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?