, DataQuick reported Thursday.
The 31.4 percent increase in the median – from $156,000 in March 2012 to $205,000 in March 2013 – was a product of the ultra-low supply of homes for sale and strong demand from investors and traditional homebuyers trying to take advantage of today’s low prices and historically low interest rates, the San Diego-based real estate information service said.
It was also a result of a big shift in the mix of homes sold, experts said. Last year, the majority of homes on the market were foreclosures and short sales. This year, conventional sales make up more than half the market, with many homebuyers moving up.
The number of homes sold for more than $300,000 in Sacramento County nearly doubled in March from the same period a year before, said DataQuick analyst Andrew LePage. At the same time, the number of homes sold for less than $200,000 dropped by 36 percent.
The rapid rise in the median “doesn’t mean every house in Sacramento County rose by 30 percent a year,” LePage said. “Probably a little more than half is actual price appreciation and a smaller portion is a change in the market mix, with more middle and high-end sales.”
The median is the point at which half of all houses sell for more and half sell for less.
March’s rise was the biggest year-to-year jump in the county’s median since June 1990, LePage said. It was also the first time the median rose above $200,000 since August 2008, when it stood at $210,000.
Though much improved from a post-crash low point of $153,000 in January 2012, the median in March was still 47 percent off the peak of $387,000 reached in August 2005.
The median price in Placer County rose by nearly 20 percent to $315,000 in March compared with the same month a year before. Yolo and El Dorado counties also saw double-digit percentage increases in their median home prices form March 2012 to March 2013.
Economists said both the region’s price appreciation and the change in the types of houses sold are good news for area homeowners, who have suffered from years of crashing prices and neighborhoods filled with foreclosures.
“A year ago everything that was selling in Sacramento was a half-destroyed foreclosed unit in a bad part of town,” said Christopher Thornberg, a Southern California economist and early predictor of last decade’s housing crash. “Now we’re seeing an expansion of properties in better neighborhoods, not foreclosed homes, in decent shape. That’s what you’re dealing with.”
Thornberg, head of Beacon Economics consulting in Los Angeles, said he thinks the increase in Sacramento home values is far more modest than the 31 percent rise in the median. DataQuick reported a rise in the median in Los Angeles of 24 percent in March compared to a year before, he noted. Meanwhile, the Standard & Poor’s/Case-Shiller index reported an 8 percent year-over-year increase in Los Angeles home values in January.
He said he thought the situation in Sacramento was similar, with the move away from foreclosures causing the median to spike.
“There’s been a tremendous shift in type of product bought and sold out there,” Thornberg said. “That should be heartening. That’s good news.”
Jeffrey Michael, Director of the Business Forecasting Center at the University of the Pacific in Stockton, has argued for the last couple of years that homes in Sacramento were undervalued relative to area rents and incomes and the cost of new construction.
The rapid price appreciation is a needed correction, he said.
He agreed with Thornberg that homes haven’t risen in value by more than 30 percent, but said the actual increase is probably around 15 percent – “certainly in the double digits.”
The rise in the median “is a really important step toward recovery,” Michael said. “I think we’re seeing more traditional buyers coming into market. It’s normalizing.”