I was just running the early numbers for March, and I’m happy to report that the Sacramento real estate market has fully recovered and has returned to the exuberance of 2004. The recovery started early in the month and was complete by March 17th.

Early in March, major lenders announced that they would once again be making many creative loan products available. John Stumpf, Wells Fargo chief executive, said his company intended to lead the market in this area by offering loans at up to 107% of the purchase price for qualified borrowers. When an aide brought the news to Countrywide CEO Angelo R. Mozilo, Mozilo quickly drafted a plan to provide loans at up to 109% of the purchase price for full doc loans, and 107% for stated income.

Countrywide is now offering two programs with these limits. The first is a traditional option-ARM, with one of the options being a negative amortization option. The second program is a new “negative amortization only” product, which is only available on the stated income loans.

With the new financing in place, buyers quickly realized the market had turned and shopped their way through the remaining inventory. After they bought the 3,411 available bank owned properties in El Dorado, Sacramento, and Placer County, they pre-ordered the next four months of bank owned inventory. A single investment group from Palo Alto accounted for over half these purchases.

With bank owned properties no longer available, buyers then quickly bid up the available traditional sales. Because of the rising prices and the availability of CountryWide’s innovative 120% HELOC, sellers offering short sales were able to refinance their homes and offer them on the market as usual.

With the short sales and foreclosures out of the way, prices quickly rose 23.9% on average, so prices in most areas are now at early 2007 levels. By July we expect to have prices above where they were in 2004.

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