I'm in Sacramento, and i have noticed that homes are dropping like mad the last few months. Houses that were asking as much as 400k as now asking around 220k and still not selling. All around my neighborhood homes are sitting on the market for under 250k left and right. (these are normal 3bd/2ba homes 1600 sq ft in decent area) Will will see these same homes go back the 120s like 10 years ago?
Bottom will be reached when average people can qualify to buy average homes. 1) The Sacramento average family income is about $67,000 per HUD. 2) Assume banks will require traditional financing, good credit and conservative terms. With $67k income and $10k down, 6% 30-yr fixed, $2500/year prop tax, $600 year hazard insurance, $500/month car payment, you're looking at $206,000 as the maximum affordable home for that family. As of January 2008 the median home price in Sackatomato was $285,000. This implies that home prices need to drop another 25% in order for the median home to be affordable to the median family.