Sacramento metro home prices have declined steadily for almost 40 months How much lower can they go? Here's the case for and against home prices bottoming out soon. Scroll over each chart to investigate and slice the data yourself.
Pro: Home prices are about to stop falling--Correction almost complete: At the end of the last bust, the median home in the region sold for, in today's dollars, abut $180,000, according to First American Real Estate Solutions. By the end of last year, the median home price for the region had dropped to $208,000. It likely fell a few more percentage points since then, meaning that if the boom was a mirage, we are back to reality.
Inflation-adjusted median home prices, Sacramento Region, 1991-2008
--More families can afford homes: At the end of the last bust, a Sacramento family earning the median income could afford 70 percent of the region's homes, according to the Wells Fargo Housing Opportunity Index. At the end of last year, a family earning the median income could afford 66 percent of the region's homes. So homes here are affordable again.
Percentage of homes affordable to family earning region's median income, 1991-2008
Con: Home prices can fall even further--Foreclosures still dominate market: Foreclosures are the main reason local home prices are so low. Banks desperate for cash are competing with each other, boosting sales but depressing prices. Toward the end of the year, it looked like the trend might be waning. But the last two months have seen an increase in foreclosure filings, according to RealtyTrac.
Foreclosure filings, Sacramento Region, 2005-2008
--The economy is in horrible shape: It's hard to buy a home if you don't have a job. And it's almost as hard to pull the trigger on a home purchase in the midst of the worst economic recession in decades.
Number of employed workers, Sacramento Region, 2000-2008
Sources: Wells Fargo/National Association of Home Builders, RealtyTrac, California Economic Development Department
Note: Foreclosure actions in the chart above represent foreclosure notices, auctions and actual repossessions.