Homes sales are down, as is the inventory of homes for sale, but that doesn't stop local real estate agents from describing the Yuba-Sutter real estate market as healthy.
The market has changed significantly since low prices in 2012 sparked a surge of activity that saw investors snatching up properties to flip them for profit.
But the median sales price has risen in 2014, which diminished the returns of real estate investors looking for a quick profit and driving them out of the market.
"It was a real buying frenzy, for a while there, with multiple offers and overbidding," said Lloyd Leighton, owner of Lloyd Leighton Realtors. "Those investors left, and we've seen lower sales numbers since about July."
In March, 113 homes sales were closed in Yuba-Sutter with a median sales price of $202,000, according to Leighton's data.
In March 2013, 145 homes sales were closed with a median home price of $172,625.
Melia Campbell, president of the Sutter-Yuba Association of Realtors, said, in some ways, the buying frenzy actually hurt the market.
There were two types of investors during those low-price years. Some were locals with extra cash in the bank who bought one or two properties because they saw an opportunity for a profit after the market crashed in 2007, Leighton said.
But the investors that concerned Campbell were large hedge funds and investment banks, which bought homes in bulk sales from banks at below-market price. These homes never went to the market and were never an option for traditional buyers. By skipping the conventional market, it limited supply, thereby raising home prices — sometimes past that point where people could afford them, Campbell said.
THR California, a subsidiary of the large hedge fund the Blackstone Group, bought about 1,000 homes in the Sacramento area that never went to the market, Campbell said.
As a result of that, and other activity, median price increased by 24 percent in Yuba-Sutter between March 2012 and 2013, Campbell said.
Last August, that activity began to taper off, Campbell said.
"Home prices are up enough that investors are no longer interested because they can't turn them for a profit, and that stabilizes the market," Campbell said.
Foreclosures and short sales, which once represented a major chunk of the homes on the market, have also declined.
Of the 337 active listings in Yuba-Sutter, 28 are short sales. Two years ago, about half of the active listings would be home sales, Campbell said.
And while sales are down, homes are only staying on the market for two or three months, which is a sign of a healthy market, Leighton said. At the onset of the housing crash in late 2007, a home could be on the market for more than a year.
Campbell said she expects a healthy summer sales season, More owners have equity — meaning their houses are worth more than they owe — and are able to sell at a profit.
Where are first-timers?
As the local housing market recovers from the 2007 crash, one thing is still missing — first-time home buyers.
The reason is simple: more and more graduates are coming out of school saddled with loan debt, which makes it harder to qualify for a mortgage, said Melia Campbell, president of the Sutter-Yuba Association of Realtors.
The timing is unfortunate. Borrowing rates are low, around 4 percent to 4.5 percent, but they are expected to increase above 5 percent by the end of the year, Campbell said.
"If you want to buy a house, make sure you get your credit clean, put your money in the bank and stay out of debt," Campbell said.
Local real estate agents say the housing market in Yuba-Sutter is healthy, but it's still a far cry from its pre-recession peak.
The median home price in Yuba-Sutter peaked at $315,000 in December 2005. Following the collapse of the markets, the price dropped sharply and continued to slowly decline until it hit bottom in February 2012, when the median home price was $125,000.
It recovered a good deal since — the median home price this March was $198,000. But real estate agents are uncertain when, if ever, it will return to its pre-recession level, said Lloyd Leighton, owner of Lloyd Leighton real estate agents.
One of the main obstacles to rising home values is stagnating household income, which limits people's ability to pay more for homes, Leighton said.
Real estate agents are concerned that static local wages could place a ceiling on local home values and limit future increases in values, said Melia Campbell, president of the Sutter-Yuba Association of Realtors.
CONTACT reporter Andrew Creasey at 749-4780 and on Twitter @AD_Creasey.