Why is inventory so low in Sacramento right now?

If there is one conversation dominating real estate right now in Sacramento, it’s definitely the shortage of listings. It’s wild to think there is only about a one-month supply of inventory on the market. This means buyers have had to duke it out (not literally) to get into contract. Also, multiple offers and offers over asking have become much more common too.

But why is inventory low? Is it because of a coming “wave” of foreclosures or a “shadow” inventory? Do sellers have less confidence in the market? Do banks have something to do with it?

Inventory in Sacramento County - Quarterly from 2011 - Graph by Trendgraphix and modified by Sacramento Appraisal Blog

I talked with Eric Peterson of Praxis Capital about the issue of low inventory. Eric’s company pays very close attention to the market as they flip about 125 houses a year in the Greater Sacramento area. Watch the video below (or here).

What do you think? Anything else you’d add? Is there a looming shadow inventory? If you are an agent, buyer or seller, what’s it been like in the trenches for you lately?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Twitter, subscribe to posts by email or “like” my page on Facebook

Comments

  1. Garrett says

    Great video Ryan, I work in sales and marketing for a new builder and we are pulling 3 times more than the average amount of permits per release. However the process takes time, up to a month and a half in some cases. This is happening not only our company but other builders around the area from what I’m hearing.

    • says

      Hey Garrett. I’ve been seeing more new construction in 2012 than subsequent years. There are many pockets throughout Sacramento where I’ve been seeing development. Construction permits are of course nowhere near where they were in the heyday of the market, but I would think they would be up from two years ago (and probably one year ago too). I had a blog post last year comparing permit levels. I wouldn’t be surprised to see an increase if I were to check those numbers again. Good luck in your building. I hope you guys find much success. There is so much opportunity out there.

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