Home Front: Don’t expect those Bay Area shoppers anytime soon
ShareThisBy Jim Wasserman
jwasserman@sacbee.com
Published: Friday, Apr. 3, 2009 - 12:00 am | Page 1B
In area conversations about real estate it’s often an act of faith that a widening gap between Sacramento and Bay Area home prices might soon spark a new migration east to buy houses cheap and put an end to free-falling prices here.

Nice theory. But wrong.

The once-widening gap that seemed to promise help has already closed. While 17 months ago the median sales price in Santa Clara County was $388,000 higher than in Sacramento County, it’s now $248,000 higher, says researcher MDA DataQuick.

Prices have tumbled in both counties to narrow the original gap.

It means we won’t be seeing thousands of Bay Area residents coming anytime soon to prop up Sacramento’s housing market or, by extension, its stores, office buildings and economy.

"I would say three to five years out, and you should see some good net migration to Sacramento," said Sanjay Varshney, dean of the College of Business Administration at California State University, Sacramento. Until then, the capital region is largely on its own to slowly absorb an overbuilt housing supply, a factor that will keep prices flat once they bottom out. Said Varshney: "We are expecting a floor sometime late this year."

During the boom earlier this decade, 140,000 newcomers from the Bay Area and Los Angeles County gave a profound boost to real estate prices as they came in search of housing bargains in El Dorado, Placer, Sacramento and Yolo counties. Their cash buys and flush pockets after selling pricy coastal homes sent area prices skyrocketing until they began to collapse after 2005.

Varshney, noting the current weakness of the Bay Area economy, said it can’t spin out a new migratory stream toward Sacramento until its economy roars back and drives up home prices again. By then, if Sacramento’s economy can offer jobs, they’ll come again for the less expensive places to live.

"That migration is a ways off," confirms DataQuick analyst Andrew LePage. "In downturns people’s mind-set changes. It’s ’maybe we can find something close to work. Let’s stay in the Bay Area.’ "

So be patient. The Sacramento Council of Governments still expects the capital region to grow long-term – they predict 1.2 million more people by 2035. Surely, one of them will have paid a nice price for your house.


Mortgage insurance offered

As the spring sales season begins, here is the question most on the mind of first-time homebuyers: What if I lose my job?

The California Association of Realtors is rolling out a program to override that fear. It has allocated $1 million to subsidize mortgage payments for six months in the event of layoff.

The CAR’s Housing Affordability Fund Mortgage Protection Program will pay up to $1,500 a month to help buyers of California homes make their payments.

It’s free for buyers, a first for the association and the first Realtors group nationally to offer it, CAR says.

Expectations are it will benefit about 3,000 families this year. The rules:

• Must be a first-time buyer or not have owned a home in three or more years.

• Must open escrow after April 2 and close before Dec. 31.

• Must use a California Realtor in buying.

• Must be a W-2 employee, not self-employed.


Rates still falling

It’s another record breaker for 30-year interest rates this week. The newest survey by mortgage giant Freddie Mac pegs the national average early this week at 4.78 percent (before points). That’s down from 4.85 percent last week.

It’s the fourth straight week in a downward trend that started with rates at 5.15 percent the week of March 5.

Freddie Mac repeated a now-familiar description: 4.78 percent is the lowest since it began its weekly survey in 1971.

The 15-year fixed-rate mortgages is also at the lowest average since Freddie Mac began tracking it in 1991: 4.52 percent before points, down from 4.58 percent last week.