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2013 vs 2014

The striking difference of cash in real estate in 2013 and 2014

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Last year was dominated by cash sales. Or I should say DOMINATED since investors really drove the market. This was true in Sacramento and it was true for many markets across the United States. But this year has been different. In fact, cash has been about half of what it was last year, and it has simply softened the market. Let’s take a look at some images and six quick talking points to share with clients and contacts. Any thoughts?

cash sales in sacramento county 2013 vs 2014 - by sacramento appraisal blog - 530

Key Takeaways for Sacramento County: 2013 vs 2014*

  1. Total sales volume is down 14% from 2013
  2. Cash sales are 21% of the market, but they used to be 35% of all sales
  3. There have been 48% fewer cash sales in 2014
  4. As prices in real estate have increased, so have cash price levels
  5. About half of cash sales are still under $200,000
  6. Less cash has created more space for financed offers to get accepted. There have been more conventional /FHA purchases in 2014 compared to last year. There were 4087 in 2013 and there have been 4194 in 2014.

* Data is based on January to May (single family detached sales in MLS).

cash sales in sacramento county 2013 vs 2014 - by home appraisal blog

I hope this was helpful. By the way, this is completely off topic, but here is my latest wood project. If you didn’t know, I love to tinker with wood – especially scrap wood. I built this outdoor cooler a few days ago out of scrap in my garage.

my DIY outdoor cooler

Questions: How have you been seeing cash investors impact the real estate market (even if you are not local)? What is driving your market right now?

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One big reason why the market has felt sluggish

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Why has sales volume been down? Let me give you a hint. It’s green, sometimes crisp, has presidential branding, swooped in to boost the real estate market for two years, and there has been less of it lately. Bingo. You guessed it. The decline of cash sales so far in 2014 is one of the big factors causing sluggish sales in the Sacramento market as a whole. Take a look below. Any thoughts?

cash sales in sacramento county 2013 and 2014 - by sacramento appraisal blog

Unpacking the Trends: Total sales volume is down by over 20% this year compared to last year, but let’s unpack a few numbers to really understand what is happening. When looking at all non-cash sales, volume in 2014 is only down by about 4% from where it was at the beginning of 2013. Granted, volume is down very significantly though from years prior to 2013, but let’s focus on these past two years. When looking at all cash sales, there are literally less than half as many during the beginning of 2013 compared to the beginning of 2014 (595 less cash sales to be precise). Having this many fewer cash deals effectively means the rest of the market has been adjusting to such a big change after a very aggressive season of cash buying. Escrows have seemed to take longer, there are more FHA offers, sellers are offering credits to buyers and inventory has naturally seen an uptick because of the lack of cash. In short, the market has been trying to figure out how to cope now that cash has normalized. Cash of course is not the only force driving values, but we are definitely feeling its absence this year. It’s simply a different market, don’t you think?

wright reportBy the way, some bathroom reading for you:

The Wright Report: This is the most exhaustive quarterly real estate report I know of in Sacramento. The latest edition covers the last half of 2013. I contributed a couple pages to the report and talked about how there was one real estate market last year, but two chapters. You can read the report online or visit Joel Wright’s site (You can DOWNLOAD directly from Slideshare, which is what I recommend).

Question: How is having less cash investors impacting the market?

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