The condo market in Sacramento County

If you’ve been surprised at how cash is dominating the single family market, take a look at what’s happening with condominiums specifically.

The condo market in Sacramento County has some similarities to the overall single family market since foreclosures are down, short sales are up and FHA has decreased, but there are also some differences. One of the biggest distinctions is the whopping sum of 65% cash sales among condominiums compared to 38% cash purchases in the overall single family market. Moreover, it’s interesting to note that over 50% of condo sales have been cash purchases for over three years, which tells us investors have been a major force in this niche for some time.

Condominium trends in Sacramento County - by Sacramento Appraisal Blog

Condo Issues: Since many condominium complexes have too many rentals, pending litigation or low reserves, quite a few have struggled to be loanable (and some are not on the approved FHA list). This has naturally given the green light to cash investors to hoard the condo market. Some complexes are advertising they will not accept cash offers since they are trying to get their owner-occupancy rates to adequate levels again. Yet clearly many complexes are accepting cash offers, which begs the question of what the future of the condo market will look like.

All Condo Sales in Sacramento County Graph from 2008 to 2013 - by Sacramento Appraisal Blog

I asked real estate broker Bruce Slaton to lend some insight into the condo market, and here is what he said. Bruce really knows his stuff, and you can check out his website at www.SacramentoCondos.com.

Bruce_Slaton_reasonably_smallBruce Slaton – RE Broker & Condo Expert: What I am seeing both in inquires and in activity is almost a turning point in the condominium market. We are getting a lot of inquires from condo community owners who have been following the media claims of a recovering market and cash buyers driving up pricing, and the results have been surprising to a few owners who thought they would be less under water than they are. What we are seeing is complexes that do not qualify for FHA or Conventional financing coupled with Rental Limits leading to limited appreciation. We also see new litigation claims which tend to happen with newer complexes within a few years of release from the developer to the HOA, and end up hindering FHA and Conventional financing in those complexes. We are seeing premiums for Homepath listings and HUD homes in those complexes due to the availability of financing. We are seeing heavy interest in complexes in Elk Grove, Natomas, Roseville, Folsom and West Sacramento. In the last several weeks we have seen a large increase of requests for Midtown Sacramento which is probably a result of the NBA decision for the Kings and the anticipated future demand and appreciation possibilities for properties around the Midtown Sacramento area. We have recently had inquiries from investor groups asking about stalled condominium or loft projects as well in the Midtown area. We are seeing popular communities like Riva in West Sacramento emerge from settled litigation suits and approaching increased financing possibilities with the introduction of several credit unions and local banks who are now willing to do conventional loans in these complexes. We are still seeing lack of inventory, and many reasons are homeowners who have not recovered enough equity yet to be able to sell their units. The increase in cash sales and decrease in FHA or Conventional financing can be attributed to the lack of financing in condominium complexes and also real estate agents not familiar with financing options and therefore marketing their listings as Cash Only instead of finding alternative financing options for their buyers.

Question: How do you think it impacts property value in a condo subdivision to have so many cash purchases?

If you have any questions or Sacramento home appraisal or property tax appeal needs, let’s connect by phone 916-595-3735, email, Twitter, subscribe to posts by email (or RSS) or “like” my page on Facebook

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