June 2016 H OUSING N EWS R EPORT a bubble; that doesn’t mean prices can’t keep rising. … (but) a major crash is coming.” Campbell noted that the last nationwide housing bubble formed as early as 2004, but people could still make money off real estate through 2006. “There’s nothing wrong with bubbles if you know when to exit,” he said. “You are trying to get off the elevator before the cable (breaks).” Campbell and Lundquist both agreed that low interest rates are the primary driver of rapidly rising home prices both in San Francisco and Sacramento. “The only thing that is supporting the housing market right now is interest rates,” said Campbell, who noted that since the year 2000 home prices have risen 70 percent based on the Case-Shiller Index of 20 major cities, but Housing Not Enough

during the housing recovery over the past five years has worked in favor of smaller custom builders like Jeff Grenz, a broker with Equity Properties who also flips properties and builds custom homes on a small scale. “There is still a lack of inventory in the lower end of the market,” he said, referring to the under-$300,000 segment. “The big builders can’t fix that because the builders can’t build below $350,000 in our area.” While Campbell does not believe Sacramento is in a housing bubble, he emphasized that the same cannot be said for San Francisco, located about 90 miles to the southwest. “San Francisco is the only city in California that to me at this point is clearly in a bubble,” he said, noting that even though San Francisco is in a bubble, the data he tracks is not indicating property owners there should sell yet. “It’s in Bubble Watch: Sacramento v. San Francisco

Jeff Grenz Broker, builder and flipper Equity Properties Sacramento, California

“ The property we’re building right now is an empty nester target property, so that’s a Bay Area refugee. … We have sold to Bay Area refugees that just pay all cash. ”

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SOURCE: RealtyTrac


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