Seeing real estate trends in Sacramento (you pick the neighborhood)

Let’s look at some specific neighborhoods today in Sacramento. How is the real estate market evolving in each of these areas? In this post I plan to include 10 graphs, but the fun part is YOU CHOOSE which ones I make.

HOW IT WORKS: Email me a request to graph a specific neighborhood or area. I’ll then make a graph like the ones below and post it here over the next few days. Keep checking back. You can use the graph as personal research, for a listing presentation or post online as you see fit. I’ll need three things:

  1. Name: Location or name of neighborhood (in Sacramento, Placer or Yolo).
  2. Time: How many years of sales do you want on the graph (1 to 5 years)?
  3. Other: Do you want to see all sales? Or would you like to refine data to see a certain square footage range, bedroom count, etc…?

Send me a quick email? Seriously. ryan@lundquistcompany.com

NOTE: I have all graphs in larger sizes if you need them. Just email me.

1) Antelope: Here all all sales over the past 5 years in Antelope per request of Scott. Isn’t it interesting to see how the market has moved? Bottomed out in early 2012, massive appreciation and then leveling off.

All Antelope Sales - 530

2) Days on Market for Antelope Sales: How long have sales in Antelope spent on the market? Here are all sales. A chart of average number of days on market each month or quarter would be great, but maybe in a different post.

days on market for all sales in Antelope in MLS - 530

3) Midtown/Downtown: Per request in a comment below, here are all sales in Midtown/Downtown from 0-2 bedrooms and under 1000 sq ft. This graph only includes single family sales – NOT condos. What do you see?

Midtown Downtown Sales in Sacramento - SFR Detached Only - NOT Condos

4) Elk Grove: Per request of Bruce, here are all sales between Bruceville, Franklin, Bilby and Elk Grove Blvd. This is the 95757 zip code. Any thoughts?

Elk Grove Market Trends - by Sacramento Appraisal Blog - 530

5) Arden Manor: Per request of Cass, here are all 3-Bed / 1-Bath sales in Arden Manor (located off Watt Avenue in Sacramento in case you are not familiar).

Arden Manor Sales - by Sacramento Appraisal Blog - 530

6) Carmichael: Per request of Susan, here are all 3-4 bedroom sales in Carmichael over the past five years. I took the liberty to include only sales under $1,000,000 because there were only a handful above that level (and including them made the graph less legible). It would be interesting to see a precise square footage range in Carmichael as a follow-up to this graph.

carmichael sales 3-4 bedrooms - 530

7) Natomas: Here are all sales in the 95835 zip code for houses at 3200 sq ft or larger (hope you like this one John).

Natomas 95835 Sales - 3200 sq ft and larger - 530

8) Elk Grove: This is a graph of all sales in Elk Grove under $400,000 with 3-4 bedrooms, 1500-3000 sq ft of living area and properties built between 1997 to 2007. Hope you like it Gary.

Elk Grove Market Data - 530

9) Condos in City of Sacramento: This pie graph helps shows all condo sales in the City of Sacramento from 2010 to 2014 – and it really says something about the market, doesn’t it? Being that many condo complexes have too many rentals, pending litigation or some other issue that is a turn-off for financing, there has been a very high percentage of cash purchases. Note this is the City of Sacramento and NOT the entire county. Hope you enjoy this one Barbara.

condo sales in city of sacramento

10) Laguna West in Elk Grove: Here are all sales with a gross living area between 2400-3000 and with no pool in the Laguna West neighborhood over the past three years. Hope you like this one Doug.

Laguna West Sales - 2400-3000 GLA - no pool - 530

Examples for Blog Post:

1479 model in Mather

Mather: This graphs shows all 1479 model sales in Mather over the past five years. I appraised a model recently that was priced beyond the highest recent sale. It was out of sync with the market.

Gold River Station Sales

Gold River Station: It’s easy to confuse Gold River Station with Gold River, but they are two different areas. Gold River Station is located just north of Highway 50 and immediately south of the Gold River HOA. Gold River Station is not a part of Gold River, which is important to consider when choosing comparable sales.

Any thoughts, insight or questions?

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The danger of using price per square foot to determine value

I talked with a really excited home owner recently about his property value. He put on his real estate thinking cap, found a recent sale in the neighborhood and determined the price per square foot (sales price divided by square footage) was $140 in his subdivision. He was ecstatic because this meant his 2800 square foot home would be worth $392,000, which would  open doors to remove PMI and maybe even pull out some equity. Or was it worth that much?

comparing apples to oranges - photo by Ryan Lundquist - Sacramento Appraisal Blog

Let’s take a quick look at some data in the neighborhood to understand how important it is to know the local market and compare apples to apples.

all price per sq ft in defined neighborhood - by sacramento appraisal blog

All Neighborhood Sales: Here are all sales in this man’s neighborhood in Elk Grove. We can see an increase of values over the course of the year, less sales at the bottom during the past two quarters and notably a fairly significant range of values. It looks like at any given moment the range in price per square foot in the neighborhood is roughly about $40.

all sales price per sq ft 2500-3500 GLA - by sacramento appraisal blog

Larger Sales in the Neighborhood: Let’s look at all sales with a gross living area between 2500-3500. This is a big range for size, but it helps make the point. Do you see any $140 per square foot sales in this graph? No. This tells us the market is not willing to pay $140 per square foot for larger properties. The price per square foot range is really mostly between $100-115, which would theoretically put a value range on this guy’s property between $280,000 to $322,000 ($100 x 2800 sq ft = $280,000 / $115 x 2800 sq ft = $322,000). That’s quite a bit lower than what the owner thought at $392,000.

all sales price per sq ft 1500-2000 GLA - by sacramento appraisal blog

Smaller Sales in the Neighborhood: So where did this guy get the $140 price figure for his neighborhood? He was looking at a much smaller sale. His rationale was that if a 1700 square foot house closed at $238,000 (which shows a price per square foot at $140), his house would be worth $392,000 by simply applying the same price per square foot metric. However, when we graph all sales between 1500-2000 square feet, we see a HUGE price difference in the neighborhood market. Smaller houses in the neighborhood actually have a much higher price per square foot than larger homes. The range for these smaller homes lately is roughly $120 to $145 per square foot compared to $100 to $115 for the largest homes in the subdivision. While it might seem odd that smaller houses would have a higher price per square foot, this is very common in real estate and something I see in almost every tract neighborhood. Price per square foot is not something constant, but rather fluid depending on the size of the house as well as what a house has to offer such as upgrades, location, lot size, layout, etc…

Apples to Apples: Can you see how errors in value can occur when we use improper comparisons? This underscores how important it is to make comparisons to similar properties in a neighborhood rather than just using a metric like $140 that might apply to a different type of property or a much larger or smaller home. This reminds us too to not apply county-wide or state-wide metrics to a specific neighborhood (which I’ve talked about lately). Ultimately, if the owner in this situation wanted to get a quick estimate of value for his property in terms of price per square foot, it would have been best to pull all recent competitive sales (2500 sq ft or more) and find out what the price per square foot was for those sales instead of much smaller sales in the neighborhood.

Questions: Why do you think smaller houses tend to have a higher price per square foot? Any stories or scenarios to share? I’d love to hear your thoughts below.

If you have any questions or Sacramento home appraisal or property tax appeal needs, let’s connect by phone 916-595-3735, email, Twitter, subscribe to posts by email (or RSS) or “like” my page on Facebook

Foreclosures vs. Short Sales vs. Traditional Sales

We often hear how foreclosures sell for less than traditional sales, but let me show you some actual data to back this up. Let’s take a look all single family sales in the 95758 zip code in Elk Grove. What do you see?

95758 zip code - all foreclosure sales - Sacramento Appraisal Blog

95758 zip code - all short sales - Sacramento Appraisal Blog

95758 zip code - all traditional sales - Sacramento Appraisal Blog

The difference in price per square foot between traditional sales and distressed sales is striking. Generally speaking, the price tier in this market begins with short sales at the bottom, foreclosures just above the bottom and then traditional sales at the top. If you want to sound smart, you can explain this market segmentation by using the word “bifurcation.” Ultimately, since investors are gobbling up the market right now, many traditional sales have been spruced-up or upgraded, which means there can be an understandably huge price difference between these sales and distressed sales. However, even without the difference in condition, distressed sales often sell for less because they tend to be marketed more aggressively since banks must unload their distressed inventory (as opposed to an owner who can take more time to sell a property).

Will appraisers make a huge adjustment for distressed sales? All things considered, it looks like the most recent percentage difference between regular sales and distressed sales in this zip code is 15%. Ideally appraisers will not use foreclosures as comps, but that’s not always a luxury in today’s market. Despite foreclosure rates declining in recent months, there is still a hefty supply of distressed inventory. If an appraiser does use a distressed sale in an appraisal report though, this doesn’t necessarily mean there will be a 15% difference warranting a 15% adjustment. Why? Because part of the 15% difference could definitely include a price premium for condition and level of upgrades – not to mention other factors. Besides, what if new construction in a zip code boosted the overall price per square foot figures for traditional sales? This is why appraisers really need to understand the market and each individual sale rather than rely on general trends that may or may not be representative of the immediate neighborhood. In short, the data above shows a big price difference, which we should take into consideration, but we also must dig deeper into the rest of the market and competitive sales to really uncover what’s going on.

Does it seem most appraisers consider whether there is difference in price between foreclosures and regular sales? Any stories to share?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Twitter, subscribe to posts by email or “like” my page on Facebook

Elk Grove Market Trends: Past 90 Days

What’s happening in the Elk Grove market lately? Specifically, what is going on in the following parameters: Elk Grove Blvd. to the North, Franklin Blvd. to the West, Bruceville Rd to the East, & Bilby Road to the South. There are many pockets within these boundaires (Machado Dairy, Backer Ranch, Franklin Meadows, Bilby Meadows…).

elk-grove-market-trends

In this neighborhood there were a plethora of builders who built out the neighborhood over the past five or so years and so the quality of construction varies from pocket to pocket throughout the local market depending on who the builder was (JTS, Beazer, KB…). The style is generally the same throughout with contemporary detached dwellings with stucco exterior and tile roofing. There are local commercial retail properties on the Northwestern end of the neighborhood as well as one other portion as well as a local church.

elk-grove-market-trends-graph

Elk Grove Real Estate Data:

  • 60 current Active listings
  • 187 current Short Sale Active listings
  • 141 current Pending listings
  • 205 sales over the past 90 days
  • 66 sales under $250,000
  • Median Price over past 90 days: $275,000

elk-grove-market-trends-36-months

If you have any questions about the data, the market, or have any potential appraisal needs in this neighborhood or others, please contact me at 916-595-3735 or www.lundquistcompany.com