Appreciation vs. Market Recovery for Sacramento Real Estate

If a reporter at the Financial Times does not understand the mathematical calculations of our Sacramento real estate market, it stands to reason, I suppose, that the average consumer is confused as well. Or, maybe some of us just didn’t pay enough attention in math class, hard to say. Not everybody likes math or realizes in school how useful math is when we’re all grown up. If you’re struggling to understand what has happened in the Sacramento real estate market, I’ll lay it out for you in terms that are easy to understand.

From January of 2012 through January of 2014, our Sacramento real estate market median price has increased 50%. When I mentioned this over the weekend to a Financial Times reporter, she said, “But your market has fallen at least 50%, so that means you’re at breakeven now, right?” I might have rather stuck hot pokers in my eyes than be forced to learn that an isosceles triangle has 2 equal sides, but I do comprehend that one can’t solely pluck the median price range and decide our market is back to normal.

• For starters, that 50% price increase applies only to the median price. Our median price moved from $160,000 in January 2012 to $240,000 in January 2014.
• Second, averaged over those 2 years, that’s only 25%, and the market is fairly flat today.
• Third, homes priced above that price point and below that price point have not necessarily appreciated by 50%.
• Fourth, if you take a home that was originally valued at $500,000, apply a 50% fall in market value, that would drop the value of that home to $250,000. A 50% increase would make it worth $375,000, not $500,000.

All real estate is local to neighborhoods. Some areas of Sacramento fared better than others. Some areas of Sacramento were hit harder than others during the downturn, most notably the newer home subdivisions in Elk Grove, Natomas, Roseville and Lincoln. It’s amazing, our Sacramento real estate market, varies so much from one neighborhood to another!

I freely admit that I didn’t really fare so well in high school math. I think I took the class because I needed one more class to graduate. I took off so much time during my senior year by hitchhiking around the country, I probably earned a B- or a dreaded C. English was my strong suit, though, straight A’s. Yet, even I, a lowly Sacramento real estate agent, know how to run the numbers. My high school math teacher would be so proud. If you want to know more about the Sacramento real estate market, please call Elizabeth Weintraub at 916.233.6759. I’m never too busy to talk.