Sacramento is set for a real estate rebound as home prices linger at affordable levels and investors wet their appetites for good buys in the Northern California market.
At least that's the conclusion of Pro Teck Valuation Services, a data company that just released its August Home Value Forecast Update.
Pro Teck sees Sacramento as the next Phoenix — a market that overshot its price bottom before soaring back up on investor and homebuyer demand.
"Sacramento is particularly interesting because like in Phoenix, home prices overshot on the downside after the market peak in 2006," said Tom O'Grady, CEO of Pro Teck Valuation Services.
Sacramento's active real estate listings are down 39.21% from last year, while foreclosure sales are 52% lower, Pro Tech reported. In addition, the months of remaining housing inventory declined to 3.65 months in the most recent report.
Pro Teck predicts the trajectory of local real estate markets by utilizing Collateral Analytics' Leading Real Estate Index for core-based statistical areas. The index evaluates employment growth, home sales, unemployment, affordability and new building permits in statistical areas.
A score that moves to 50 or above suggests a pending increase in home prices, while a score lower than 50 indicates falling prices.
"Sacramento’s LREI has been climbing over the past two years and recently shot up to a value of 50, which means that half of its components are moving in a positive direction relative to their historical performances and that further home price ppraeciation is expected," noted O’Grady.
"Another important factor supporting home prices in Sacramento is affordability. This month's Home Value Forecast shows that Sacramento’s housing affordability index at its highest level in years. Also, in many areas of the Sacramento market, we are seeing nearly every ZIP code classified as 'good' or 'normal' according to our most recent market condition scoring system, which is in contrast to the weakness in the market a year ago."