The smell of a slow and soft January market

We have one month under our belts for 2014. If you’re anything like me it’s been 31 days of perfectly executing all of your New Year’s goals and resolutions so far (that’s sarcasm). Let’s take a brief look at how the Sacramento real estate market unfolded in January. I’ll have some more stats to share soon , but for now let’s glance at median price, inventory and sales volume to get a brief sense of how things went.

The Market Scoop:  This was a slow January. In fact, we saw the lowest number of monthly sales in the past six years in Sacramento County. The median price declined to $240,000 from $250,000 and inventory rose to 2.6 months from 1.9 months. However, despite only 932 sales there are currently over 2000 pending properties, which is important to consider as these may boost next month’s figures. On average it is taking 47 days to sell a home, so many properties that went into contract this month were not able to close escrow yet.

Freaking Out: It’s easy to freak out and use stats to say things like “The market declined by 3% last month” or “Inventory is at its highest level since 2011” or “Pitiful sales numbers in January”, but let’s chill out a little and give some context by recognizing the season. As you can see in the graph above, January ALWAYS has less sales than December and February is usually fairly similar to January. The market historically isn’t very aggressive in January and February, but it ALWAYS picks up in March in terms of sales volume (prices can either decline or increase, but there are more sales without fail when real estate spring fever hits). Yes, the market has felt sluggish and I have some legitimate concerns about the direction of interest rates and the true strength of the job and housing market, but let’s be sure to keep stats in context and continue to watch closely.

A Reminder: The market this year won’t be like last year, which means we are not going to see insane appreciation each month. In fact, think about it this way. If the experts are correct in thinking we’ll see mild appreciation in 2014, there really isn’t too much room to move up, which effectively means some months will show an increase in median price and others will show a decrease. The real estate market will not behave the same each month. Right now the market is soft, but let’s see what things are like in March.

Questions: How has the market felt to you? What are you noticing out there in the trenches? Comments are welcome below.

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