Home Front: Lights out in the move-up market

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Home Front

A blog about the economy and the Sacramento-area real estate market.

June 16, 2009

Lights out in the move-up market

I've just finished a story on a huge dead zone in the middle of the Sacramento-area real estate market - the move-up scene that is traditionally the bedrock of any market.

The move-up market is largely gone - and the market can't really revive until it comes back. That's the summary of the story that's scheduled to run Thursday.

In short, we've become a market in the past 18 months in which first-time buyers and investors become the majority of buyers - accounting for two-thirds of sales.

In a normal market the majority is usually the people who sell one house and buy another. Now that category is really in the minority. Why? Most sales transactions now are distress sales: they pay off a bank and that's where it stops. Nobody moves up. Most people also have no equity or a lot less to carry to the next house. So they're sitting. And those who do have equity are scared for their jobs. So as you can see: it's all frozen.

We found lots of statistics about how this affects move-up neighborhoods. Three move-up ZIP Codes - Land Park's 95818, East Sacramento's 95819 and Arden Park's 95825 - are seeing their collective market share fall because of the lack of move-up buyers. DataQuick says the three have seen their sales fall by more than half from the 10-year average.

Here's a chart from MDA DataQuick that will run with the story:


Year	Number 1,500+sqft houses resold in 3-zip area	% countwide resales
1999	434	2.1%
2000	405	1.7%
2001	376	1.5%
2002	436	1.6%
2003	437	1.5%
2004	430	1.3%
2005	367	1.3%
2006	291	1.6%
2007	223	1.7%
2008	160	0.7%
YTD 2009*	62	0.7%

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