I have long been predicting that home prices would at least hit inflation adjusted 2000 prices. My logic simply being that median incomes are no higher than then while unemployment rates are higher. How can home prices possibly stay higher than they were then?
Over building, poor local economies, and the shattering of the myth of housing as a good investment may cause home prices to over shoot 2000 prices; but outside areas with dramatic economic growth I don't expect prices to stay above those levels.
Now many areas in California seem to be at those price levels:
Sacramento home prices:
from 143k in 2001, up to 352k, back down to 171k. That makes it 4k below inflation adjusted 2001 prices.
Fresno home prices:
From 97k in 2001, up to 282k at the peak and back down to 137k today. Only 10k more to fall to hit 2001 price levels.
Merced home prices:
From 117k in 2001, up to 339k at peak now down to 116k. This is a whopping 27k below inflation adjusted 2001 prices.
Stockton home prices:
From 146k in 2001, up to 374k at the peak, now down to 130k. An astounding 50k below inflation adjusted 2001 prices.
Riverside home prices:
from 147k in 2001, up to 412k at peak, down to 189k today. Only 9k above inflation adjusted 2001 prices.
San Bernardino home prices:
From 100k in 2001, up to 327k at peak, down to 122k today. Currently 1k below inflation adjusted 2001 prices
Bakersfield home Prices:
From 100k in 2001, up to 309k at peak, down to 131k today. Currently 8k above inflation adjusted 2001 prices.
Santa Rosa home prices:
From 321k in 2001, up to 556k at peak, down to 307k today. Currently an impressive 88k below 2001 prices.
Gilroy home prices:
From 439k in 2001, to 724k at peak, down to 381k today. An almost investment worthy 100k lower than inflation adjusted 2001 prices.
Fairfield home prices:
From 224k in 2001, up to 485k at peak, down to 217k today. A full 58k lower than 2001 prices.
Hayward home prices:
From 307k in 2001, up to 583k at peak, down to 280k today. A quite impressive 98k below inflation adjusted 2001 prices.
Madera home prices:
From 107k in 2001, up to 303k at peak, down to 123k today. Currently 8k below inflation adjusted 2001 prices.
Salinas home prices:
From 282k in 2001, up to 609k at peak, down to 226k today. An astronomical 121k below inflation adjusted 2001 prices.
Santa Clara home prices:
From 501k in 2001, up to 696k at peak, down to 533k today. A full 83k below inflation adjusted 2001 prices.
More expensive areas in Southern California have yet to hit bottom. Inland California has had its bubble and can now return to its regularly scheduled economy. The bay area may stay high relative to the rest of the state, but it appears in much of it all of the gains from the past bubble have been eaten up. I have the poor luck of living in the one part of the state some of the bubble price gains have stuck. Now to must wait for further falls in the Los Angeles, San Diego, Orange areas. Now that prices are so cheap inland it is all but inevitable though in all but the wealthiest of areas. These inland areas will act as a sponge, sucking demand from the more expensive areas as people realize just how much farther their money would go elsewhere.
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