The cash feast in Sacramento real estate in 2013

Let’s make two quick market stops to see what’s been happening cash-wise in the 2013 real estate market in Sacramento County (as well as Placer & Yolo). I’d love to hear your thoughts and what you are seeing in the trenches too.

Stop 1: FHA, Cash & Conventional under $200,000

FHA cash conventional comparison 2009 to 2013 Sacramento County - Chart by Sacramento Appraisal Blog

So far the percentage of cash has not seen a decline in Sacramento County in 2013. There has been a slight dip in FHA and a fairly normal level of conventional loans. The 10%+ dip in FHA over the past year is a good reminder that if your book of business is all FHA, it’s a good time to diversify (and crush it). By the way, 50.5% of all sales in Sacramento County in January and February 2013 were under $200,000. This is significant because what happens in the market under $200,000 will have a huge impact on stats for the rest of the market.

Is it just me or does it feel unreal to see that 52% of all sales in February under $200,000 were CASH?

Stop 2: Cash in Sacramento, Placer & Yolo Counties

Cash sales in Sacramento Placer Yolo County through February 2013 - by Sacramento Appraisal Blog

cash sales chart for sacramento placer yolo county - by Sacramento Appraisal Blog

We’ll see how quarterly numbers pan out once we have a bit more data to consider next month, but so far Sacramento County has seen an increase in cash in the overall market as well as under $200,000. There is so little data under $200,000 for Placer & Yolo that monthly stats are almost meaningless, so take them with a grain of salt.

Questions: Any thoughts? What are you seeing in the market?

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  1. ricardo villanueva says

    You bring up an interesting subject, Ryan — the often heard refrain heard around Sacramento over the past two years — ‘cash is king’. This seems to put the lie to another cliche — ‘all real estate markets are local’. Cash is global as are the hedge funds paying cash for houses as investment vehicles. If you combine that with banks stalling foreclosures and being able to do so through an historically low rate at the Fed Reserve Window, you have low inventory and an artificially high real estate market. This could be sustained if the local economy began to grow, but all we seem to see are venerable employers like Campbell’s Soup scooting. Seems risky.

    • says

      Thanks Ricardo. I hear you. I think you hit on an important point too. We need to see internal economic growth here in the Sacramento area instead of outside forces influencing our market so much. Unemployment has been on a downtrend overall, but it’s still high around 10% and a big blow to have companies like Campbell and Hostess close their doors.

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