Are homes in Sacramento cheap?

Depends, how we look at it. If we look at sales data of last 4 years, the current prices look very attractive. The other side of the equation is that homes are abundant in this area and there are more than 18000 properties either foreclosed or in the process of getting foreclosed. I was told by a real estate professional that banks are sitting on most of them and not listing them at once. I verified his claim both on city-data reports and local MLS Listing service myself. One thing is sure that, Sacramento and surrounding neighborhood real estate saw the boom first so when credit crisis was exposed, Sacramento was the one which crashed first. Take a look at the Home sales graph from city-data; the median price touched $370k in 3rd quarter of 2005 which started to decline in late 2006. It nose dived early but look carefully, when entire nation was seeing sharp decline in home sales, in Sacramento investors started to move in again. I was told that bay area investors are the one who changed the equation and changing again. But the important trend to look at is that Sacramento real estate may have hit its bottom in 2008 itself when median price settled on $150k - more than 60% decline. I am not sure any other part of country saw this much decline on median home price. I recently took a day trip to Sacramento to see the market situation myself. I was really surprised to see some quality homes build by Centex home (I know that they build quality home) in Elk Grove area that have been foreclosing at 60% lower value ($230k)  compared to its peak sale value. In SF bay area the similar homes in evergreen and elsewhere resell for more than $800k. The real question is, if 2005 was the peak time and most of the loans were 5/1 ARM then not all mortgages have renewed yet. In other words, if 2010 is the year when these 5/1 ARM are going to expire, more and more home owners are going to run away from these homes and what will happen to the current long list of short sales in the area? Its anybody's guess. but I will be closely watching !