Under the leadership of El Dorado County, the Sacramento area became one of the premier hotspots for housing and growth in California in the final months of 2020.
The backward year dominated by the coronavirus pandemic ended with a lively real estate frenzy in the capital region, fueled by Bay Area emigrants, as well as a state-leading surge in housing construction and competition among local buyers, with property prices still rising.
El Dorado County stands out not only locally but nationally.
Average home sales in El Dorado County were $ 535,000 for the final months of 2020. This corresponds to a price increase of 18% in the last three months of 2019, one of the largest percentage leaps between the average and large countries of the state data analyst ATTOM Data Solutions.
Another review by real estate data analyst Ryan Lundquist found that the number of homes sold in El Dorado rose 41% in 2020 after seven years of relatively static growth. There was a similar jump in Placer County.
El Dorado County also led the state in population growth last year, albeit a modest 1.7%, according to the Treasury Department. Sacramento and Placer also increased while the coastal areas lost population. Overall, California population growth stalled for the first time in modern history.
El Dorado officials say they are trying to strike a balance between building their economy and maintaining their largely non-urban lifestyle. This includes an ongoing battle in the South Lake Tahoe pandemic between economic growth and public and environmental health.
This balance could become more difficult as the teleworking catch-up phenomenon persists in 2020 and more people may leave urban centers in search of cheaper areas with more freedom of movement.
"Many people who are now able to work from anywhere because of the COVID-19 pandemic have made the decision to move to El Dorado County from higher priced, congested parts of California and the nation for obvious reasons," the county spokeswoman said. Carla Hass said.
What's behind the wave?
Though the Bay Area and coastal immigrants fleeing to the Sacramento area to avoid some of the highest housing costs in the country make big bucks, the price hikes in the local real estate market are also due to local millennials getting their first homes in their thirties and young families moved up to bigger homes and some local retirees looking for new homes for their golden years.
Many are able and willing to pay more for homes right now as interest rates remain historically low and monthly payments become more manageable, property watchers say.
However, prices in the region have risen, partly because Sacramento saw a large imbalance between supply and demand in 2020. There were far more potential buyers looking for a home than there were owners putting their homes up for sale. This imbalance remains an issue that threatens to add to the value of homes through 2021.
Affordability Issues in Sacramento County
Sacramento County also saw some of the steepest property price hikes in the state in the late months of 2020, up nearly 17% from the fourth quarter last year. This is the fastest price increase since 2013 compared to the previous year.
The median sales price in Sacramento County was $ 420,000 at the end of its year, compared to $ 360,000 at the end of last year. That made it more difficult for more sacramentans to afford a home than the average over the past 15 years, if not as bad as it was during the 2005 housing bubble.
Currently, according to ATTOM, it would take an annual income of $ 87,000 to afford a home sale at average price in Sacramento. That is significantly more than the median household income of about $ 72,000 in Sacramento.
Similarly, in the final months of 2020, Placer County's average sales prices rose 13% "year over year" to $ 543,000.
According to Attom, prices in Yolo County rose a modest 8% to $ 460,000.
Sacramento, Yolo, El Dorado, and Placer prices remain well below recent Bay Area home prices. For the past several months, the median home sales price in San Mateo County was $ 1.42 million. San Francisco was $ 1.38 million, Marin and Santa Clara about $ 1.25 million.
With average home sales prices also high in Santa Cruz, Monterey, and Contra Costa counties, the Sacramento area will remain affordable by coastal standards through 2021.
Good or Bad Business?
Attom Data Solutions uses median home price, mortgage rate, and income data to determine how affordable a home is in each county compared to the 15 year average for the same county.
It assigns a number based on its calculation. A county with a value over 100 is cheaper than the historical average. A county with a score below 100 is less affordable than the historical average.
This move made Sacramento County less affordable than usual in late 2020, but Yolo, Placer, and El Dorado counties were each cheaper.
In all four countries, prices are growing faster than wage growth, a trend that has been offset by record-low mortgage rates. Houses were much cheaper at the end of 2020 than during the real estate boom, but much less affordable than in 2012 or 2013 (when many people couldn't buy a house anyway, despite low prices, because a large number of investors paid cash). .
Assuming current mortgage rates and a 20% down payment, it would take approximately $ 87,000 a year to buy the house at the average price in Sacramento County by the end of 2020.
It would cost about $ 96,000 to buy the house at the average price in Yolo County. approximately $ 111,000 for the home at average price in El Dorado County and approximately $ 115,000 for the home at average price in Placer County. All of these price points are higher than the median household income in any of these counties.
That said, the area remains a steal when compared to the San Francisco, Santa Clara, Marin, and San Mateo counties, which take more than $ 250,000 to afford the home at average price.