News, insight and some thoughts about the Sacramento-area real estate market

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March 14, 2008

Is that light at the end of the tunnel?

One of the things I most enjoy about covering real estate in Sacramento is the fact that no one knows for sure what exactly is going on. People and experts are always simply speculating: is this the bottom? Is now a good time to buy? Is this or that statistic the light at the end of the tunnel?

Our Friday story on the DataQuick February surprise for Sacramento County is certainly prime for new speculation. It is a sure sign of this long regional housing slump that 7.7 percent home fewer sales than the same time a year ago can look like great news. But as the statistics tell the story, it really is the first time since Aug. 2005 that sales declines for Sacramento County – the biggest single sector of the regional housing market - have dropped to single digits.
My first reaction seeing that yesterday was to see some kind of faint light at the end of the tunnel. It was even more interesting to hear that investors are back and snapping up houses to rent out. Investors are key.

For months I have been told by real estate agents and builders that investors always set the bottom of a market. The conventional industry wisdom is that when you start hearing people at parties talking about the bottom of the market it is already over. Naturally, much of that talk was always aimed at persuading people that the region was near bottom and that now was a good time to buy.
I heard 17 months ago at a local builders conference that the eyes of the nation were on Sacramento and Washington D.C., seeking signs that the first markets into the tank would be the first to lead the way out. That turned out to be wishful thinking. Nine months ago again I heard Sacramento-area home builders say we were already scraping along the bottom. That, too, was a little premature.
Now again there is a lot of buzz in the real estate industry that we’re approaching bottom in Sacramento.
Maybe we are. Maybe that is the significance of one month of surprising sales statistics. Maybe, indeed, this capital region that fell into the tank far earlier than most metro areas is showing a sign of climbing out, even perhaps leading the nation back out.
I could, of course, be wrong. And I would not be the first. But February sales numbers in Sacramento County have pushed the speculation game now to a whole new level. March will tell more.