The month of January has historically been the slowest month for existing home sales in the Greater Sacramento area but last month is sunk to the lowest level in the past six years.

In Sacramento, Placer, El Dorado and Yolo counties January sales fell 29% to just over 1,600 sales. This volume level has not been seen since January 2000 according to DataQuick reports.

Sales volume was not all that went down, the median sales price also dropped. In Sacramento County it was the fifth straight month of declines to $352,000 or a 5.2 percent drop from the August 2005 peak of $372,000 but it is still 10 percent higher than it was in January 2005. In other counties we experienced slower price appreciation and clearly off the 20 plus percent gains over the past few years. The median price of a home in the counties that make up the Greater Sacramento area ranged from 5 to 13 percent increases from last January.

A closer look at some of the communities, by zip code, revealed lower volume and mixed changes in median price for resale homes. Overall Lincoln (95648) performed best with 47 homes sold, up over 20% from a year earlier and 7.2 percent growth in median price to $418,000. Here is the detail of some of the more active communities:
January 2006 Sales Volume and Median Price Changes
Community Zip Code Sales Volume % chg. Median Price % chg.
El Dorado Hills 95672 23 -44.0% 630.0 3.2%
Granite Bay 95746 14 -46.2% 710.0 -2.7%
Lincoln 95648 47 20.5% 418.0 7.2%
Rocklin 95677 18 -25.0% 397.5 3.5%
Rocklin 95765 26 -29.7% 455.0 3.5%
Roseville 95661 19 -42.4% 440.0 -4.3%
Roseville 95678 40 -21.6% 375.5 12.1%
Roseville 95747 37 -39.3% 434.0 9.7%

There remain a number of experts who believe what we saw in January is the market changing back to normal after a number of years of double digit price run-up. A Sacramento Bee article about January activity included a quote from an economist from the University of Pacific who said, Right now, were in a downshifting to normal time. It is not unraveling. He went on to say that if interest rates jump and inflation flares up or if unemployment increases, then were talking a different story.

It would appear that buyers have all the cards now, especially if you read many articles on the real estate bubble or even some of the reports out about January numbers. However, things have changed quickly and it happened about mid-month in January. All of a sudden buyers started getting active and I am seeing an increasingly busy market with buyers and sellers in a more neutral negotiating position. Buyers showing up with low-ball offers are being disappointed when they lose the house to someone else. I will agree that the sellers are not calling all the shots but they are far from not having a negotiating position, especially if they have priced their home well.

In addition to the drop in January resale volume the Greater Sacramento area also saw available inventory increase 8 percent from the previous month to 9,267 homes for sale. The number of homes on the market at the end of January was almost 250 percent more than January 2005.

Homes continue to sell but with greater number of houses on the market it clearly increases the average number of days on the market for sold homes. Based on data I have found, homes sold in January were on the market an average of 56 days in the four county area. This is up from 48 days in December and 40 days in January 2005.

Looking at the State situation, home sales for January were at a four year low and marking the forth month of declines. As I reported in my daily BLOG, 38,300 new and resale homes were sold which was a drop of 27.5 percent from December and the median price of a home in California was down to $452,000, down 1.3 percent from December.

The numbers in January are traditionally the lowest of the year and were expected to have negative movement from what we experienced in December as well as be lower than last year. The real test of where this market is headed will be February and March performance. Based on what we are experiencing as of the end of February approaches I expect to see increased volume, moderate growth in median price and inventory levels slightly lower than January.

If you have questions, disagree with my assessment or want to leave a comment please contact me via my web site at www.jalone.com. If you want detailed information or specific numbers for your community you can find them at DataQuick.