Being a parent is a bit like being a private investigator. When problems come up, I often get different stories from my kids or neighborhood kids about who said or did what. It’s then my job to listen (hopefully), gather evidence, and then sift through bits of information to maybe uncover the truth. Can you relate? The same thing happens in real estate because you get different stories depending on who you talk to. One person might say, “the market is on fire and values are increasing”, while another says “the ‘bubble’ is about to burst”. This is why it’s important to pay careful attention to trends so we can be informed and offer accurate information to clients. Today let’s take a look at the latest stats for Placer County, and also touch on what is happening in Sacramento’s regional market. I hope this is helpful.
Two ways to read this post:
- Scan the highlighted text and graphs quickly.
- Grab a cup of coffee and spend a few minutes digesting what is here.
1) Prices have been flat in Placer County:
There was a small seasonal uptick in the Spring in Placer County, but prices have been more or less flat lately, which is in part a byproduct of increasing inventory. The median price in Placer County is $380,000. Prices are more or less flat in Sacramento County too, though the median price is about $100,000 less compared with Placer County. Remember that sales stats show a flat market, but these sales got into contract 30-60 days ago. I bring this up because there is even more inventory in the current market, which is really softening values beyond what mere sales stats might tell us.
2) Housing inventory is increasing:
Monthly inventory increased from 2.52 months to 2.76 months between May and June. It’s normal around this time to see an increase of inventory, but this is still important to keep in mind when pricing properties in certain price segments. Less competition tends to cool values. When considering all price segments, the higher the price, the more inventory there is.
3) Houses are taking an average of 37 days to sell:
On average it is taking 37 days to sell a home in Placer County as opposed to 35 days in Sacramento County (minor difference). Generally speaking, the higher the price, the longer it is taking to sell (which is normal). There were only 7 sales above $1M, so take the “10 days” stat with a grain of salt since properties above $1M generally take much longer to sell. Overall it took less days for homes to sell last month compared to previous months, and if the market unfolds like it did last year, expect to see a longer listing period over these next few months.
4) Volume is down by 11.5% from last June:
Sales volume has been down in the entire Sacramento region. Why? In large part it’s a reaction to investors stepping away from the market one year ago. There were 11.5% less sales in June 2014 compared with June 2013. The same trend is showing up in Sacramento County also. The market is simply trying to figure out how to normalize or adjust now that investors have taken their foot off the gas pedal.
5) Listings increased by 6% from last month to this month (normal):
Listings increased by 6% from last month to this month. At the beginning of June there were 1303 active listings on the market, and at the beginning of July there were 1387 listings. This isn’t earth-shattering news, but the number of listings is something important to watch because the market tends to soften as there are more listings (assuming the number of sales does not increase).
6) “Layers” to watch over the next two quarters:
What is driving value in Placer County? Low interest rates and low inventory are two of the bigger “layers of the market” right now. In light of less cash investors playing the market (especially in Sacramento County), local real estate is more sensitive to interest rates and upticks in inventory. Rates are still flirting with the low-to-mid 4s, and that is helping buyers afford higher prices for the time being. Yet it will be interesting to see how the market is able to cope with higher inventory and presumably higher rates in the third and fourth quarter of the year.
THE SACRAMENTO REGION:
7) Inventory is increasing in the Sacramento Region:
Real estate trends are sort of like neighborhoods at times. What happens on one parcel can tend to impact a property next door (even though we’d like to think we live on “parcel islands“). That’s why knowing what is happening in Sacramento, Placer, Yolo, and El Dorado County can help us see where the market as a whole is going. Overall inventory increased from 2.23 months in May 2014 to 2.43 months in June 2014.
8) It’s taking 37 days on average to sell a house in the Sacramento Region:
Properties are not sitting on the market for very long since 37 days is still fairly quick. However, if they are not priced correctly, they are DEFINITELY sitting. Buyers have been gaining more power in the market, so they can afford to be a bit more picky. My advice to sellers? Remember, the market is no longer as aggressive as it was in 2012 and 2013, so it’s important to price your properties correctly if you want to sell.
9) There are 8% more listings this month in the Sacramento area:
The number of listings jumped by about 8% from last month to this month, while the number of sales stayed about the same. The number of pending sales is actually lower than last month, which shows the market definitely experienced a slow down.
A little wood project: By the way, from time to time I like to share things I build since I enjoy working with wood. This is a porch footstool I built a few weeks ago out of scrap wood. It’s really meant for an adirondack chair, but it’ll still work I think. It’s kind of funky and it can double as a launch ramp for the kids.
Sharing Trends with your Clients? If you want to share graphs online or in your newsletter, please see my sharing policy. Thank you for sharing.
Questions: How else would you describe the market? I’d love to hear your take.