“Two Truths and a Lie” & Cash in Sacramento

I taught my kids how to play the game “Two Truths and a Lie” recently and we’ve been having fun with it. Here’s how the game works. One player shares two things that are true and one that is a lie, while other players try to guess which statement is the lie. Since I know virtually everything about my boys, this game is a breeze for me. But since there is so much they don’t know about me, I can usually win by pulling out two things that shouldn’t be true (usually things I did as a teenager) and then one equally obscure lie to match.

Let’s play the real estate version of “Two Truths and a Lie” (cash style):

  1. Image purchased at 123rf dot com and used with permission - 14688774_s - smallerCash sales have represented about 50% of all sales under $200K for the past eight months in Sacramento County.
  2. The past two months are the first time in four years where REO sales have been less than 10% of all sales in the market.
  3. Cash sales have begun to see a steep decline since Blackstone has been purchasing less.

Check out the charts below and read a few sentences to see which two statements are true and which one is the lie.

cash sales in sacramento placer yolo county - by Sacramento Appraisal Blog

Cash is still very strong in the Sacramento real estate market. When we parse numbers, 34.75% of all single family DETACHED sales have been cash in 2013. When including condos and other attached units, the number jumps to 37.46% (which tells us there is a greater percentage of cash in the condo market). Yes, there has been a very slight decline in county-wide cash sales during these past two months, but let’s finish out the month of June to complete an entire quarter to getter a better feel of any real decline. Some in the real estate community have said Blackstone is purchasing less lately, so cash sales have declined, but the numbers don’t tell that story – especially since Blackstone has been primarily focused under the $200,000 price level. Keep in mind it’s been eight months steady where roughly 50% of all sales under $200,000 have been cash purchases in Sacramento County. If anything, the market under $200,000 for cash has not flinched at all because it’s been very strong.

chart of cash sales by month in sacramento county - by Sacramento Appraisal Blog

We’ll take a deeper look at the cash market under $200K and distressed properties in the next few days, but for now it’s worth noting that foreclosures and short sales have seen blatant declines in 2013. In fact, April and May 2013 were the first two months in over four years where foreclosure sales represented less than 10% of all sales in the market. How does that strike you?

ANSWER: In case you missed it in the paragraphs above, #3 is the lie.

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  1. ricardo says

    Ryan: Interesting post. I like the way you present numbers generated by the Sac housing market insted of editorializing, unlike the (zom)Bee. And in fact today’s ZB admitted that though interest rates are up, the “experts” it consulted agree that the recovery is solid and the house market here a sound investment.

    Housing in this town used to be a piggy bank type investment in the future. Now the market is more like a pinata blown up to the size of a zeppelin. After the 2009 Hindenburg pop when so many got scorched, this time the blimp is filled with all things good and surely candy will rain down on us all. Uh huh.

    • says

      Thanks Ricardo. We’ll see how things play out. The market cannot continue at this rate of appreciation over time. It’s just not sustainable. When things slow down or decline at some point, it’ll likely be expected because it’s normal to see ups and downs. The stock market doesn’t always go up. It’s the same with housing.


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