California, Sacramento, S.F. home sellers have record equity
Time to test the market? California home sellers walking away with record amounts of cash
BY TONY BIZJAK, SACRAMENTO BEE, OCTOBER 22, 2020
Despite the economic downturn caused by the coronavirus pandemic, Californians who sold their homes this summer pocketed record levels of cash – on average a half-million dollars in Silicon Valley – far more than people in the rest of the country.
Even more modestly expensive California communities sit near the top of the national list.
The Sacramento metropolitan area, which includes Roseville, Folsom and Elk Grove, ranked as only the eighth most lucrative home sales market in California, but the typical home seller here this summer walked away with $145,000 in their pockets, more than sellers in the New York-Newark metropolitan area, where the average net was $114,000.
The national average was $85,000, according to ATTOM Data Solutions, a national real estate analyst firm, which analyzed public records of sales in metropolitan areas with at least 1,000 home and condo sales during July, August and September.
Nine of the 16 most lucrative home-sale markets in the country were California metropolitan areas.
San Jose and Santa Clara, the traditional heart of Silicon Valley, was number one. In a region where homes typically sell now from $1 million to $3 million, according to Zillow, sellers were walking away this summer with an average $565,000 in cash equity.
The San Francisco-Oakland area ranked second at $375,000 cash per sale, and Los Angeles-Long Beach-Anaheim was third at $254,000.
Seattle was the most lucrative sales market outside of California, followed by Boston, Portland, Ore. and Honolulu.
The numbers reflected a dramatic increase in house prices in California and, to a lesser extent, metropolitan areas across the western United States since the end of the Great Recession in 2012. Until then, many home sellers were still underwater, owing more on their homes than the houses were worth, ATTOM’s data show.
In Sacramento, the typical home sold in the summer of 2012 was $52,000 underwater, according to ATTOM.
“It’s almost as if the housing market and the overall economy are operating in different worlds,” said Todd Teta of ATTOM Data Solutions. “Things remain in flux, given the significant uncertainty about when the pandemic might recede or what impact the recent resurgence could have in different areas of the country.”
The huge cash equity numbers reflect a bonanza for homeowners who bought during or right after the Great Recession when prices had plummeted. But the data also reflect a dramatic imbalance in the Golden State between haves and have-nots, and what some economists see as a troublesome trend of younger would-be buyers struggling to afford a home.
The new data also confirms what has become a bottleneck in the real estate market: Fewer and fewer people in California and nationally are putting their homes on the market for sale. One reason in California is a Catch-22: A California homeowner who sells and pockets a substantial amount of cash likely will have to use a large chunk of that money just to buy another home here.
ATTOM’s analysis shows, for instance, that Sacramento-area owners who used to sell their homes on average after living in them for about six years now do not sell until they have lived there nearly a decade. The same goes for other metropolitan areas of the state.
Nationally, the average homeowner tenure in a sold house had increased from a little more than four years a decade ago to eight years as of this summer.
It’s caused a recent run on houses as soon as they have been placed on the market. Houses in Sacramento County in September were selling after being on the market for only six days, an unusually fast turn-around, according to an analysis by the Sacramento Association of Realtors.
The lack of available housing combined with the high prices do not bode well for the Golden State, some economic analysts warn. Last year, the state lost a net 200,000 residents to other states, where housing prices are lower.
Historically, the people who left California were lower income wage earners with lower education levels. At the same time, California was attracting the best and the brightest from elsewhere to lucrative tech jobs in the Bay Area and entertainment industry in Los Angeles.
Now, however, new census data covering 2018 and 2019 have begun to show that California is losing more high wage earners to other states as well, according to an analysis this week by economist Adam Fowler of Beacon Economics.
Fowler warns that the state’s lack of housing and high prices could be reaching a tipping point.
“Our inability in this state, the lack of political will, to increase housing supply, that has been a blinking red warning light for a long time,” said Fowler of Beacon Economics.
COVID-19 may hasten that out-migration. Some companies in high-priced coastal areas are allowing workers now to telework out of state, freeing them from living in high-cost areas like Silicon Valley, and even Sacramento.As a result, some California companies may be able to hire new employees living out of state without requiring them to move here.
Staff writer Phillip Reese contributed to this report