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Greater Sacramento Region

Can you use comps from a different neighborhood?

March 1, 2018 By Ryan Lundquist 6 Comments

One of the questions I get asked the most is, “Can I use comps from a different neighborhood?” Maybe. But then again, maybe not. Let’s talk about it, and I’ll show you what I do when making this decision. Of course there isn’t just one right way to go about this. Anything to add? 

1) Compare sales over time: One of the most important steps is to compare similar properties in each neighborhood over time. If there aren’t many recent sales I have no problem going back year by year to compare older sales. That’s okay. Is there a price difference? Sometimes it’s very clear there is, so it’s probably not a good idea to use “comps” from a different neighborhood (unless I’m making a location adjustment). When looking at two areas I try to find a percentage price difference too where possible so I can say something like, “It looks like prices are 10-15% higher there.” This sounds time-consuming, but there’s no such thing as a 5-minute “comp check”, right? Nothing replaces putting in the time.

2) Let’s get visual: Here are a few visuals I made to compare two areas. Does it look like there might be a value difference? I know, you don’t know how to graph. Why not learn though? It’s an incredible skill to add to your bag of tricks. Here’s a video tutorial.

Truth: It’s easy to “cherry pick” sales from Elmhurst when in Tahoe Park or North Oak Park. Maybe it works out okay sometimes, but in other cases it could be a really bad move.

3) Word on the street: Talking with other real estate professionals about what they think can be insightful. Where are values higher? If you had a property in both areas, where would it sell for more? Of course someone’s perception might be off, but insight from other agents and appraisers can still be useful.

4) Crunch numbers: Why not run stats for both areas? Running the numbers might give us clues into how value works. If you don’t know how to pull stats, here’s a tutorial.

The numbers clearly show one neighborhood has higher prices, so I might need to give a location adjustment if I’m using a “comp” from a different area. For me I like to give location adjustments based on lining up neighborhood sales instead of stats like this, but I might still use these stats to help reinforce an adjustment I give. Let’s remember the market isn’t so mechanical to always apply the same adjustment either. Sometimes there are special properties that seem to buck the trend and ignore price differences (this is what makes value complicated). But in most cases I would be foolish to ignore stats like this and arbitrarily choose “comps” from an area with higher prices without consideration that there might be a location adjustment needed.

BIG CAUTION: If one area has smaller homes, heavy fixers, not enough data, more foreclosures, or more remodeled properties, we might draw the wrong conclusions when looking at stats if we’re not careful. In other words, we need to know how to think through the numbers rather than taking them at face value. For instance, in North Oak Park there are more fixers and some streets simply do not sell as high as others, so that might actually soften the stats a bit. I might also recommend pulling stats for the entire neighborhood as well as competitively-sized properties. This way we at least have two data sets and hopefully a little more balance. And of course do steps 1-3 above too.

I hope that was interesting or helpful.

Questions: What step do you think is most important? Did I miss anything? What else do you do or recommend? I’d love to hear your take.

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Filed Under: Resources Tagged With: choosing the right comps, comparing two neighborhoods, Elmhurst, Greater Sacramento Region, Home Appraiser, House Appraiser, how to make a graph, making a loction adjustment, MedCenter, North Oak Park, pulling comps, pulling stats for Sacramento, tips for pulling comps

A recap of the Sacramento real estate market in 2016

January 11, 2017 By Ryan Lundquist 14 Comments

High demand. Modest value increases. Price sensitive. Those are ways to describe the real estate market in 2016. Today let’s take a deep look into where the market went last year. This post is long on purpose. You can scan it quickly or pour a cup of coffee and spend some time here. If you aren’t in Sacramento, I hope you can still find some value. Do you see any parallels to your market? Any thoughts? 

P.S. I have some really cool year-in-review images. Please share.

13516718 - white wood texture with natural patterns

DOWNLOAD 76 graphs HERE: Please download all graphs in this post (and more) here as a zip file (including a one-page quick stat sheet). See my sharing policy for 5 ways to share (please don’t copy verbatim). Thanks.

A Market Rush: Overall prices saw a dip these past few months as the regional median price declined 4-5% from summer. This isn’t anything unexpected because it happens virtually every year. Just as there is a season for fishing, fashion, or television, there is also a season for real estate values. Granted, 2016 did have a more aggressive feel in that multiple offers were commonplace, it took an average of 7 less days to sell a home compared to last year, and inventory was sparse at best. In fact, the year closed with the strongest months of sales volume in the past 5 years for November / December. It’s as if there was a rush on the market from September through November that ended up beefing up these year-end stats. Why did sales volume increase? Some say it’s the power of Trump or the anticipation of a new political era. Or it could be buyers were expecting an increase in interest rates and wanted to get in before a rate hike. Or maybe it’s the byproduct of a fall that wasn’t all that dull and a market with strong demand. Or maybe it’s a combination of all or none of the above.  🙂

When looking at the entire year, most price metrics increased 7-9% and sales volume was up a modest 2% overall for the year. Remember, just because price metrics increased by 7-9% does not mean actual values increased by that much (we can talk about that more below if you wish). My sense is prices at lower levels saw larger increases than the middle and upper end of the market, which means a more aggressive bottom tends to create larger increases on paper. I say this because it’s easy to see the median price at 10.5% higher and say, “Values went up by 10.5% last year,” but that just isn’t true for the bulk of the market. On a related note, last week I mentioned trends to watch in 2017, and if I had to add one more thing I would say there could easily be a problem this year with overpricing homes because of so much focus on the market being “hot” without looking at actual data.

A few year-in-review images:

sacramento-county-year-in-review-blog-size

sacramento-region-year-in-review-blog-size

placer-county-year-in-review-blog-size

Sacramento County:

  1. The median price was $315,000 in December (6.5% above last December).
  2. Housing inventory is about 10% lower than it was last December.
  3. Sales volume was 7% lower this December compared to last December, but this year and last were higher than 2012, 2013, and 2014.
  4. It took 3 days longer to sell a house last month compared to November. 
  5. One year ago in December it was taking 4 days longer to sell.
  6. FHA sales volume is down 6% this year compared to 2015 (but 25% of all sales this year were FHA).
  7. Cash sales are down 11% this year (they were 13% of all sales last month).
  8. The average price per sq ft was $202 last month (about the same as November, but 7.5% higher than last year).
  9. The average sales price at $343,670 is down about 4% from the height of summer (but is 6% higher than last year).
  10. When looking at the entire year in Sacramento County it took 33 days on average to sell a home this year.

A few images to show the bottom and top of the market:

all-residential-sales-in-sacramento-county-by-sacramento-appraisal-blog

all-residential-sales-under-100k-in-sacramento-county-by-sacramento-appraisal-blog

all-residential-sales-under-100k-in-2016-in-sacramento-county-by-sacramento-appraisal-blog

million-dollar-market-in-sacramento-county-by-sacramento-appraisal-blog

Some of my favorite images this month:

cdom-in-sacramento-county-by-sacramento-regional-appraisal-blog interest-rates-since-2008 inventory-december-2016-by-home-appraiser-blog median-price-context-in-sacramento-county price-metrics-since-2015-in-sacramento-county-look-at-all

SACRAMENTO REGIONAL MARKET:

  1. The median price was $350,000 in December (7% above last December).
  2. It took 3 days longer to sell compared to the previous month (but 4 less days compared to December 2015).
  3. Sales volume was about 1% lower this December compared to last year.
  4. FHA sales volume is down 6% this year compared to last year. 
  5. Cash sales are down 8% this year compared to last year.
  6. Cash sales were 14.4% of all sales last month.
  7. The average price per sq ft was $208 last month. That’s down about 1% from the height of summer and 8% higher than last year.
  8. FHA sales were 22% of all sales in the region last month.
  9. The average sales price was $387,915 in December. It’s down about 5% from the height of summer but 8% higher than last year.
  10. When looking at the entire year in the region it took 37 days on average to sell a home this year.

Some of my favorite images this month:

median-price-sacramento-placer-yolo-el-dorado-county

regional-inventory-by-sacramento-regional-appraisal-blog

sacramento-region-volume-fha-and-conventional-by-appraiser-blog

inventory-in-sacramento-regional-market

days-on-market-in-placer-sac-el-dorado-yolo-county-by-sacramento-appraisal-blog

PLACER COUNTY:

  1. The median price was $423,925 in December (7% above last December).
  2. It took 2 less days to sell compared to the previous month (but 9 less days compared to December 2015).
  3. Sales volume was about 1% lower this December compared to last year.
  4. FHA sales volume is down 11% this year compared to last year (FHA sales were 18% of all sales in Placer County last month).
  5. Cash sales are down a mere 1% this year compared to last year.
  6. Cash sales were 16% of all sales last month.
  7. The average price per sq ft was $216 last month, which is about as high as it’s been all year (about 8% higher than last year).
  8. REOs were 1.5% and short sales were 1.8% of all sales in Placer County.
  9. The average sales price was $472,130 in December. It’s down about 2% from the height of summer but about 9.5% higher than last year.
  10. When looking at the entire year in Placer County it took 42 days on average to sell a home this year.

Some of my favorite images this month:

regional-market-median-price-by-home-appraiser-blog

months-of-housing-inventory-in-placer-county-by-sacramento-appraisal-blog

placer-county-price-and-inventory-by-sacramento-appraisal-blog

placer-county-sales-volume-by-sacramento-appraisal-blog

days-on-market-in-placer-county-by-sacramento-appraisal-blog

DOWNLOAD 76 graphs HERE: Please download all graphs in this post (and more) here as a zip file (including a one-page quick stat sheet). See my sharing policy for 5 ways to share (please don’t copy verbatim). Thanks.

Questions: Did I miss anything? What are you seeing out there? How would you describe the market? I’d love to hear your take.

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

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Filed Under: Market Trends Tagged With: Greater Sacramento Region, home appraisals, house appraisals, housing market in Sacramento, Placer County, real estate graphs, real estate market in 2016, recap of 2016, Sacramento County, Sacramento Real Estate, sactown, values in sacramento

Recap of 2009 Sacramento Area Real Estate Market

January 3, 2010 By Ryan Lundquist Leave a Comment

Here is a brief podcast recap of the 2009 real estate market in general in the Greater Sacramento region. What will 2010 have in store for us? Do you think the market will surge, stabilize or decline? Do you feel like now is a good time to buy? Your comments are welcome below.

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Filed Under: Internet, Market Trends, Resources Tagged With: 2009 Real Estate Market in Sacramento Area, Greater Sacramento Region, Home Appraiser, House Appraiser, Real Estate Appraisal, Real Estate Podcast, Sacramento Real Estate Appraiser, Sacramento Region Real Estate Market Trends

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First off, thank you for being here. Now let's get into the fine print. The material and information contained on this website is the copyrighted property of Ryan Lundquist and Lundquist Appraisal Company. Content on this website may not be reproduced or republished without prior written permission from Ryan Lundquist.

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