What’s your housing shtick?

It’s easy to fall into the trap of saying one thing about the housing market. Just as a comedian has a shtick, or regular performance, we can get into the routine of talking about real estate based on one big idea about what the market is doing or will do. Let’s consider some examples. Which one(s) are you? Any thoughts?

37841087 - overhead of office table with notebook, computer keyboard and mouse, tablet pc and smartphone. copy space

Doom & Gloom:  The market is going to crash like it did 10 years ago.

Corrector:  Values will correct but not implode.  

One-Metric Wonder: The market will turn as soon as this one thing happens.

Normal: The market is normal and not in a “bubble”.

Mr. Buzzword: The market is headed toward a “shift” in the future.

Polly Pollyanna: It’s always a good time to buy and sell. Everything is always good.

Specific Year Guy: This year is going to be the one where values turn.

Mrs. Cyclepants: The market has a 7 year cycle and it’s about up.

Foreclosure Prophet: Another foreclosure wave is coming. Just wait.

Headline Regurgitator: This person says whatever the latest headlines say.

Spinster: Any negative aspect of housing is spun into something positive.

The Feeler: I feel like the market is strong and will be in the future.

Crystal Ball: This is exactly what the market is going to do.

Broken Crystal Ball: Nobody knows the future including me.

If we’re honest we might identify with several shticks above. That’s okay. I’m not saying there’s something wrong with that, but let’s be challenged to consider what we say and not get locked into conveying only one thing about the complex housing market. Moreover, let’s be cautious about imposing clichés and ideas on the market because it’s easy to miss trends that way. At the same time let’s not be naive by refusing to consider the future. My advice? Pay attention to the numbers and know them well enough to quote, know what is normal and not for the time of year, remember that values might be moving differently in various price ranges and neighborhoods, and find ways to talk about current values in specific terms while keeping an eye on the future (instead of focusing entirely on the future).

My knee & market update post: Some of you may know I hurt my knee in a snow tubing accident 10 days ago. I have an MRI next week, but for now the doctor thinks I may have torn my meniscus. Anyway, I normally do my big market update between the 10th and 15th of the month, but I can’t swing it this week since I took last week off and I’m basically playing catch-up with all my reports this week. I’m just grateful to be at my desk again. Anyway, I will be 100% up and running (not literally) next week, and I’ll get to my big update then. Thanks for your understanding.

Questions: Which shtick stands out to you most? Any others to add? Did I miss something? I’d love to hear your take.

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A snapshot of Sacramento’s real estate market

I could tell you what’s been happening in Sacramento’s real estate market, but why not show you instead? Of course there are a handful of things to look at, which is why there are two options for reading this post:

  1. Briefly scan the graphs below in probably 30 seconds.
  2. Take a few minutes to digest the graphs and commentary.

Enjoy and let me know what you think.

Monthly Median Sales Price in Sacramento County - by Sacramento Appraisal Blog - 530 pixels

The median sales price is currently at $252,000 in Sacramento County. When we look at the average price per square foot though, the market has been very flat for four months as it has been hovering between 162 to 163. I’ve been seeing lots of current listings priced at levels more consistent with July or so, which causes me to not put too much weight in a slight increase in median price last month.

Sacramento real estate trends 2 - by sacramento appraisal blog

Here is a closer look at median sales price, inventory and interest rates. As you can see, prices have begun to stabilize as inventory and interest rates have increased. But it’s also Fall, so it’s completely normal to see a slowdown since that is usually what happens. Real Estate Broker Joel Wright did a study recently of the past 25+ years and found there is a dip 75% of the time during this season.

sacramento county inventory

This is a graph from Trendgraphix and I like the way it shows the story of inventory. When zooming in on roughly only the past year, it’s easy to see that inventory has more than doubled in recent months (whereas my graph above looks like there has only been a slight uptick lately). What does it mean that there are 2.3 months of housing supply? This means if zero new listings hit the market it would take 2.3 months for all these properties to sell. Remember, inventory is easy to find out. It’s just a matter of dividing the number of current listings by the number of sales over the past month. I actually have a brief YouTube tutorial here (or below) in case it’s of interest. It’s good to know how to make these calculations so you are not waiting around on Trendgraphix or other sources to tell you what you need to know.

absorption rate in Sacramento county

The absorption rate is basically how fast current listings are being absorbed (sold or pended) each month. It’s an inverse of the months of inventory really, so this rate declines as inventory increases. Right now the absorption rate is 44.3%, which means that 44.3% of all listings are being absorbed on a monthly basis. All you need to do to figure out the monthly absorption rate is divide the number of sales over the past month by the number of current listings.


Cash sales in Sacramento County declined by over 12.5% since early 2013, and cash sales under $200,000 are currently at 35.6% of the market (only for the first 40 days of Q4 though) compared to 50% the previous in Q2 2013.


I’ve mentioned this several times lately. Cash investors have been exiting the market, which has given opportunity for FHA buyers and conventional buyers to gain a greater hold on the market. This is good news for neighborhoods to get more owner occupants (assuming of course the owners take care of their properties).


It’s easy to vilify cash investors since many first-time buyers were beat out of the market from big investment funds flexing million dollar muscles, but it’s important to remember a few things. First, many investors entered the market when it bottomed out in early 2012. There is nothing wrong with being savvy and coming in at the right time. Don’t you wish you did that if you had the means? Second, a rapid increase of cash purchases was one of the reasons why we saw exponential appreciation in value over the past year. This is good and bad depending on how you look at it, but many home owners who needed to sell or refinance should probably be thanking investors (as well as writing a letter to The Fed for keeping rates artificially low). Lastly, in some sense I think investors have really helped revive the market over the past few years with so many flips. It’s nice to have distressed inventory purchased, rehabbed and then sold because that improves our housing stock. Granted, there are certainly drawbacks to having too many investors in the market, and I don’t think anybody is weeping since Blackstone has been pulling back on their purchasing strategy lately. All I’m saying is there have been some positives too.

foreclosures and short sales in sacramento county - by real estate appraiser blog

We have pretty much bottomed out when it comes to foreclosures. Short sales have seen a rapid decrease also. The market used to be utterly driven by distressed sales, but that’s no longer the case. Yes, distressed sales do tend to sell at lower levels still in many cases, but they are not driving the rest of the market right now. When it comes to foreclosures, there is very little room to go down. In fact, I’ve been seeing slightly more REO listings lately, which probably explains the very slight uptick in bank-owned sales over the past month. But ultimately we’ll see what the stats say after a couple more months (keep in mind banks don’t usually foreclose around Christmas too, which could halt some of the data).

Unemployment in Sacramento County through August 2013

Unemployment in Sacramento County has been trending downward for a few years, but let’s be honest, there are still far too many people looking for jobs. The unemployment rate for September 2013 was not announced on time due to employees at EDD being furloughed in light of the government shutdown (sorry to bring that up). We should see new stats in about two weeks.

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.

Question: Any thoughts, insight or stories to share? I’d love to hear your take.

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