June 2016 H OUSING N EWS R EPORT economic fundamentals and strong wage growth. “It’s not really wage growth, and it’s not really the economy that’s driven the housing market,” he said. “It’s not like we’re in this extremely healthy place … we still need jobs. You have both values rising and rents rising for sure, and that’s a tough market. We just need wage growth to catch up and play a more central role.” Median home prices have risen 95 percent in Sacramento County since bottoming out in Q1 2012 while average weekly wages have risen just 7 percent during that same time period, according to a RealtyTrac affordability analysis using home price data from sales deeds along with average weekly wage data from the Bureau of Labor Statistics. According to the RealtyTrac affordability analysis, buying a median-priced home in Sacramento County required 39.4 percent of average wages in Q2 2016, still below the historic average of 41.5 percent for the county and nearly half the worst affordability in Q4
another opportunity?” questioned Acord, who has a degree in Chemical Engineering and worked in that field before jumping into real estate nine years ago. “And if that becomes a reality, we could have a shock because we would have an influx of inventory.” Lundquist noted that other homeowners who would otherwise be transitioning into “move- up” buyers are not doing so, also contributing to tighter inventory. “People who bought in 2012, 2013 who are sitting on incredibly low interest rates … Why would (they) move up?” he said, noting that this tight inventory is placing upward pressure on both home prices and rental rates. “Rents have gone up 10 percent last year and are projected to go up another 10 percent this year. … That’s a huge, huge issue.” Lundquist cautioned that the rising prices and rents in Sacramento are being driven more by internal supply constraints and buyer perception of value rather than external Sitting on Low Interest Rates
Ryan Lundquist Certified Residential Appraiser Lundquist Appraisal Company Carmichael, California
“ It’s not really wage growth, and it’s not really the economy that’s driven the housing market. … . You have both values rising and rents rising for sure, and that’s a tough market. We just need wage growth to catch up and play a more central role. ”
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SOURCES: RealtyTrac, Bureau of Labor Statistics
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