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cash

Horses aren’t allowed & a big market update

January 14, 2020 By Ryan Lundquist 19 Comments

The other day a client asked me to include a statement in my appraisal that horses are allowed on the property. It was a huge lot, so it seemed like that might be okay… But I said NO for a very specific reason. Let’s talk about this and then for those interested let’s take a deep look at the local market.

A conversation with the city:

Me: Are horses allowed in the Tahoe Park neighborhood?

City: No. You need agricultural zoning for that to work. City of Sacramento code says: “It’s unlawful to keep, harbor, or maintain any bovine animal, horse, etc… on any parcel located in the city.” There are some locations that will work in the northern part of the city due to agricultural zoning, but not this location.

Me: What if it’s a really large lot though?

City: No. You need agricultural zoning.

Me: What if it’s an emotional support horse? (I wish I asked)

The point: On paper it might look like a horse property, but what does zoning allow? That’s the question. This is a good reminder to call the city or county to verify what is legally possible. To be fair owners can sometimes obtain a variance, but otherwise horses weren’t going to fly in this tract subdivision.

Class I’m teaching on Jan 16th: I’m doing a big market update at SAR from 9-10:30am. We’ll talk through the market, tips for talking to clients, and ideas for where to focus business. I’d love to see you there. Sign up here.

Any thoughts?

—–——– Big local market update (long on purpose) —–——–

This post is designed to skim or digest slowly.

A QUICK LOOK AT CONTENT

  1. Recap of 2019
  2. Loans & cash over the past decade
  3. The number of sales in 2019 vs 2018
  4. Distressed sales in Sacramento County
  5. Sales above $1M over the past eight years
  6. Sales below $100K over the past eight years
  7. Sales volume “recovery”
  8. Not a crash, but on the lower side
  9. Price growth is slowing down
  10. Comparing last year vs this year
  11. Price Cycles
  12. Housing supply is anemic
  13. More visuals for surrounding counties

Scroll down to see what captures your interest. There are a number of new visuals too. I used a different format. What do you think?

DOWNLOAD 145 visuals: Please download all graphs here as a zip file. See my sharing policy for 5 ways to share (please don’t copy verbatim).

1) Recap of 2019: The year ended up feeling somewhat normal after a painfully dull last half of 2018 that left us wondering what would happen in 2019. Price gains were modest, there were slightly fewer sales compared to the prior year, and it typically took several days longer to sell in most counties (besides El Dorado taking over ten days longer). Here are some trends to watch in 2020.

2) Loans & cash over the past decade: These visuals are brand new and I hope you like them. Conventional financing has taken off this past decade, right? FHA used to be more common until conventional products began offering lower down payments. There was actually an uptick in FHA though this year, so let’s keep watching that. Cash sales are not a big factor in today’s market despite sellers thinking they are.

3) The number of sales in 2019 vs 2018: There were more sales at higher prices and less at lower prices. This makes sense for a market that showed upward price movement. 

4) Distressed sales in Sacramento County: It’s astounding to think that 84% of sales in Sacramento County were distressed in early 2009, whereas now we have fewer than 1.5% bank-owned sales and 0.5% short sales. People keep asking me if we’re poised to see these numbers start increasing again. Technically there’s really no place to go but up since distressed sales have bottomed out. But I wouldn’t expect these to increase dramatically because there’s no mechanism in place right now that would trigger mass-distressed sales. There is not the ticking time-bomb of adjustable rate mortgages or an economic collapse. But if we had a devastating economic downturn or some other huge issue, that could change things. There are definitely voices that talk about a coming “wave” of distressed properties, but this wave has not materialized despite prophecies for many years. Granted, bank-owned sales are up very slightly this year, but it’s not statistically significant. I’ll keep you posted with any changes.

5) Sales above $1M over the past eight years: This is a fascinating way to look at the market. I know there are many colors, but here is the number of sales above $1M for each respective year. What’s the trend?

6) Sales below $100K over the past eight years: On the other side of the price spectrum, here are sales below $100K. There aren’t too many these days. I know, everyone wants to go back to 2012. But the problem is financing was hardly available back then to so many people who had a foreclosure or short sale on their record. So even though prices were right so to speak, financing wasn’t.

7) Sales volume “recovery”: We’ve begun to see sales volume come out of a funk as it was down for over a year. However, there’s an asterisk to this news because we’ve seen sexier volume over the past few months, but we’re also comparing these recent months to a REALLY dull season last year. So of course the numbers today look better. My advice? Take this news with a grain of salt and save rejoicing for the spring season if we see this trend continue.

8) Not a crash, but on the lower side: As I said above, we’ve been having a definitive sales volume slump since mid-2018, but lately volume has been stronger. The number of sales this year has basically been down about 3% or so from last year in the region, though when looking at the past five years we can see volume is down closer to 5% or so. But here’s the thing. Sales volume this year was still on the lower side of normal (and even higher than 2014 which was a dull year). This is a good reminder to look at stats in a wider context instead of having tunnel vision stuck on one or two years. For reference, when the market crashed in 2005 we saw a 40% drop in sales volume over one year.

9) Price growth is slowing down: Price growth has been slowing, which basically means prices aren’t rising as quickly as they used to. Though technically the monthly and quarterly data below show higher price growth this year. Does that mean the market has been more aggressive? Has it begun to rebound? Not necessarily. I recommend being hesitant about sharing this positive-sounding news because the market was REALLY dull last year. Thus when we compare monthly and quarterly numbers today with dismal stats from 2018 it can really inflate the figures.

10) Comparing last year vs this year: All year long most price metrics have been up about 2-4% each month compared to last year, but these past three months they’ve been higher. This is likely due to stats sagging last year during a dull 2018 fall season. I know, I keep mentioning that. Additionally, mortgage rates went down a few months ago and we’re likely seeing some of the effect of that.

11) Price Cycles: Markets go up and down. That’s just what they do. Here’s a look at the past few price cycles in various counties. This is a fascinating way to see the market. Do you see the price deceleration in this current cycle? Also, in El Dorado County I pulled my stats just two days ago and the median price was down 0.1% instead of at 0% in my recap image above (that’s why the numbers are slightly different).

12) Housing supply is anemic: There isn’t much on the market right now, so buyers are hungry for good product. Remember, the spring market usually comes alive in the sales stats by March, but this means the market really started to move in January and February when these sales from March got into contract. Anyway, inventory looks to be mirroring what we saw a few years prior to last year’s dull season as you can see in the image directly below. There should be more homes hitting the market in coming months if we have a normal seasonal rhythm. Sellers, there’s nothing wrong with listing in January or February either. If you sense demand is there and especially if rates go down, you’ll have a captive audience.

13) More visuals: I know, there are too many visuals already. But here’s more. I never post them all either, so check out the download if you wish.

SACRAMENTO REGION (more graphs here):

SACRAMENTO COUNTY (more graphs here):

PLACER COUNTY (more graphs here):

EL DORADO COUNTY (more graphs here):

DOWNLOAD 145 visuals: Please download all graphs here as a zip file. See my sharing policy for 5 ways to share (please don’t copy verbatim).

Thanks for respecting my content: Please don’t copy my post verbatim or alter the images in any way. I will always show respect for your original work and give you full credit, so I ask for that same courtesy. Here are 5 ways to share my content.

Questions: What stands out to you about the market last year? What are you seeing right now? Anything to add?

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Filed Under: Market Trends Tagged With: 2019 market recap, 2019 real estate market, 2020 real estate market, cash, City of Sacramento zoning code, FHA, foreclosures, Home Appraiser, horses, House Appraiser, multiple offers, price growth, sacramento regional appraisal blog, sales volume shrinking, Short Sales, Tahoe Park, VA, Valuation

It’s just NOT a cash market like it used to be

April 17, 2019 By Ryan Lundquist 6 Comments

Investors are playing the market like Monopoly and buying everything in sight… Well, that’s what many sellers think. But it’s not true. Like many markets across the country, in Sacramento we’re actually seeing significantly less cash today than during the heyday of investor activity a few years back.

The Big Takeaway: It’s not an aggressive investor market like it used to be around 2012 when investors really were buying everything, so it’s important to price for today’s trends instead of a rapidly moving cash market from the past.

The Mistake: Sellers tend to aim for that one elusive cash buyer from the Bay Area, but we have nearly 50% less cash today in the Sacramento region compared to 2012. The market is competitive still, but we’re not seeing huge price gains like we did when investors were running the show 5+ years ago.

Three Graph Takeaways:

1) Cash happens at every price point.
2) Cash is more common at lower prices.
3) Sorry if these graphs are confusing.

Now some visuals:

1) A View Without Dots: Let’s start with a graph without dots. Keep in mind this same trend is seen below. It’s just not so easy to see in the midst of over 70,000 sales on one image…

2) A Panoramic View: Here’s all single family detached sales in Sacramento County (not condos).

3) More Cash at Lower Prices: It’s not easy to see the trend here, but cash purchases are concentrated more heavily at lower prices. Keep in mind in 2018 we really only had close to 15% of sales go cash. This is what it looks like on a graph…

4) Big Cash-Only View: Here’s all cash sales since 2012 at the bottom of the market in Sacramento County under $1M. Can you see a higher concentration in 2012 (a thicker black)?

5) A Closer Cash View: Here’s a view of cash purchases under $500,000 to help see the trend a little better.

6) A Close-up for 2019: Here’s a look at 2019 only. When we zoom in we can clearly see that cash is present, but not dominating the market. By the way, who can tell me why this visual has lines like this? The reason is simple, but kind of cool to see on a graph.

 

Conventional & Bay Area Buyers: Let’s remember some investors these days are using conventional financing because of such favorable terms. So in this regard I look at cash stats with an asterisk. Also, cash is a bit higher in Placer County and El Dorado County these days, and some of that stems from Bay Area buyers (not that Bay Area buyers aren’t also targeting places like Elk Grove, Midtown, etc..).

New Market Video: Here’s a video I put together to talk through the competitive and flat market. Here’s what I mean:

I hope that was helpful or interesting.

Questions: What are you seeing out there? If you are not in Sacramento, is the trend similar in your area?

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Filed Under: Market Trends Tagged With: 2019 real estate market, Appraisal, Appraiser, Bay Area buyers, cash, cash percentage, cash stats, El Dorado County, investors, Market Trends, Placer County, Sacramento County, Sacramento Region, sacramento regional appraisal blog, trend graphs

A few trends to watch in Sacramento’s real estate market

February 6, 2014 By Ryan Lundquist 5 Comments

How is the real estate market doing? That’s actually a loaded question. I shared about median price and inventory the other day, so let’s touch on some other trends today – distressed sales, cash and FHA. Real estate has many different layers of value, so it’s important to watch the market closely to be able to speak with authority about what is happening and also be a great resource to clients.

A Market Facts Download: First off, here is an image I made that recaps some stats from 2013. Feel free to use it on your blog, Facebook or wherever. You can link back to me if you wish. Click on the image below (or here) to view and save a larger file so you can re-size as needed. Or download a PDF here.

2013-Real-Estate-Recap-Sacramento-County-530

For reference, the graphs below are based on all single family detached homes in Sacramento County. These are quarterly trend graphs, but the short stem at the end of the trend line represents the month of January. Any thoughts?

foreclosures and short sales in sacramento county by sacramento appraisal blog

The Bank-Owned Lowdown: Foreclosures have seen an uptick recently. There have definitely been more REOs hitting the market. yet at the same time the past three months have actually seen VERY few sales, so a small spike in foreclosures should be taken with a grain of salt. Assuming there are more sales in coming months, we’ll then have a better context for interpreting this trend. Short sales continue to hover around 10% of all sales. Is it just me, or have there been some really low-priced short sales lately?

fha sales in sacramento county by sacramento appraisal blog

FHA Digging Deeper: FHA purchases have continued to increase. The vanishing of cash investors over the past two quarters has hands-down given more space for FHA buyers to dig deeper roots in the market. Last year FHA offers became less attractive in the midst of so many cash and conventional offers, but this year looks to be different. If you’re not in tune with FHA appraisal guidelines and minimum property standards, spend a few minutes looking over my FHA article library to get you up to speed. By the way, the percentage of conventional buyers has also increased lately.

cash sales in sacramento county by sacramento appraisal blog

cash and fha sales under 200K in sacramento county by sacramento appraisal blog

cash and fha sales in sacramento county by sacramento appraisal blog

Waving Goodbye to Cash: There was a slight uptick with cash sales in January, but with so few sales last month (lowest amount of sales in six years) it’s best to wait two months to see if this is a developing trend or not. Overall cash has decreased by about 15% through the course of the year. The market in 2013 was dominated by cash, but we’re now in a different market.

Share the Graphs: As always, you can use these images unaltered in your newsletter, on social media sites or blog posts (just link back). See my sharing policy for more details about 5 different ways to share my content. Or if you need a quote for a blog post you’re writing, let me know.

Question: Any stories, thoughts or questions? Feel free to comment below.

If you liked this post, subscribe by email (or RSS). Thanks for being here.

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Filed Under: Market Trends Tagged With: cash, decline of cash, FHA, first-time buyers, investment funds, investors in Sacramento, investors leaving real estate, Sacramento Real Estate, Sacramento Real Estate Market, Sacramento real estate trends

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