There’s a lot of concern about housing right now. People are wondering if the Sacramento Real Estate market has flattened out or if it’ll continue to depreciate. If I’m considering selling my home should I do it now or will it get worse before it gets better? Scared it will indeed get worse. Of course potential first time buyers have fears and concerns about purchasing a home in the Sacramento area right now.
Not many of have heard the saying “be greedy when people are fearful and fearful when people are greedy”. Interestingly enough one of the best investors in history, Warren Buffet, is the one that said that. But what does he know? He’s only the richest man on the planet! What I get from his saying is, when people are scared and nervous, it’s time to look at that as the most likely bottom of the market place. Of course Mr Buffett is talking about investing in the stock market but I think that is what’s happening right now in the Sacramento housing market.
Of course, Sacramento property values today are significantly lower than they were just a couple years ago. On top of that we’ve seen many people have a hard time purchasing a home. What does all of this tell us? There should be some great opportunities out there! That doesn’t mean to go out and buy the most expensive home possible. With the large amounts of inventory in the Roseville and Sacramento marketplace you can still, today, come in and buy a home at 5 or even 10% below current market value! This opportunity acts as somewhat of a safeguard against the small chance that the market will decrease more from today.
However, when the market does turn, and it has to turn, you’ll be sitting pretty. The census bureau reports that the average person lives in their home for 14 years. In any 14 year period home prices should do very well. Why? Because of population growth…
-The population of the United States has doubled every 50 years. Look at the Sacramento area, especially suburbs like Roseville, Elk Grove, and Folsom have more than doubled in much shorter periods of time.
-Today there are 15,000,000 kids in colleges in the United States. What are those kids going to be doing over the next few years? Getting married, starting families, and buying homes.
-A recent Harvard study showed that by 2011 our country will need another 11,400,000 households created. No small number.
Population growth = demand for housing. Period. Demand = increase in property values. All of this is happening at a time where new construction is contracting. Yes, there is a lot of inventory for us to get through but there seems to be a lot of great opportunities right now in the greater Sacramento housing market. Incredible bargains out there!
My cash-flow analysis (assuming comparable home, an average annual rent increase, average tax deductions, and a minimal rate of return on Real Estate) of some moderately priced homes in Roseville shows that over a period of 5 years it may actually be less expensive to own a home in Roseville than to rent.
Till next time!
~Greg :: Roseville Loan Expert