I don’t know about you, but I’ve been encountering quite a few home owners who say, “I like that values have been increasing, but I’m a little nervous at how fast they’ve gone up.” Since the market has changed so rapidly over the past 12-18 months in Sacramento County, it’s understandable to feel this way. Today let’s take a quick look at a few market trends to gain some context for local real estate.
1) Median Price on Steroids: The median sales price in Sacramento County is now close to $250,000. As you can see from the graph above, the median price has skyrocketed over the past year. The median sales price was above $375,000 in Sacramento during the peak of the market, but then dropped 59% until it began increasing again in early 2012. Right now stats on a graph like this (year-end median sales price figures only) make it look like the current market resembles previous values in 2003 and 2008. Personally I think today’s values in most areas of Sacramento are much more aligned with 2002 and 2008-ish. I say this because I often make graphs of historic sales in neighborhoods and values are usually still higher in 2003 compared to current values (for most areas). Why is this? The median sales price right now is inflated due to the disappearance of foreclosures at the bottom, increased investor cash and a lower inventory overall. Remember, the median sales price can be a helpful metric, but it also has its limitations.
By the way, here is a graph of AVERAGE price per square foot for surrounding counties. Thank you to Real Estate Broker Joel Wright for this graph. I love Joel’s data, and you can read more on his post here.
2) The Unemployment Rate is Back from Vacation: The unemployment rate took a recent “vacation” south to 8% in Sacramento County for a few months, but has since crept back up to 9.2% as of July 2013. The unemployment trend has been declining since the summer of 2010, but we’re not out of the woods yet, are we? For reference, unemployment in California right now is 8.7% and the United States unemployment rate is 7.4% (as of July 2013).
3) Changes in the Market: I appreciate Realtor Doug Reynold’s take on the market in his most recent YouTube video. Doug talks about how the market has begun to see some changes lately in light of more inventory and less investor cash. Give it a watch or listen above (or here) and let me know what you think.
Question: Any thoughts, stories or insight to share? Comment below.