Placer & Nevada County Housing Prices Continue to Increase, Following Nationwide Trend
According to S&P and CoreLogic Housing Price Index numbers, home prices continue to show strong growth over the past year with record year-over-year increases in many cities. Some cities are seeing increases as high as 20% versus the same month last year. These numbers are likely to remind some of the “pre-bubble days” when increases such as these were seen for several years in a row. However, you have to look a little closer at the data to see what’s really driving these numbers.
Why Did the Crash Hit Some Cities Harder than Others?
The answer to that question has to do with a number of economic factors, though there are similarities amongst the cities that saw the biggest losses in the crash. The cities that were hit hardest by the market downturn are also the cities showing some of the best growth in value according to the S&P/Case-Shiller Housing Price Indices.
Let’s take a look at three cities that posted large increases in May 2013 versus May 2012. Phoenix saw a 20% increase, Vegas 23%, Miami 14%, and San Francisco had an impressive 24% gain. If we graph these cities over the last decade, it’s easy to see how high prices rose and how far they fell.
SOURCE: S&P/Case-Schiller Housing Price Index
When compared to the National average you can see that all three cities showed increases far greater than the National trend. What we see is that homes in areas that experienced rapid growth were the ones hardest hit by the market downturn. Cities like Miami, Phoenix, and Las Vegas all saw tremendous growth in the last decade and were overdeveloped in many cases. When developers in these cities saw the rate at which home prices were increasing they were quick (and careless) in taking advantage of the abundance of inexpensive land.
SOURCE: S&P/Case-Schiller Housing Price Index
Homes in larger more established cities like Charlotte, Denver, and Cleveland (see above graph) saw significantly less of a reduction in home values from their peak. These cities often have less physical room for growth with little economic justification for increasing prices and are less likely to suffer from overdevelopment. This means that homes in those cities were more accurately priced than those in cities allowing developers to build recklessly. As a result, they saw less of a reduction of value when the market crashed. Even New York saw a relatively low drop during the crash. These cities are also the ones showing the smallest growth in the report, with New York and Cleveland up 3% over last year, and Denver and Charlotte up 9% and 7%, respectively. Even the slowest markets are seeing increases. CoreLogic reports year-over-year increases in 296 of 384 metropolitan areas with the 20 largest areas all showing increases.
What does this mean for the homebuyer?
The areas strongly impacted by the crash represent a great value. Homes in those areas are likely to be very reasonably priced and are often priced exceptionally lower than when they were constructed. This means homebuyers can get a great deal on a home, or even a luxury estate with every amenity, with confidence the home will continue to increase in value.
Here in Placer County, the city of Lincoln grew at of over 300% in the last decade and was the fastest growing city in the country. As a result, a number of large developments were built in the southeastern region of the city. Many of which offer impressive homes in gated communities at significantly reduced prices.
Do Strong Price Increases Mean We’re Headed for Another Bubble?
The following infographic tracks Housing Price Index by state over the last decade to reveal the beginnings and effects of the housing bubble on U.S. housing prices.
In 2003, housing prices had already been going up for several years and, as the graphic illustrates, and they continued to climb strongly through 2006. It took the U.S. housing market several years of hefty gains to build up enough air to cause the bubble burst we experienced. Indeed this concurs with the CoreLogic report finding that U.S. housing prices are still 26% below their June ’06 peak. Take a look back at the S&P National Housing Price Index to see how far away we still are from the dizzying heights of the bubble.
How much will rising prices impact your mortgage payment?
Even with the price of homes increasing, interest rates are still quite low. The government is doing everything it can to energize the economy and that means borrowing money is cheap. It should be noted that a $10,000 increase in the value of a $500,000 home would represent roughly a $50 increase in the monthly payment with a 4% loan, whereas a 1% increase in the interest rate from 4% to 5% on a $500,000 loan represents a $300 monthly increase in the mortgage payment and over $100,000 in additional cost over the life of the loan. Wow, that’s huge!
It’s amazing how much of a difference 1% can make. Try it and see for yourself using our convenient Mortgage Calculator.
Simply put, the fact that home values are increasing is a great sign. A healthy housing market is one where home values increase responsibly and in response to economic conditions, not one where speculation and questionable lending practices drive home values up rapidly while median incomes are decreasing.
Read MoreIt’s Still Cheaper to Buy Rather Than Rent in the Sacramento Metropolitan Area & Nationwide
That’s right! Even with increasing housing value it’s still cheaper to buy, pretty much across the board. Home prices have been on the rise in 2013 but rents are still high in California and across the nation. Trulia’s March 2013 Rent vs. Buy Report shows that buying a home in the top 100 metropolitan markets is still less expensive than renting, demonstrating just how expensive renting can be. Trulia’s interactive map allows you to graphically access the report’s results and is quite informative and fun. It shows that even with a loan at 5.5%, San Francisco is the only market where it would be cheaper to rent if you stayed in your home for 7 years.
Rent Continues to Increase Nationwide
So why is it still cheaper to buy than to rent if housing prices have been increasing steadily? Because most people are still renting. The Zillow Rent Index shows consistent increases in rents in California, Sacramento, and San Francisco, among many others, over the past two years. Would-be homebuyers wary of the economy and the housing market are opting to rent. This is helping drive up the cost of renting nationwide. Large metropolitan cities like nearby San Francisco and Oakland have been hit particularly hard by increasing rental prices. It seems like the shadows of the housing crash are still looming over us as buyers’ fears of a second downturn continue to have unexpected effects on the housing market.
It’s not just the big cities feeling the squeeze. In some cases the average rental price in Placer County for a 2 bedroom unit rivals prices in San Francisco County. While residents of San Francisco may find themselves with no other options, as housing prices remain relatively high in the city, renters in Nevada and Placer County do have another attractive opportunity. With the allure of affordable housing prices, cities such as Roseville, Rocklin, and Granite Bay are likely to see an increase in home purchases as many buyers’ worries are quickly overshadowed by the weight of their monthly rent payments.
Higher rents mean it’s a good time to be a landlord as well. If you are looking to purchase a second home as an investment property, now is an excellent time. With a low interest rate on a mortgage and the ability to earn top dollar from tenant rents, it is easier to see greater returns from an investment property.
Stop throwing your money away on Rent!
Today’s housing market has a lot going for it: increasing rents, record low interest rates, drastically reduced down payments, and (most importantly) reasonably priced homes. The latest CoreLogic Housing Price Index reports housing prices are still more than 20% below their pre-bubble peak. Regardless of what the market is going to do tomorrow, the conditions today are hard to ignore. Going back to Trulia’s interactive Rent vs. Buy map, we can see that with a 4.5% mortgage and five years invested in a home it’s 22% cheaper to buy a home than it is to rent in the Sacramento Metropolitan Area. That is hard to ignore.
The next quarterly Rent vs. Buy report is due out soon. Will average rental prices continue to climb or will increased demand in the sales market finally start to slow the increasing cost of rent?
Read MoreEureka Schools Foundation is more important than ever for Roseville and Granite Bay Public Schools
Granite Bay and Roseville are two Placer County communities that go above and beyond the call of duty when it comes to education. Simply take a look at the work of the Eureka Schools Foundation (ESF) to find evidence of that dedication. For 21 years now the Eureka Schools Foundation, a non-profit foundation funded by donations from local businesses and private individuals, has been helping to enrich the lives of students and teachers in the Eureka Union School District (EUSD) by providing for additional programs not funded by the State’s budget.
Each year the Eureka Schools Foundation raises hundreds of thousands of dollars for EUSD through a number of community-based fundraising events. These events include an online and live auction, a student art auction, pledge drive, golf tournament, and the annual 5k/10k run. Local businesses and individuals are presented with various ways to help give to the organization and get involved with the community.
You might think that communities like Granite Bay or Roseville should have no problem funding their public schools due to a healthy property tax base. However, since before ESF’s inception, California’s outdated school budgeting program has left many districts far short of what they need to succeed; EUSD is one of those districts. In July Governor Jerry Brown signed the most sweeping (and controversial) change to California’s public school budgeting formula since 1972. The newly-created Local Control Funding Formula (LCFF) is intended to provide a more equitable funding model and to effectively pay back the deficit created by years of deferred payments. The formula replaces revenue limits with base grants per pupil, plus supplemental funding provided via percentage “weights” for students who are English learners, from low-income families, or in foster care.
Under the previous Revenue Limit budgeting system, established in 1972, the demographics and property tax base of the Eureka Union School District resulted in a yearly budget that fell far short of the needs of its students. Additionally, after years of insufficient funding and deferred payments, whereby the State re-allocated money belonging to California public schools to other government programs, EUSD and every other district in California found itself receiving less than 80% of the monies it was owed each year. In 2012 the amount of the deficit created by these deferrals was $10.4 Billion statewide. This deficit is what the LCFF is aimed at reconciling over its initial 8 year period. While this is an appropriate objective, the manner in which the LCFF model proposes to pay back the money the State had been deferring, means that many districts are likely to find their budgets varying greatly from year to year. There will also be wide variance in the funding levels between districts, as the LCFF is based on population demographics and not size or academic performance.
What does this mean for the Eureka Union School District? “The unpredictability of the LCFF budgeting model over the next 8 years means the Eureka Schools Foundation is more important than ever in maintaining the excellent educational standards that EUSD has established,” says Melody Glaspey, Chief Business Officer with EUSD, “Each year the Eureka Schools Foundation is there to fill in the gap created by the State’s public school funding.” Indeed every district should strive to achieve such high standards but without proper funding it is impossible to provide the programs and support that students need to thrive.
ESF has always been there to fill in the gap, funding many essential programs and services like library and technology staff, music programs, before and after-school Spanish language instruction, and after-school athletics coaches. Indeed the students of the EUSD see many of the same advantages of private school in a public school setting. In 2012 the record $669,000 donation made by ESF to the district prevented the School Board from having to lay off librarians while a nearby district was forced to let go of 24 teachers. In June ESF announced that they would be donating $301,000 to the Eureka Union School District for the 2013-14 school year.
ESF doesn’t just provide grants to educate and enrich the students of the EUSD. ESF’s Summer Institute program provides advanced summer instruction to EUSD teachers in “21st century teaching practices”. These courses are designed to inform teachers about new technology and new developments in classroom education, helping to enrich teachers’ knowledge and experience as well as the students’. “Our aim is to keep teachers sharp and motivated so they can create a positive educational environment for EUSD students,” says Mark Goozen, President of ESF. “This dedication is reflected in the high test scores seen throughout our district.” The schools in the Eureka Union School District are consistently ranked among the best schools in Placer County and the State of California.
The Eureka Schools Foundation strives for transparency by publishing a list of all the programs funded by ESF grants each year and cost of those programs. The funding grants for the five school years can be viewed on their website.
What the final verdict will be on the new LCFF model is unsure. What is clear though is that even with this new funding model the budget gap faced by the Eureka Union School District isn’t going away in the foreseeable future. Thankfully the community members of Roseville and Granite Bay place a great deal of value on education and they aren’t afraid to put their money where their mouth is.
Read MoreRoseville is Placer County’s Fastest Growing City in 2012
Roseville firmly surpasses neighboring Lincoln as the fastest growing city in Placer County. Last year, Roseville grew by 1.2%, which is above the state average of .8%, and is more than double the growth rate of Lincoln, the second fastest growing city in Placer County, with a population increase of .5%. The city of Lincoln previously held this distinction as its rapid expansion during the last decade earned it the title of “Fastest Growing City” in the country in the 2010 U.S. Census.
It is likely that Roseville will continue to hold this title as Lincoln’s recent overdevelopment has lowered home values in that city, making it less attractive to developers looking to see big returns from their investments. With Roseville’s attractive real estate market, thriving economy, abundance of urban amenities, good schools, and room to expand, the city looks like it should see steady and continued growth in the future.
Despite having housing prices that are higher across the board than the national average, California’s population continues to grow even during uncertain economic times. It is important to remember how vital the California Lifestyle is to our economic well-being. As an increasingly densely populated state we need to keep our eye on responsible and sustainable growth lest we experience the effects of wide-spread overdevelopment.
Homes in Roseville are found in is the last ‘urban’ community in Placer County. The Sierra Nevada Foothills offer far more suburban and rural accommodations than the areas surrounding Sacramento. With more than twice the residents of neighboring cities in Placer County, a strong revenue base, and a variety of shopping and entertainment attractions, Roseville will continue to be the magnet city for the region and the leader in growth for Placer County.
Read MoreNational Housing Price Index up 10.5% from March 2012. Is this Another Bubble?
Even with unexpectedly strong increases in housing prices in the last 12 months, there’s still room for growth in the housing market. But how much?
The latest Core Logic Housing Price Index (HPI) data shows that national housing prices in March 2013 are up 10.5% from March 2012. After 19 months of consecutive decline in the year-over-year HPI, March 2012 showed a 1.13% increase over March 2011. For the last 13 months up until March 2013 that number has steadily increased to 10.54% based on the latest data. At first glance it may appear that we are seeing the beginning of another bubble, however appearances can often be misleading.
As Paul Diggle, Property Analyst for Capital Economics notes in the article, “…if house prices and incomes continued rising at their current rate, the house price-to-income ratio wouldn’t return to its long-run average until 2017.” It took the housing market 4 years to reach the dizzying heights of its peak just before the crash. This single year increase of over 10% is nothing compared to the unbridled increases we saw in the early 2000’s.
A quick look at CoreLogic’s data shows several states saw annual growth that EXCEEDED 10% for 3 consecutive years. Let’s take a look at an example of what that kind of growth means. A home purchased in 2002 for $500,000, would be able to sell for over $665,000 by the end of 2005. Growth like that simply can’t go on forever. If the trend had continued that same house would be worth around $1.3 Million today. If that is the type of return on investment you’re looking for in the housing market then you need to reconsider your investment plans
Markets reward those with patience. Remember when the U.S. Stock Market was falling with seemingly no end in sight? Well that same market is once again back to its old value and reaching for a new high. And that is what is driving the housing market these days: patience. Long gone are the days of homebuyers expecting to sell their home a year after purchasing it for a profit. Instead a new kind of apprehension and respect for the market has settled in, and that doesn’t leave much room for those looking to squeeze quick profits from the market.
In a statement made 5/16/13 CoreLogic predicts, “Home prices projected to increase 3.9 percent annually over next five years, following a 7.3 percent rise in 2012.” That is exactly the kind of consistent and healthy growth we’ve been looking for from the U.S. housing market since the crash. With regular scrutiny of the CoreLogic data we will continue to track this trend as we wait and see if their predictions ring true.
Read MoreRoseville Hosts Monthly Food Truck Mania
Sacramento Mobile Foods (SactoMoFo) hosts monthly Food Truck Mania in Roseville. This eclectic culinary event occurs every 2nd Thursday at the corner of Washington and Vernon in the recently revitalized Downtown Vernon Street Shopping District. The next event will be Thursday, July 11th. As Roseville continues to encourage new and exciting community events it will ensure the city maintains its reputation in the region as a destination for entertainment, shopping, and modern culture.
Roseville Embraces the Food Truck Revolution
Food trucks are California’s answer to the wildly popular street food vendors found throughout the busiest streets in Manhattan. The success of mobile food trucks was aided by social media as the forerunners of this craze started using Facebook and Twitter to announce their whereabouts. Now, food truck events have sprung up in every city in the country. The social media influence on this newly formed American tradition has helped these events build a stronger sense of community as it provides residents with an opportunity to enjoy a wide variety of foods right in their neighborhood.
Unlike street fairs or farmers markets which generally involve a great deal more planning and set up, food truck events can almost appear out of nowhere. A typical street corner can quickly transform in to a festival of every type of food from vegan cuisine to gourmet grilled cheese. Some of the trucks that can be seen at Food Truck Mania include; Krush Burger, Drewski’s Hot Rod, Knucklehead Hot Dog Diner, Smoothie Patrol, and Volkswaffle.
Food Trucks are also a great way to provide catering for larger community and private events. If you’re looking to book 3 or more trucks for an upcoming event SactoMoFo can help. Food trucks can easily provide a number of meal options with significantly less hassle. “With a variety of cuisines all built in to one event, and no additional equipment to rent, our services showcase the Greater Sacramento Area food scene while easily adding gourmet value to your event,” says Paul Somerhausen, Coordinator at SactoMoFo.
For a list of the trucks that will be attending the next Food Truck Mania event or to book their trucks for your next event head over to the SactoMoFo website.
Read More49 Placer County Schools Receive Honor Roll Distinction
49 Placer County public schools were included in the California Business for Education Excellence (CBEE) 2012 Honor Roll list. This program awards schools showing a dedication to more than just their overall academic achievement. The CBEE wants to honor the schools that are “getting it right for all students,” says Greg Jones, CBEE Chairman. The award has its eye on the variance between a school’s highest achievers and its lowest. The smaller that gap is, the better the school is at helping all of its students succeed.
What’s the Goal of the CBEE and the Honor Roll distinction?
Beyond just recognizing the schools that are reaching the greatest number of their students the CBEE wants to use these schools as role models for schools that didn’t make the grade. “To ensure more of our schools succeed,” says Jones, “we must change the conversation from being about fixing failing schools to one that focuses on replicating the success of schools like those on the Honor Roll.”
Since the program started in 2005, the number of schools tapped for this honor has increased nearly 10 fold, from 261 schools to 2,108 schools in 2012. This means that, according to the CBEE, nearly 1900 California Public Schools have noticeably improved their academic performance amongst all their students in less than a decade.
News of Great Schools in Placer County is Nothing New
In the 8 years since the program began a number of Placer County public schools have consistently made the grade. Granite Bay High and Rocklin’s Valley View Elementary have been honored a total of 6 times, and Rocklin Academy in the Rocklin Unified School District has the distinction as the only Placer County school to receive the honor every year since the program’s inception.
Awards such as this are nothing new for many Placer County schools, particularly those in Roseville, Rocklin, and Granite Bay. These communities have shown a strong commitment to education. The Eureka Schools Foundation, a community driven organization that finds private donations to help fund the areas public schools, is an example of that commitment.
The 2012 Placer County Schools on the CBEE Honor Roll
|
School Name |
School District |
|
Antelope Meadows Elementary |
Dry Creek Joint Elementary |
|
Coyote Ridge Elementary |
Dry Creek Joint Elementary |
|
Heritage Oak Elementary |
Dry Creek Joint Elementary |
|
Quail Glen Elementary |
Dry Creek Joint Elementary |
|
Greenhills Elementary |
Eureka Union |
|
Maidu Elementary |
Eureka Union |
|
Oakhills Elementary |
Eureka Union |
|
Olympus Junior High |
Eureka Union |
|
Ridgeview Elementary |
Eureka Union |
|
Willma Cavitt Junior High |
Eureka Union |
|
Franklin Elementary |
Loomis Union Elementary |
|
Loomis Basin Charter |
Loomis Union Elementary |
|
Loomis Elementary |
Loomis Union Elementary |
|
Ophir Elementary |
Loomis Union Elementary |
|
Placer Elementary |
Loomis Union Elementary |
|
Newcastle Charter |
Newcastle Elementary |
|
Newcastle Elementary |
Newcastle Elementary |
|
Weimar Hills |
Placer Hills Union Elementary |
|
Colfax High |
Placer Union High |
|
Del Oro High |
Placer Union High |
|
Antelope Creek Elementary |
Rocklin Unified |
|
Breen Elementary |
Rocklin Unified |
|
Cobblestone Elementary |
Rocklin Unified |
|
Granite Oaks Middle |
Rocklin Unified |
|
Rock Creek Elementary |
Rocklin Unified |
|
Rocklin Academy |
Rocklin Unified |
|
Rocklin Elementary |
Rocklin Unified |
|
Rocklin High |
Rocklin Unified |
|
Ruhkala Elementary |
Rocklin Unified |
|
Sierra Elementary |
Rocklin Unified |
|
Spring View Middle |
Rocklin Unified |
|
Twin Oaks Elementary |
Rocklin Unified |
|
Valley View Elementary |
Rocklin Unified |
|
Whitney High |
Rocklin Unified |
|
Blue Oaks Elementary |
Roseville City Elementary |
|
Catheryn Gates Elementary |
Roseville City Elementary |
|
Crestmont Elementary |
Roseville City Elementary |
|
Diamond Creek Elementary |
Roseville City Elementary |
|
Junction Elementary |
Roseville City Elementary |
|
Robert C. Cooley Middle |
Roseville City Elementary |
|
Stoneridge Elementary |
Roseville City Elementary |
|
Thomas Jefferson Elementary |
Roseville City Elementary |
|
Warren T. Eich Intermediate |
Roseville City Elementary |
|
Antelope High |
Roseville Joint Union High |
|
Granite Bay High |
Roseville Joint Union High |
|
Woodcreek High |
Roseville Joint Union High |
|
Western Sierra Collegiate Academy |
SBE – Western Sierra Collegiate Academy |
|
Twelve Bridges Elementary |
Western Placer Unified |
|
Twelve Bridges Middle |
Western Placer Unified |
Read More
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