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Stale real estate headlines & buyers flocking to El Dorado County

January 27, 2021 By Ryan Lundquist 4 Comments

Real estate headlines can get stale quickly, so we have to be really aware of what we’re saying. Is it still even true? Here’s an example of what I mean.

Headlines in recent years: Rising fire insurance rates in California are causing buyers to pull back from more rural areas.

New stats that change the narrative: In El Dorado County this past year we actually saw a larger increase of sales volume WITHIN areas that have higher fire insurance. Take a look at this visual. Typically El Dorado Hills & Cameron Park don’t have fire insurance issues whereas the rest of El Dorado County does (generally speaking). In short, volume in “fire areas” grew more than areas without issues.

Off the charts: Here is a visual to show how off the charts sales volume has been in El Dorado County. There was an initial COVID dip early in the year and then a massive increase WAY beyond normal.

QUICK TAKEAWAYS:

1) The market is always changing, so we need to be sure our narrative is informed by actual data instead of headlines from last year.

2) Uncertainty about fire insurance rates clearly didn’t hold back buyers this year in El Dorado County. Part of this could stem from rates regulating and buyers getting used to higher rates, but there is no mistaking El Dorado County had enormous pandemic migration. Thus incoming buyers simply cared way more about having land and space than fire insurance rates.

3) I’ve only run stats for El Dorado County, so I’d be careful about saying fire insurance is no biggie throughout California. Moreover, this trend could change in coming years. It’s actually very difficult to parse fire stats for Placer County. If anyone has ideas for how to do that I’m open ears. I just haven’t found a way yet.

VIDEO MARKET UPDATE:

Yesterday I did a big market update at Joel Wright’s Residential Roundup event. This is 38 minutes. Enjoy if you wish or skip to the last slide with closing thoughts to focus business in 2021. Watch below (or here).

PRESENTATION TODAY: I’m speaking at a Placer County Women’s Council of Realtors event from 10-11:30am. I’ll have one hour to unpack the market and I have some fresh Placer and El Dorado stats too. Sign up here.

Thanks for being here.

Questions: What are you seeing in El Dorado County or other areas? What are you hearing about fire insurance? I’d love to hear your take.

If you liked this post, subscribe by email (or RSS). Thanks for being here.

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Filed Under: Market Trends Tagged With: Appraisal, Appraiser, Cameron Park, El Dorado County, El Dorado Hills, fire insurance, greater regional appraisal blog, pandemic migration, pandemic real estate market, rising fire insurance rates in California, rural areas, rural real estate market, Sacramento housing market blog, sales volume

My new sewer line adds huge value, right?

January 19, 2021 By Ryan Lundquist 31 Comments

A new sewer line. That’s what 2020 gave my family as a parting gift before the year closed. Yep, just before Christmas we had to replace our entire line at a whopping $13,688. I know that sounds crazy expensive, but we had four separate bids and went with the most reasonable one. In part it was so pricey because we had one hundred feet of line under eighty feet of concrete. 

The good news is my house is worth $13,688 more now, right?

THE SHORT ANSWER: No.

THE LONGER ANSWER: Buyers expect things like sewer lines to be in working order, so they aren’t prone to pay a premium for a new one. Would some buyers pay a little something extra? Maybe. But I’m not holding my breath for much of a value add because buyers get more excited and swayed by the bling in a house rather than boring adult stuff like sewer pipes. After all, we don’t hear buyers say stuff like, “I want an open concept kitchen, hardwood flooring throughout, but I’m walking if the sewer line isn’t new.”

IF IT’S BROKEN: But if a sewer line is broken, that’s where it becomes more of a value issue since a traditional loan shouldn’t be able to fund without a functioning sewer line. Moreover, in most markets buyers would likely deduct for the expense and inconvenience of having to replace a line. 

CLOSING ADVICE: Sellers, don’t expect buyers to pay dollar for dollar for every repair you do. Seriously, buyers expect certain things to be present and working. This is why they’re not going to look at my house and say, “Whoa, there’s a new sewer line? Let’s offer $13,688 more.” This is just how it works. And frankly if we were the buyers there’s no way we’d be paying cost either, right?

Anyway, here’s to indoor plumbing in 2021.

Thanks for being here.

Market update at SAR: I’m doing a big market update at SAR on January 21st from 10-11:00am. Sign up here.

Questions: Have you done any similar repairs recently? Have you ever seen a sewer line increase value? I’d love to hear your take.

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Filed Under: Appraisal Stuff, Random Stuff Tagged With: Appraisal, appraisal stuff, Appraiser, buyers don't always pay the cost, contributory value, cost vs value, Market Value, replacing sewer line, sacramento regional appraisal blog, sewer line

The housing market nobody predicted

January 12, 2021 By Ryan Lundquist 10 Comments

Nobody predicted 2020. Who would’ve thought during a pandemic we’d see such an explosive year in real estate? The expectation was that the market would start to tank, but we saw the exact opposite. It’s not just Sacramento either because many areas of the country experienced this same dynamic. Anyway, enjoy some brand new visuals if you wish. Thanks for being here.

THE SHORT VERSION:

Here is a highlight reel to talk through some of the bigger themes this year. In short, the stats are stunning.

What stands out to you?

THE LONGER VERSION (organized by county):

1) Sacramento Region
2) Sacramento County
3) Placer County
4) El Dorado County
5) Yolo County
6) Bonus visuals

I welcome you to share some of these images on your social or in a newsletter. Please use this stuff. In case it helps, here are 5 ways to share my content (not copy verbatim). Thanks.

1) SACRAMENTO REGION:

 

2) SACRAMENTO COUNTY:

3) PLACER COUNTY:

4) EL DORADO COUNTY:

5) YOLO COUNTY:

6) BONUS VISUALS:

Here are some extra regional graphs to show how various counties are moving together.

 

Other visuals: Not that you needed more, but check out my social media in coming days and weeks for extra visuals. I am posting daily stuff on Facebook, Twitter, and LinkedIn. Oh, and sometimes Instagram.

Thanks for being here.

Questions: What stands out to you most about 2020 real estate? Any stories to share? I’d love to hear your take.

If you liked this post, subscribe by email (or RSS). Thanks for being here.

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Filed Under: Market Trends Tagged With: annual recap of housing 2020, Appraisal, appraisal blog in sacramento, Appraiser, cash sales, El Dorado County, Greater Sacramento appraisal blog, Housing market 2020, housing trends, million dollar sales, Placer County, price growth, real estate recap, rising prices, Sacramento Appraisal Blog, Sacramento County, sacramento regional housing market, Yolo County

Real estate trends to watch in 2021

January 4, 2021 By Ryan Lundquist 22 Comments

What’s the real estate market going to do in 2021? Let’s talk about some of the emerging trends. Scroll quickly or digest slowly. Anything to add?

Market update at SAR: I’m doing a big market update at SAR on January 21st from 10-11:00am. Sign up here.

TRENDS TO WATCH IN 2021:

Continuation of aggressive market: My crystal ball is broken, but right now demand is truly excessive and inventory is about as low as it’s been, so for the spring season at least we seem poised to see the continuation of the competitive market we’ve had these past two quarters. Let’s remember one of x-factors why the market has been “on fire” though is rates below three percent.

Low inventory & vaccines: Housing supply is about half of what it should be locally and that’s the story in many areas around the country. There are many reasons why inventory is low, but the pandemic is a huge culprit. Frankly unless something happens to motivate owners to list their homes it’s hard to imagine normal inventory levels until we have a vaccine reach the masses and sellers feel more comfortable with buyers coming inside.

Thanks Sandra Schraeder for letting me use this photo.

Working from home: It was a game-changer for migration last year to see so many companies allow employees to work from home forever and this year we’re poised to see this trend continue. But let’s remember opportunities are uneven as the poor and low-wage earners are not likely to have increased mobility.

Buyer preferences: The pandemic has shaped buyer wants and needs and I suspect buyers will still target homes with larger backyards, built-in pools, larger homes, space for an office, and it wouldn’t be surprising to see condos be less appealing again this year.

The color of the year: This year Pantone has a twofer for their color of the year with both shades of gray and yellow. Gray has been prominent for years already. Do you think we’ll see more yellow?

Divorce: I was talking with a divorce attorney client the other day and he says his colleagues are all incredibly busy. While I don’t have statistics, I suspect the pandemic has caused life reflection and many couples have decided to call it quits. Of course having years of equity may propel this decision for some too.

Bubble concerns: Today I had two different people ask me what prices are going to do in the future (I didn’t give a specific answer). While we don’t have bubble hysteria, many prospective buyers are still wondering about future prices. Here are three truths to consider: 1) We’re now entering our tenth year of price growth; 2) It’s normal for markets to go up and down; and 3) What happened in 2005 isn’t the new template for every future market correction. For more thoughts see my open letter to buyers concerned about another housing bubble.

Uncertainty on the horizon: Housing headlines have been glowing lately, but let’s not get lost in the glory and forget we’re still in the thick of the pandemic and we’ve only scraped the surface of understanding the effect of the pandemic on the economy, job market, local businesses, foreclosures, and evictions. We need time see how all these things pan out.

Elimination of single family zoning: There’s a movement to do away with single family zoning to help create more housing and even undo some of the damage caused by past discriminatory practices such as redlining. In 2019 we saw Minneapolis do this by allowing up to three units to be built on a single family lot, and the City of Sacramento right now is talking about updating their general plan and moving away from unit-based density restrictions. This means instead of typically being able to build just one unit you could build a fourplex instead. For instance, read page 12 of this Sacramento City Council report (pdf). 

Racism in real estate: I expect we will see many more headlines about racism in real estate. Much of the conversation has focused on appraisers, but it will likely spread to other professions within real estate too. My advice? Listen, be a part of the conversation, and change as needed. If you are local and want to understand some of the history of redlining and restrictive racial covenants, check out this UC Davis talk by Dr. Jesus Hernandez.

Proposition 19: This California proposition just passed and it allows homeowners over 55 to transfer their primary tax base to a replacement residence. This is a big deal as it can free up mobility for a segment of the population. But the other side of Prop 19 is it’s now not so easy for heirs to retain the tax base of the previous owner. On my end working with heirs I’m hearing lots of talk about selling instead of holding. Though before predicting an avalanche of listings I suspect we’re going to see some creative ways heirs can still retain properties without residing in them. Let’s keep watching.

Affordability: Low rates have helped buyers afford the market more this year, but prices have also risen. At some point the benefit of crazy low rates is going to be diminished by lofty prices and we’re going to see the narrative shift to the struggle of affordability.

iBuyers may have a better year: This year wasn’t pretty for the iBuyer model because companies liked Opendoor and Zillow basically paused their operations during the beginning of the pandemic. Right now in the Sacramento region Zillow owns 32 homes and Opendoor owns 19 homes according to Tax Records. A couple years ago Opendoor regularly owned nearly 100 homes locally for reference. Ultimately the iBuyer model took a step back this year, but expect them to gain a little more share this next year. Let’s keep it all in context though because these companies have only a tiny sliver of the market despite getting tremendous press. 

1031 Exchanges: My analysis of local stats shows there are more 1031 Exchanges in an up market than a down market, so expect more of them this year. I’ve seen quite a few Bay Area investors park their money in Sacramento and I’ve seen some Sacramento investors move their money to lower-priced states. Of course lots of big companies such as Tesla have moved out of California recently. While that is a different thing, it’s something to watch because wealthy individuals and corporations are clearly weighing their options for where to park their money and businesses.

Goodbye California: Rising prices since 2012, the ability to work from home, and Boomers on the cusp of retirement will likely fuel more migration this year. Of course other groups will leave for other reasons too. I shared some migration stats last month from the American Community Survey and I’ll share more this year from other sources too. Stay tuned.

Other: What did I miss? What’s on your mind for the year?

RECAP NEXT WEEK: Stay tuned for a big market recap post with brand new visuals. Check out my social media this week for some previews (links on sidebar).

I hope this was helpful or interesting.

Questions: What else do you think will be important in 2021? Did I miss something? I’d love to hear your take.

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Filed Under: Market Trends Tagged With: aggressive price growth, Bay Area, COVID-19, Divorce, future housing market, housing market 2021, pandemic housing market, Pantone color of year, Prop 19, real estate bubble, Real Estate Market, sacramento housing trends, working from home

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Most Recent Posts

  • Stale real estate headlines & buyers flocking to El Dorado County
  • My new sewer line adds huge value, right?
  • The housing market nobody predicted
  • Real estate trends to watch in 2021
  • You carried me & a spreadsheet for Christmas
  • Real estate drama (and a market update)
  • Goodbye California. Is everyone leaving?
  • How much are buyers paying above the list price?
  • What would happen to the housing market if we went on lockdown again?
  • Overpricing, multiple offers, & hot ranges

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First off, thank you for being here. Now let's get into the fine print. The material and information contained on this website is the copyrighted property of Ryan Lundquist and Lundquist Appraisal Company. Content on this website may not be reproduced or republished without prior written permission from Ryan Lundquist.

Please see my Sharing Policy on the navigation bar if you are interested in sharing portions of any content on this blog.

The information on this website is meant entirely for educational purposes and is not intended in any way to support an opinion of value for your appraisal needs or any sort of value conclusion for a loan, litigation, tax appeal or any other potential real estate or non-real estate purpose. The material found on this website is meant for casual reading only and is not intended for use in a court of law or any other legal use. Ryan will not appear in court in any capacity based on any information posted here. For more detailed market analysis to be used for an appraisal report or any appraisal-related purpose or valuation consulting, please contact Ryan at 916-595-3735 for more information.

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