One of Sacramento's longest running competitive advantages - its relatively cheap housing in a notoriously expensive state - is back.
Call it the positive side of the region's long, painful contraction of housing values since 2005. Though the housing collapse has shredded the fortunes of thousands of existing homeowners, the sudden return of affordability also may help set the stage for an eventual turnaround.
Already, some people who were priced out of Sacramento just a few years ago have bought homes and settled in - bringing their job skills with them.
"It's not the be-all, end-all," Jeff Michael, head of the Business Forecasting Center at Stockton's University of the Pacific, said of the affordability factor. "But for sure it's going to help with the recovery."
Widespread $400,000 and $500,000 price tags for single-family homes "used to be a hurdle," said Barbara Hayes, who woos companies and jobs as head of the Sacramento Area Commerce and Trade Organization. "Now (they're) not."
With median home prices back to 2001 levels in many parts of the region, skilled outsiders and professionals have begun trickling back to Sacramento's housing market. From July 2008 to July 2009, the population of the four-county capital region comprising Yolo, Sacramento, El Dorado and Placer counties grew 1.1 percent - faster than the state as a whole, according to the California Department of Finance.
Placer County, which saw its median home price drop 13.6 percent in just the past 12 months, posted the region's strongest growth, adding about 1.8 percent to its population. In December, the median price for a house in Placer was $275,500, compared with $525,500 at the market peak in 2005.
The migration suggests a resumption of Sacramento's 1995-2004 "brain gain," a pattern identified by the Public Policy Institute of California. The PPIC said people moving into the capital region then were better educated and more skilled than those leaving. The magnet then - as now - was reasonably priced houses.
"We liked where we were, but it was way beyond our reach to own a home," said attorney Anthony Cortez, who left Orange County with his family in 2008 for a house in Lincoln. After a year of renting there, the now-Sacramento attorney closed escrow before Christmas on a distress-sale property in Lincoln Crossing.
"We paid literally less than half what the original owners paid for it," said Cortez. He said many of his new neighbors are also from Southern California and the Bay Area. All bought at housing-bust prices in a new neighborhood plagued by foreclosures. Consequently, they also have more disposable income to help fuel regional economic activity than the previous owners.
"Three or four months after we moved in, a friend of my wife's from the Bay Area saw where we were living," said Cortez. "She came, too." The friend's husband, a computer engineer with global clients, now works from home in Lincoln. It's one more job created in a region with 12.3 percent unemployment.
"We wouldn't have done this two years ago," said Cortez.
Michael, a Maryland economist who moved into the capital region in 2008 and bought a house at 2009's lows, said the same about his decisions.
"I would not have come in 2005 or 2006."
Clearly, Sacramento buyers are scoring real estate deals unimaginable three years ago. Still, the larger economic gains of cheaper home values remain hard to identify in a region shedding jobs instead of adding them.
The real estate collapse remains a significant hindrance to recovery, spilling people out of foreclosed homes, chilling spending and undermining the tax base.
When the local economy improves, economic development officials say, cheaper home prices will be just one competitive factor among many for resumption of job growth - and Sacramento won't be the only region to possess it. Home prices are falling throughout the nation, as well as in Sacramento, says Hayes. When it comes to competing for jobs, there's also the regulatory climate, quality of a region's work force and stature of its culture and amenities to consider.
--Call The Sacramento Bee's Jim Wasserman, (916) 321-1102 or email him at [email protected]. Read his blog on real estate, Home Front, at www.sacbee.com/blogs.