According to a report issued this week by Realtor.com, real estate in Northern California is booming -- especially in one housing market that was among the hardest hit of any in the country by the collapse of the housing bubble.
The report, which looked at the year-over-year increases in median home listing prices in housing markets across the United States, found that the Sacramento area had the largest gains of any metro region. This data suggests that sagging housing prices, which have been a drag on the economy in much of California's Central Valley for years, are not only beginning to rebound, but are doing so with surprising strength.
Five of the top 10 cities with the fastest growth are located in Northern California and two more are in the southern portion of the state.
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"In Sacramento, you have a desirable area that was hit really hard by the housing bubble, with a lot of foreclosures and a lot of overbuilding," said Alison Schwartz of Move, Inc., the operator of Realtor.com, who noted that the spike in prices in the area is largely a result of how far home values had dropped in the region during the recession.
During much of the 2000s, loose financing led to an oversupply of housing being built in the San Francisco Bay Area's far outlying suburbs in the run-up to the crash. Since then, there's been little new construction; so as demand naturally increases with the gradually improving economy, supply hasn't been able to keep up and prices have jumped.
Additionally, many homeowners in the region still underwater on their mortgages, making it impossible for them to sell and further drying up some of the liquidity that would otherwise be present in the market.
Schwartz explained that it isn't exclusively people re-entering the housing market after the recession or, for that matter, first-time home buyers who are driving this new demand. "A lot of investors are looking to buy cheap properties that are relatively undervalued at the moment because they were built at the wrong time."
Not only did Sacramento have the biggest gain in home list prices over the course of the past year, but it also had the largest percentage of its listed houses go off the market, an inventory reduction of just over two-thirds. Even so, Sacramento's median listing price is still well below its mid-bubble 2006 peak.
The Stockton-Lodi area, which was hit just as hard by the housing bubble, saw similarly staggering inventory reductions.
Housing price gains can't come soon enough for many homeowners in the region, which has been wracked by foreclosures and a flood of underwater mortgages.
"There are certain subdivisions in ... [the Central Valley area] where one out of every two or three houses are in foreclosure," Ruben Villalobos, an attorney and school board member in the nearby city of Modesto, told The Huffington Post in an interview last year.
Many of the other Northern California cities sitting atop the list owe their rapid price increases to a fairly different set of factors than those underlying Sacramento's swift ascent. Places like Santa Barbara, San Francisco and San Jose largely retained their value during the recession and owe the continued strength of their real estate markets to their booming economies where high-income people want to live.
While San Francisco only had the third-highest jump in housing prices over the past year, the report found that the City by the Bay had, far and away, the highest median home sale price in the country of $749,000 -- about double the median price of buying a home in New York City.
Check out the full top 10 list here:
Correction: The article originally stated home sale prices instead of home list prices.