Coming off of the year we went from a super heated market to stone cold the big question in real estate circles is how the Sacramento market will perform in 2007. The Sacramento Bee's story this morning by Jim Wasserman, "Hope seen on home front," details the slowing of price declines in January. There are others who don't have as much hope for the market and continue to pound the collapse mantle by pointing out the increase in foreclosure activity as the tool of doom.

Looking at MLS data released earlier this week by the Sacramento Association of Realtors (SAR) showed new listings in January up over 75 percent from December and an almost 20 percent growth in inventory. This is normal and expected as we move out of the holiday season and end of year rush. Compared to January 2005 there were less new listings (2.9 percent) and current inventory is down 4.8 percent from last year to 4,926. The median price paid in January is virtually the same as December but down 3.5 percent from 2005 to $355,000. If you want to look at all the data it is available here.

In Placer County the MLS data for single family homes shows the same pattern as Sacramento County. There were 826 new listings in Placer County during January. This is more than twice the amount as reported in December but up only 48 listings from last January. Inventory was up 3.4 percent to 2,178, from December and up 17.5 percent from a year ago. During January there were 211 closed transactions accounting for a median price of $430,000. This is a 30 percent decline in month-over-month closings and 2.2 percent decline in the median price paid. Compared to a year ago the current closings are down almost 14 percent and the median price paid is off 6.9 percent. The above MLS data is available on the Placer County Association of Realtors website, PCAR or can be downloaded here.

A quick review of some of the communities in Placer County shows some interesting numbers and leads to a question regarding the quality of reported values when looking at small samples.

In Roseville we lower had lower year-over-year sales in January compared to last year, higher pending and an increase in available inventory. There were 73 homes sold in Roseville during January with a median price of $415,000. This is decline from last year's January median of $432,500.

Rocklin MLS data shows a modest increase in sales this January compared to last year. The trend continues when looking at pending sales which is reported up 3 sales to 52 compared to last year. There is also a small increase in listings this year when compared to last year, with 236 homes reported as available for sale. Unlike most areas the median price paid in January for a home in Rocklin was up compared to last year. The Placer County Association of Realtors reports a median price increase of $20,000 to $445,000.

The median price in Granite Bay also showed an increase compared to last year. The January MLS data reported a median price of $802,500 compared to $705,000 a year ago. Remember these numbers are computed on a small number of sales and can be misleading. In January of this year there were 18 sales compared to only 11 last year.

Many pundits argue that real estate is local and looking at National, State or even County or City results can't be used when doing analysis on a neighborhood or single property. The reports for small communities and zip codes often do not have a sufficiently large enough sampling to make accurate statements about pricing trends. The home value site, Zillow has developed a home valuation index they call Zindex in an effort to set a median value on all homes in a given geographic area not just the homes that were sold during the period.

Regardless of what you think about Zillow, their Zestimates it is an interesting concept and worth looking at.

In Sacramento County where we just learned the median price paid for a home in December was $355,000 the Zindex for the same area at the end of the year was $357,148. By the way this is down from $371,148 reported at the end of the third quarter of 2006 and down 6.74 percent from the previous year.

The reported Zindex for Placer County was $460,466 at the end of the year. This compares to MLS data median price paid in December of $430,000. The Zindex value was down 5.11 percent quarter-over-quarter and off by 5.97 percent from last year.

Going down to the community level and looking at my example above, Granite Bay, we find MLS data on 11 sales in December 2006 yielded a median price of $705,000. The Zillow Zindex reports a Granite Bay valuation of $703,382.

Based on this cursory review it would appear that although the numbers come different methods the MLS data and median price determined by the homes sold during the period is not inconsistent with the Zillow valuation method. This is something that clearly requires additional examination and watching. If you are interested in looking at the full Zillow report on the Sacramento area it is available for download on their site.

Based on all of the above it does appear that prices in Greater Sacramento area are beginning to stabilize. Inventory is, as expected, increasing as we leave the holidays behind and head into the spring selling season. The sales activity is still anemic but reports from agents I have come in contact with over the past few weeks indicate things are picking up. The next 60 days of sales activity will be impacted by the weather. If we continue to have some dry days we could see a nice increase in sales. If on the other hand it starts to rain and continues like it did last year, it may be late March or early April before the buyers come out to look. January looks much like some of us expected, but it is clearly too early to set the tone for what we will see all year long.

Julie Jalone is an experienced professional RealtorÂ(r) serving buyers and sellers of residential real estate in the Greater Sacramento area including Placer and El Dorado counties. Some of the communities served by Julie include Sacramento, Roseville, Rocklin, Lincoln, Loomis and Granite Bay. To learn more about Julie, visit her website, jalone.com, where you will find additional articles, current listings, home search, news, resources for buyers and sellers and her daily blog, "Keep it Real in Sacramento."