From Bay Area to Sacramento region: ‘My house back home is $2 million dollars’
If you're touring a model home this weekend in Sacramento, chances are the other couple over there, the ones checking out the quartz counters and sizing up the master closet, are not locals.
Emigres from the San Francisco Bay Area will comprise one-third of house hunters in the capital region this summer, real estate analysts predict.
Call it the coastal wave. It started a year ago, and it may be about to peak.
Bay Area residents are inundating Sacramento home developer websites, clicking through floor plans, watching promotional videos and signing up for email blasts, according to Kevin Carson of the New Home Company. His firm is building in El Dorado Hills, downtown Sacramento and Davis.
"I believe this summer, when the kids get out of school, we are going to see a real increase in Bay Area sales," he said. "We haven’t really seen the wave hit yet."
Michael Strech, head of the North State Building Industry Association, said he's checked with other builders and guesses the one-third figure may be conservative at some new subdivisions.
The reasons are obvious: The median price of a Bay Area home hit $850,000 in April, according to CoreLogic, a real estate data company. That's a $100,000 increase in one year.
In San Francisco, the median price hit $1.3 million. That often buys no more than a 1,600-square-foot house.
In contrast, the April median sales price for a resale home in Sacramento County was $357,000. And the median for a new home was $433,000.
In an eye-opening Bay Area Council survey this month, 46 percent of Bay Area residents said they want to move out of the region within the next few years. They cite the high cost of living, high housing costs, traffic congestion and homelessness.
By comparison, Sacramento's sparkling new hillside subdivisions and moderately priced midtown condos are hot properties.
Retiree Marie Diaz, 59, of San Jose is among the emigres. She and her former spouse are selling their home for $2 million after a divorce.
Diaz said she found she can't afford another Bay Area house with her portion of the proceeds.
"Prices here are outrageous," she said. "I can't afford to live in this area. I'd be in an apartment."
She bought a home under construction in El Dorado Hills for $525,000. It has the same square footage as her old home, with an outdoor "California room" and a nearby community clubhouse where she will play bingo and bunco and do yoga.
There's a Costco, a Sam's Club, theaters and restaurants just five minutes down the hill in Folsom. It reminds her of the laid-back San Jose she grew up in, before the Silicon Valley era.
Sacramento saw similar surges of Bay Area buyers around 1990 and again around 2004, when coastal housing prices were overheated.
This time, though, local builders are pushing the trend by aggressively marketing Sacramento's charms in the Bay Area with advertising campaigns on websites, social media, newspapers and radio.
The New Home Company has run "Head for the Hills" and "Beyond the Bay" marketing efforts. It's pitching its Cannery project in Davis as a commutable location with family-friendly themes, like "Room to Bloom" and "Good Soil for Family Trees."
The expected influx of buyers means stiffer competition for the Sacramento region's still limited supply of new and resale homes. It also means home prices likely will rise again this summer.
Analyst Dean Wehrli of John Burns Real Estate Consulting said his company has projected new home prices here will increase 4.7 percent this year and resale prices will go up 8.2 percent.
But he suspects prices could increase even more, partly due to the push from the Bay.
Some Bay Area residents who cashed out are looking for homes in rarefied price ranges.
Realtor Erin Stumpf has begun showing homes to one such couple, both physicians who landed new jobs here. They plan to sell a 1,700-square-foot Silicon Valley home for about $2.5 million and will look for a Sacramento home in the $1.5 million range, focusing on Sierra Oaks and East Sacramento's Fab 40s neighborhood.
"They will pay cash here," Stumpf said. But more Bay Area buyers appear to be exercising "financial prudence," buying modest homes at the right price, she said. "Not, 'Hey, I've got millions of dollars and I want to overspend for a home in Sacramento.' "
Recent retirees Jan and Dave Sechrist, who worked for Bay Area nonprofit agencies, say they moved here precisely because they are not wealthy. They sold their Dublin home to get out from under a mortgage and had just enough money to buy a $339,000 home in Antelope this month.
They paid the asking price and were the only people to make an offer.
"If it had been higher, we wouldn't have heard about it," Sechrist said. "That's the top of what we could afford."
Builders say new $500,000 hillside homes south of Highway 50 in Folsom are expected to attract coastal buyers looking for hilly topography, open space and larger lot sizes. Aren Bazzocco of Taylor Morrison, which began building in Folsom this summer, said his company's initial buyer interest list last month suggested about 30 percent of shoppers will be from the Bay Area.
Other new communities appear to be of less interest to Bay Area buyers.
McKinley Village, an infill community near East Sacramento, is attracting solid interest from local residents who work downtown and want to live close in, but only marginal interest from people outside the region. Homes there go from the $400,000s to more than $1 million with add-ons.
The new Riverchase subdivision in the Southport area of West Sacramento, where starter home prices are in the mid-$300,000s, is also attracting downtown Sacramento workers but is not high on Bay Area buyers' shopping lists, builder David Ragland of Anthem United development company said.
In contrast, Ragland predicted up to half of home shoppers this summer at his Reflections at River Islands in Lathrop, near Stockton, could be from the Bay Area. Lathrop is close enough to the South Bay for long-distance commutes. Ragland's company is advertising in the Bay Area, including on social media.
Many buyers will be retirees. But for those still in the workforce, the economics of a move from the higher-salaried Bay Area to the smaller local economy could be difficult.
"The Bay Area job market is quite an attraction," said Jeffrey Michael, director of the Center for Business and Policy Research at the University of the Pacific. "It can be a challenge to leave it. We’ll see how it plays out."