Real Estate Bubble

Inflated Prices and Declining Sales

Roseville, CA- During the past few weeks I have had two buyers remind me local home prices are just about what they were at when the market crashed in back in 2005. They both were worried about buying and having the value of their new home go down.

My response is to agree the numbers are similar, but they tell based on different factors. I do feel current home prices are inflated. We have had years of very low interest rates which has increased demand which puts upward pressure on prices.

The prices back in 2005 was built on rampant fraud and investor speculation. It was a housing market which went way too high too quickly. The rate of appreciation was not sustainable. I recently read an article about the crash and current prices and it explained if adjust prices for inflation the current Sacramento medium price of $390,000 would have to be $510,000 to compare to what the prices were in 2005.

The market has slowed down. The growth we are experiencing is in the 2 to 3 percent range, not the 7 to 8 percent of the past few years. In addition, in the Sacramento region, we have seen a decline in he the number of sales.

Although I am seeing buyers a bit more cautious recently and they want to time their entrance right I remind them the housing market is cyclical and they still have very low interest rates working for them.

Julie Jalone

Realtor Julie Jalone

If you have any comments or questions about buying or selling in the current market, please contact me (916-899-6571) at the MagnumOne Realty office in Roseville. You can also reach me by emailing to juliej@jalone.com (DRE# 01418097)