appraisals

Shocking titles tend to get clicked more on Facebook. So if I wanted more clicks, I probably could have gone with a sensational title like, “The market is taking a turn downward”. Or maybe I could have said, “Big changes you MUST know about in Sacramento real estate.” After all, the stats are showing values are softening, so hyping up this point could certainly lead to more traffic. But you know what? I’m not interested in hype, and I never want more clicks at the expense of my integrity. Yes, the market is growing softer right now, and that can feel scary for some, but truth be told there really isn’t any shock here because this is exactly what we expect to see happen during the fall months. Nonetheless, the fascinating part is the fall season this year has still been different than it was last year. This year is actually much more competitive and far less dull. So let’s unpack some trends below with the goal of understanding what values are doing so we can more effectively tell the story of the market to our clients and contacts. I hope this is helpful for locals as well as out-of-town readers (what is your market doing right now?).

Two ways to read THE BIG MONTHLY POST:

1. Scan the talking points and graphs quickly.
2. Grab a cup of coffee and spend a few minutes digesting what is here.

DOWNLOAD 70 graphs HERE (zip file): Please download all graphs in this post (and more) here as a zip file (or send me an email). Use them for study, for your newsletter, or some on your blog. See my sharing policy for 5 ways to share (please don’t copy verbatim). Thanks.

One Paragraph to Describe the Sacramento Market: The market has been slowing in the Sacramento area, but it’s nowhere near as slow as it was last year at the same time. Overall sales volume is up nearly 11% in the region this year, housing inventory is down 24%, and homes took 4 fewer days to sell this September compared to last September. There have actually been less price reductions so far this year too. In terms of home prices, the median price, average price per sq ft, and average sales prices are tending to be about 4-5%+ higher than they were last year, though this doesn’t mean values are necessarily 4-5% higher. This is an important distinction because median price increases don’t always translate dollar to dollar to actual value. Keep in mind the median price in the regional market has softened by almost 2.5% over the past few months, and the median price in Sacramento County has been about the same for five months in a row. There are some graphs below to help show the seasonal market, and they remind us it is customary to see the median price soften, inventory increase, and sales volume decline during the fall months. Overall there is still a higher demand than there was last year, but the market is very price sensitive. Buyers simply aren’t pulling the trigger on overpriced homes (sellers, please consider that). By the way, if you missed my post last week, I gave some perspective on “real estate bubble” conversations, and it is a very relevant post as we see price metrics begin to soften at this time of year.

Sacramento County Market Trends for September 2015:

1. The median price has been hovering around $290,000 for 5 months (3.6% higher than last year).
2. It took an average of 36 days to sell a house last month (up 2 days from the previous month).
3. Last year at this time it was taking an average of 41 days to sell a house.
4. FHA sales were 29.5% of all sales last month (nearly 28% of all sales in Sacramento County last quarter).
5. Sales volume is 10.1% higher so far in 2015 compared to last year.
6. Sales volume was 13% higher in Sept 2015 compared to Sept 2014.
7. There is a 1.74 month supply of homes for sale (similar to previous month).
8. Housing inventory is nearly 30% lower right now compared to Sept 2014.
9. The average price per sq ft is 188 (5.6% higher than last September).
10. The average sales price is $314,317 (1.9% higher than last September).

Sacramento Regional Trends for September 2015 (Sac, Placer, Yolo, El Dorado):

1. Sales volume was up 11.5% in Sept 2015 compared to Sept 2014.
2. Sales volume for the year is up 11% compared with 2014.
3. The median price at $325,000 is up 4.8% from last year, but down 2.5% from the past few months.
4. It took an average of 41 days to sell a house last month (2 days longer than last month).
5. FHA sales were 23% of all sales in the region last month.
6. There is 2.06 months of housing inventory (same as previous month).
7. The average sales price is $360,481 (4.3% higher than last year, but down slightly from three months ago at $370K).
8. It took 4 less days to sell a house this Sept compared to Sept 2014.
9. FHA sales volume has increased by 30% in 2015 compared with 2014.
10. Housing inventory is nearly 24% lower right now compared to Sept 2014.

Placer County Market Trends for September 2015:

1. Sales volume was up 7.7% in September 2015 compared to September 2014.
2. Sales volume for the year is up 15.8% compared with 2014.
3. The median price in Placer County is $389,000 (about 1% higher than last year at the same time).
4. Cash sales were 18.8% of all sales last month (very normal level).
5. It took 46 days on average to sell a house last month (same as previous month).
6. Last year at this time it took 1 day longer to sell a house.
7. FHA sales were 16.7% of all sales in Placer County last month.
8. There is 2.42 months of housing inventory (17% lower than last year).
9. The average price per sq ft is 194 (5.3% higher than last year at the same time).
10. REOs were 2.6% of all sales and short sales were 1.5% of all sales last month.

I hope this was helpful. Thank you so much for being here.

Quick Pricing Advice:

1. It’s normal for prices to cool during the fall. This year the market is not as soft as it was last year at this time, but we are still seeing a softening.
2. Price according to the most recent listings that are actually getting into contract rather than the highest sales from the spring.
3. Talk about the difference between actives, pendings, and neighborhood sales on your listing appointments and in your appraisals. See How to use a CMA to gauge the temperature of the market for a fantastic way to quickly explain what the market is doing to your clients.
4. The market is price sensitive, which means buyers are not biting on overpriced listings despite inventory and interest rates being relatively low.
5. Remember there are many markets within a market, so price according to the neighborhood market rather than county-wide trends since your neighborhood might be more or less aggressive compared to the entire county.

DOWNLOAD 70 graphs HERE (zip file): Please download all graphs in this post (and more) here as a zip file (or send me an email). Use them for study, for your newsletter, or some on your blog. See my sharing policy for 5 ways to share (please don’t copy verbatim). Thanks.

Questions: How do you think sellers and buyers are feeling about the market right now? What are you seeing out there?

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