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Based on where our Sacramento real estate market has been the last several years with short sales, bank owned properties and so many more sellers than buyers it is hard to believe some experts are predicting the next real estate problem could be a shortage of homes.

The demand for housing based on population growth in the United States is 1.5 million homes each year. Last year there were only 672,000 housing starts, with only a handful in Sacramento, which were less than half the units needed to meet our average population growth.

In the Sacramento area we still have excess inventory of homes on the market, many of which are vacant. There does not seem to be any significant reductions in the number of distressed properties we are seeing come onto the market. In addition, I believe we are seeing some cultural changes related to housing. There are more young people moving in with parents and even two families moving in to a single home to share expenses. The question is will the success of these new living arrangements alter the demand for housing and if so for how long?

Regardless of any cultural change in living arrangements the demand of housing is going to take significant job growth and a healthy economy to trigger any action. Even as the National and Sacramento area economy improves it will take time to work through the current excess inventory so I don’t think we need to spend much time worrying about demand reaching “problem” levels.

The problem in the Sacramento area is too many homeowners in houses where they owe more than they are worth. This fact continues to drive our growth in distressed properties. This fact is driving our very large short sale market as well as increasing the potential for foreclosure. I don’t see any significant changes to the current situation over the foreseeable future.

It is hard to argue the long term demand for housing may eventually bring around a shortage but as we experienced in the early 2000s the builder who are left will quickly figure out how to satisfy the demand and avoid any artificial increase in prices.

Julie Jalone

Realtor Julie Jalone

If you have any questions about buying or selling a home in the current market, feel free to reach out to me at the MagnumOne Realty Office in Roseville at (916) 899-6571 by email to [email protected] I would be happy to answer your questions.

We specialize serving the needs of buyers and sellers of homes in the Sacramento area including Sacramento, Placer, El Dorado, Sutter and Yuba counties.

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