Mismanaged Equity Costs Home Owner $500,000

Just over 3 years ago, the Natomas area of Sacramento, California was one of the hottest real estate markets in the USA. The Natomas residential development just north of the downtown area was a real estate developer's dream. Vacant land in Sacramento was abundant and cheap.
Arnold Schwarzenegger was the Governor and the Sacramento Kings' Basketball Team was winning some of the time.

The Natomas Development is a perfect location for commuters. The development is located close to the Sacramento Airport with phenomenal freeway access. The Natomas area was the place to buy a new home. New shopping centers, biking trails and river access make it the ideal market for those homeowners who wanted to trade up.

In the hey day of the area, houses were priced from $450,000 to $650,000 and buyers and sellers were everywhere. The houses were jumping on and off the MLS like popcorn on a hot grill. The price for a 5 Bed, 3.5 Bath, 4,096 Sq. Ft. dream house seemed like a steal for bay area buyers.

The Bay area buyers burst into the Sacramento area in droves. These bay area residents had cash-in-hand to purchase almost anything they wanted. They still had money to burn after buying their dram homes.

The money from the sale of their 3br/2ba houses in the Palo Alto or San Jose area were on the market for twice the price. These Bay area residents caused the real estate market in Sacramento to burst at the seams.

Housing prices rose so quickly that many real estate agents and homeowners were caught off guard. Even houses that were not built were going up in price. Real estate speculators could earn $30,000 in months just by getting first crack in a new development.

Bay area buyers had an added advantage. They could live in their bargain priced dream house in Sacramento while still earning the large salary from the Bay Area. According to demographic information, the average income in the Natomas area is less than $52,000 per year. The average income of individuals who moved to the Sacramento area from Silicon Valley was $69,466, and the median income for a family was $77,189.