Affordability is The Housing Issue – Another Example or Two

Implications: Here’s more evidence that we’re not at any bottom in the residential market and that more hard times are ahead.

Analysis:

The key issue here is to note that the jobs that accompanied housing growth in the Inland Empire were in construction, retail, professional and business services.  You can read this data as noting low wage growth in each category and unsustainable growth without new rooftops in the retail and construction areas.  It’s hard to define a housing market which has reached such inequality between buyer and seller as a market.  Rather, the homeowners are locked in and the buyers are locked out.  Assuming that normal influences make it imperative that sellers sell, the probability of a sea price change is high.

The same thing is occurring in Sacramento.  But we have some pricing numbers in Sacramento.  The median price of a new house in Sacramento County compared to a year ago fell last month by 14.6 %.  I believe this is artificially high too as buyer incentives may have also exceeded say $ 25,000 in cost to the builder in my opinion.  Given an average sales price of over $ 395,000 in the market, this would tell me that prices here have really fallen by 20 % or more from the previous period.

The bad news is there seems to be no relief apparent here or elsewhere yet.  Let’s hope for better in the near future but I don’t see a window in the coming year.