Sacramento has been reported as one of the fastest growing areas in the state of California. But with homes sales on the decline, does this area have a fighting chance?

The National Association of Realtors released this week a report that notes, "Total existing-home sales in the West declined 3.5 percent to a pace of 1.37 million in January, and were 14.4 percent below January 2005. The median existing-home price in the West was $310,000, up 11.5 percent from a year ago."

A rise in inventory (now four to six months worth) has haulted the once rapid price appreciation seen early last year. The state of California has seen the number of homes sold statewide drop 27 percent from December (but only 9.5 percent from last January). Despite these factors, Sacramento, California, has been named one the Top 10 most desirable places to live in the United States.

Lower priced homes are still selling quickly, but homes over the $450,000 mark are seeing adjustments in pricing. This makes for buyer advantage.

Further down the coast, San Diego, California, is facing the reality that drops in home sales are, well, coming home. A huge inventory of homes sit on the market, possible results of homeowners trying to sell while there are still buyers looking. Inventory has increased by nearly 700 percent -- from 2300 units on the market to 17,000 in the last few years.

One local expert reports, "San Diego was solely reliant on tourism and the Defense Industry back in the 1980s, but it has expanded and balanced itself by making it known for their wireless, engineering, biotech, pharmaceuticals, and manufacturing industries as well." These factors, though, have not been enough to create the same phenomenal real estate markets of other areas of the state.

But a slowing market is nothing new for the San Diego area -- the last two years have seen a slight cooling in much of the region. While the national average for price appreciation is near 6 percent per year, January 2006 sales data indicates that the City of San Diego detached median home prices are now at $540,000 which represents an increase of 2.9 percent compared to last year. This means a buyers market with neutrally rising prices.

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