Prediction of Yuba-Sutter housing rebound met with skepticism

A new report says the Yuba-Sutter housing market is poised to improve in 2012, but local real estate experts don't give the prediction much weight.

After sustaining more than a 50 percent decline in home prices since the end of 2005, the Yuba City metropolitan statistical area has been identified by a financial news and opinion website as one of 10 areas where home prices will increase in the next year

Yuba-Sutter home prices are expected to increase 9.2 percent from the second quarter of 2011 to the second quarter of 2012 and by another 9 percent in the year after that, according to 24/7 Wall St.

"I don't think people are sitting down and number-crunching Yuba City," said area real estate appraiser Terry Kennington. "We are kind of like a lottery machine, and the balls pop out and the numbers are in our favor."

The data is only as good as the source, he said, and even then calculated by high-tech algorithms. The market can change in a day.

"As projections go, they are all speculative, and the market has been historically unstable for the last couple of years," he said. "I really don't put much weight in projections on short-term results."

Yet positive news is better than the alternative.

"I would not want the market segment to be discouraged. The market will rebound," he said. "There is going to be a time when it comes up. I just hope they're right."

Help could come from banks, if they were more assertive in keeping homeowners in their homes rather than foreclosing, Kennington said.

And historically, the market has seen a bump in election years, as officials try to take action to ensure favor with voters.

Yuba-Sutter also has its strong suits to attract home purchases, including a relatively low crime rate, available support services, proximity to Sacramento and a thriving agricultural sector, he said.

According to the real estate news site DataQuik, Yuba County had 88 home sales in September, compared to 100 in August and 88 at the same time the previous year. The $134,000 median home sales price is lower than the month before, at $140,000, and September 2010, at $145,000.

The number of sales of resold homes was on the decline from the previous year, but new homes sales were up. Sutter County figures were not available.

Yuba City real estate agent Lloyd Leighton said he did not know how accurate the prediction of a rebound is, but it is certainly possible. The Mortgage Bankers Association is also forecasting housing price increases are coming in 2012 and 2013.

Some of Leighton's optimism draws from October's monthly housing study by Realtor.com that reported year-over-year housing price increases in the double digits in various metro areas around the nation and topping 20 and 30 percent in Florida.

Admittedly, Leighton said, California price increases are a mere fraction of that, but there are still positive indicators in the Yuba-Sutter market.

"If you just forgot for a minute that 30 or 40 percent of mortgages in California are underwater, and if you just look at our sale activity and the number of months of inventory we have on hand, you'd say this is a good market," he said.

Current home sales in Yuba City are double those during the recession in the '90s, and inventory on the market is about three-fourths of what was then, Leighton said.

Yuba-Sutter's market also is such that people's cost to buy homes with a minimum down payment, principle interest and taxes is less than what they would pay to rent something comparable. And all-cash buyers are able to buy nice homes with a higher yield on their investment.

"In the last month, my office has seen a lot of increased activity," Leighton said. "Is that something that is just going to last a few months, or is that the start of something new? It's hard to know.

James Andrews, a frequent commentor on the Wall St. site, expressed doubt the prediction is legitimate.

"Expecting home prices in the Yuba City Metropolitan Area to increase 9 percent means the authors invented this from statistics and not from reality. The decline continues as it has no employment except farming," he wrote. "The Yuba City area will lose another 10 percent over the next 2 years. I assume the rest of the areas are similarly misstated hopes and not reality."

Appeal-Democrat online readers had mixed reactions.

"That is some serious spin! In fact, I haven't seen spin like that since I got rid of my record player in the '80s! I will believe it when I see it," wrote Katie Hennessy Farley.

But Kathy Kilgore chose to read into the numbers more optimistically.

"At least it made the list and isn't the worst place to live as it was at one time," she said.

Overall, Leighton said he takes such reports with a grain of salt and said his advice to people is what he practices himself: Buy real estate when it makes sense.

"You buy something you can afford with a fixed-rate loan and you buy for the long term," he said.

CONTACT reporter Ashley Gebb at 749-4783.