Everyone with a computer or a television set probably knows that Placer County prices fell over the last year, and that more homes are in foreclosure this year than last.  The interesting question about the real estate market in Placer County is not whether prices have fallen, but by how much, and what do the numbers mean?  On the face of it, prices have fallen by some 30% from last year, but as I’ll argue in a minute, the real decline in value in Placer County depends on what specific area and type of home you’re talking about.  Not to minimize the decline in prices, in most areas the 30% drop is more illusory than real, and arises partly from the mix of properties that are still selling versus those where sales are slow.

Let’s look at the overall numbers first.  Placer County’s average home sold in the first quarter of 2008 for $369,647, down 27.2% from last year’s average sale price of $508,090.  Meantime the average sold price per square foot fell somewhat faster, 30%, from $235.44 last year to $164.73 this year.  The median sale price dropped 18.6%, from $430,000 to $350,000. 

So did prices really fall 30% in Placer County?  Well, yes and no.  What’s happening is partly a result of price decreases, and partly a result of the fact that where the prices are hardest hit, the market is showing more activity.  The best way to illustrate this is by looking at three areas as a table:

Area	Drop in Price	Change in Unit Volume 2007-2008	Percentage of Placer Sales 2007	Percentage of Placer Sales 2008
Lincoln	35%	20.3%	17.3	20.0
Roseville	19.8%	(2.5%)	36.7	39.5
Granite Bay	9.2%	(57.7%)	8.8	4.1

The price changes shown here are changes in sold price per square foot.

As you can see, the areas where prices fell the most are the areas where unit volume held relatively steady or increased.  In Lincoln, where prices fell 35%, 20% more units sold this year than last.  (Remember in school when your teacher said it’s always a few bad apples that ruin things for the rest of us?  She had Lincoln in mind).  Roseville, where prices fell 19.8%, was relatively unchanged in unit volume at a 2.5% decrease.  Meantime in Granite Bay, where prices dropped only 9.2%, unit volume was off by 57.7%.  Because of this, as you can see in the last two columns, areas where the prices fell the most made up a larger percentage of the overall sales in Placer County in 2008 than 2007. 

So how much is your home worth now compared to last year? 

Remember, statistics are always the general case — and the more general you make them, the more likely you are to be wrong about an individual house.  A computer generated comparative market analysis zeros in on your particular neighborhood and can give you a better idea.