What next Sacramento?  The financial turbulence of the past week makes it difficult to understand how what is happening on Wall Street is going to impact the Sacramento real estate market.  As I have reported here before, our market has been showing slow but steady signs of improvements since late spring.  We have been seeing more sales, inventory of available homes did not grow over the summer selling season and although prices have continued to slip they have not been in free fall.  In addition the lower end of the market, up to about $350,000 has been, if not hot, very active.

Along comes Washington’s realization of the crisis, bailout plans, failed passage in the House of Representatives and now a slightly revised plan to be debated in the Senate.  I would be surprised if we don’t have some sort of legislation by the end of the week but the real question is how will whatever is passed impact the recovery of the Sacramento real estate market. 

We need to do something to relieve the pressure on credit and the financial industry, I am convinced anything related to the Paulson plan is not the way to go but there will be some sort of bailout and it will cause a delay in our Sacramento recovery.  It is only natural, for whatever is enacted, to take time to put in place, and when making large financial decisions such as buying or selling a home it is equally natural to wait and see what happens.

One of the key components that may change the Sacramento real estate market is how lenders will deal with delinquent loans.  Part of any bill will be provisions for homeowners to stay in their homes.  Depending on how that is written it could have significant impact on our market which is currently highly comprised of bank owned properties and short sales.  With the passage of legislation we could see short sales rapidly disappear, either because homeowners will believe they can now work a deal with their lender to stay or the banks are able to avoid the process by selling the entire loan to the government. 

Regardless, as a Sacramento Realtor, I believe, if legislation is passed to rescue the economy, it will trigger a wait and see attitude that has the potential to slowdown the Sacramento real estate markets recovery.