Sacramento home-market chill cause for concern

first_imgSACRAMENTO – One of the nation’s hottest housing markets is showing fresh signs of weakness as sales slow, prices fall and more buyers cancel new home purchases. Experts don’t know how much the Sacramento area market will soften, but many suspect the recent chill is more than just a seasonal lull. And the region’s housing troubles appear to be worse than in most parts of California. “At the moment it is one of the weakest in the state,” said economist G.U. Krueger of Irvine consulting firm Institutional Housing Partners. “I can’t see anything that’s weaker.” Most experts don’t expect the Sacramento market to crash. Instead, many predict a soft landing in which prices stagnate or drop slightly for a while, then rise modestly over the next two years. AD Quality Auto 360p 720p 1080p Top articles1/5READ MORERose Parade grand marshal Rita Moreno talks New Year’s Day outfit and ‘West Side Story’ remake But the epic housing boom that generated wealth, created jobs and propped up an otherwise lackluster economy appears to be over. In the Sacramento resale market, sales volume dropped nearly 20 percent in October from a year ago, according to DataQuick Information Systems. The median price of a resale home in Sacramento County slipped 2 percent to $363,000 in October from $372,000 in August. Resale prices are still about 17 percent higher than a year ago, but until recently, homeowners enjoyed year-to-year gains of 25 percent, among the country’s highest appreciate rates. Real estate agents are now seeing the largest inventory of unsold homes in a decade, with the number of “For Sale” signs doubling in the past six months. Cancellations of new-home purchases soared 260 percent in the third quarter over last year, according to Hanley Wood Market Intelligence. Experts attribute the softening market to a variety of factors. Mortgage rates have risen above 6 percent, while banks are tightening their lending standards, especially on the riskier types of loans that helped fuel the boom. Bay Area residents aren’t buying Sacramento properties as quickly because it’s taking them longer to sell their existing homes, said analyst Greg Paquin of the Gregory Group in Folsom, Calif. Investors who believe the market has peaked are cashing out and buying in cheaper markets in the Midwest and South. Economists worry that the economic effects of the housing slowdown will be felt across California. “It definitely worries me,” said economist Ryan Ratcliff at the University of California, Los Angeles. 160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set!last_img read more