By Hudson SangreePublished: Oct. 24, 2012
Home prices in the Sacramento area are likely to rise significantly in the coming year and will outpace the national average, online real estate tracker Zillow predicted Tuesday.
The Seattle-based firm projected that home values in the region will increase by an average of 5.6 percent through the third quarter of 2013. Home prices will rise 1.7 percent nationally during the same period, the firm said.
"Six percent is on the healthy side," said Zillow senior economist Svenja Gudell. "It's a steady clip of appreciation."
Like other market-watchers, Zillow says Sacramento area home prices hit bottom in the first few months of this year after a five-year free fall.
Tight inventory, including fewer foreclosures for sale, combined with strong demand from investors for rental homes has spurred recent increases, Gudell said.
At the same time, low prices and historically low interest rates have been drawing more would-be homeowners to the market. Home values are about half what they were at the peak of the boom but starting to trend upward, she said.
"Prices have fallen so far," Gudell said. "As soon as they start to pick up, it's almost a mentality of no one wants to miss the boat."
The median home value in the region rose 3.4 percent to $210,900 in the third quarter of 2012 compared with the third quarter of 2011, Zillow said. Prices were up 2.9 percent from the second to the third quarter of this year.
Some cities did better than others. Elk Grove's median home price rose 6.4 percent in the third quarter of 2012 compared to the same period a year before, Zillow reported. Roseville's jumped by 6.2 percent year-over-year, it said.
In the city of Sacramento, the median home price rose by 3.7 percent from the third quarter of 2011 to the third quarter of 2012, Zillow said.
Sacramento area home values are now back to March 2002 levels, the company reported.
The area's median home price is about 50 percent of its peak value of $422,000 in the fourth quarter of 2005, Zillow reported. The last time home values rose as fast as they have recently was in March 2006, when the median price rose 3.4 percent year-over-year, Zillow said.