If an article is too long, I probably won’t read it. Can you relate? Yet if an article is full of solid information to apply to life or business, I’ll definitely look it over – even if it’s longer. Enter my big monthly post. I hope to highlight the real estate market so you can see it, pick up a few conversation nuggets, and have some images to share too. Take a look below at the latest trends for Sacramento and Placer County.
Two ways to read this post:
- Briefly scan the graphs below.
- Take several minutes to digest the graphs and commentary.
Enjoy and let me know what you think.
PLACER COUNTY REAL ESTATE TRENDS:
Median Price: The median sales price in Placer County is $366,500 as of April 2014. This is 5% higher than April 2013, but fairly steady from where the market was at in the summer of 2013. As you can see, the market sort of leveled off two quarters ago, and has since been fairly flat with a mild seasonal uptick.
Inventory at “Bottom” Levels: Inventory has declined over the past few months (which is normal this time of year). Right now there are 2.5 months worth of houses for sale in Placer County. After spending about 18 months below two months of housing supply, the market is finally back to 2.5 months, which is about where it was when the real estate market bottomed out at the beginning of 2012.
Low Volume, but Increasing: Sales volume has been down by 10% or so in Placer County over these past few months, and April 2014 was down by 15% compared to April 2013. This past month did see an increase though, but it’s fairly normal to see an uptick in volume this time of year. Properties spent an average of 50 days on the market to sell in April 2014 compared to 39 days in April 2013.
Flattening Market: There are many layers to the real estate market. This graph helps show how median price, inventory and interest rates work together. An increase of interest rates and less investor cash tends to impact prices, right?
SACRAMENTO COUNTY REAL ESTATE TRENDS:
Sensitivity & 2008 Values: The median price in Sacramento County is $265,000 as of April 2014. This is definitely higher than the summer of 2013 and similar to where the market was at in January 2008. Sacramento County has been showing a seasonal uptick over the past few months (this is normal). Yet at the same time sales volume is low (which makes stats weaker), and the market is very price sensitive. This means if properties are not priced correctly, they are sitting. Homes spent an average of 39 days on the market last month compared with 26 days in April 2013. Some neighborhoods and price ranges are very flat, while other areas feel a bit hotter so to speak.
More Price Context: When taking a wider look at Sacramento County, values are currently close to the beginning of 2008 and the end of 2003 (or very beginning of 2004). Keep in mind each neighborhood might have a different price dynamic, so be careful not to project county-wide stats on every neighborhood equally.
Sacramento vs. Placer: This is what the median price comparison looks like between Sacramento & Placer County.
Good News of More Volume: The past quarter has had very sluggish sales volume, but last month had a healthy increase in sales. Granted, it is fairly normal to see an uptick from March to April, but an increase doesn’t always happen. In fact, 4 our of the last 5 years did not have an increase at all as you can see in this graph. Ultimately it will be interesting to see if the market will have a stronger next quarter to make up for the slower first quarter. This is something to watch carefully.
Declining Inventory: As of April 2014 inventory in Sacramento County is about 1.8 months. Trendgraphix says 1.9 months, but it is really 1.82 months to be precise. This is very low and is creating more competition among buyers. You can read 4 reasons why inventory is low for details about how inventory works.
Rates & Steroids: Interest rates are almost one percentage point higher than they were than last year, but they are still incredibly low. Keep in mind when rates are this low, they act as a steroid for the market to boost values. The Fed talked about raising rates when unemployment reached 6.5% nationally (it hit that level last month), but now they are backing away from that plan. The housing market and economy may still be too fragile to raise rates, so The Fed will presumably keep rates low for a season to help artificially boost the market or at least try to hold the market from tipping over to experience declines. If interest rates do dip lower for some reason though, it will super-charge the housing market again. We shall see.
Upticks: The median price, average sales price, and average price per sq ft have all shown increases over the past few months ranging from 1.7 to 2.3%.
Layers at Work: Now that cash investors have backed off significantly in Sacramento County, the market will presumably be more sensitive to what happens with inventory levels as well as the local economy. We often hear that inventory at 5 months is normal, but think of how low inventory is right now, yet how flat the market has seemed. Could the market remain fairly flat if inventory increased from 1.8 months to 5.0 months?
April to April: When looking at data, it’s always good to compare what was going on last year at the same time with this year. This helps us see how the market has changed.
The Region: Last but not least, here is a glimpse of the Sacramento Region. Inventory is at 2.1 months right now. If you want a deeper picture of inventory, check out The Big & Little Story of Inventory.
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.
I hope this was helpful. I sincerely appreciate you being here.
Questions: What are you seeing in the trenches of the market? What stands out to you from above?
A brief post for you today. I appraised a house in the Empire Ranch neighborhood in Folsom over this past week and wanted to show you how quickly property values have increased over the past few quarters. This graph illustrates a very clear and aggressive upward trend, doesn’t it?
Empire Ranch has also seen a slight increase in DOM (Days on Market) lately, which means properties are tending to take slightly longer to sell. This trend has been evident throughout the Sacramento area as housing inventory and interest rates have seen an uptick over the past couple months.
Any thoughts, questions or stories to share? Comment below.
There is honestly some
really bad less-than-helpful information floating around out there about disputing property taxes. Today I wanted to share five bits of information to help give honest insight into tax issues. These points are relevant for counties surrounding Sacramento as well as California. I hope this helps.
- Tax Values Posted: New assessments for 2013 for most counties surrounding Sacramento will be posted online on the Assessor’s website around July 2013. The new assessment should be based on the value of your home on 01/01/2013.
- Expect an Increase: If you purchased in the past 10 years, there is a good chance your property taxes will be going up this year in light of the market increasing in value during 2012. For instance, say you bought your property for $400,000 in 2007, but the assessment was lowered over the past few years to $250,000 due to Proposition 8, which allows for a temporary reduction in assessed value due to market declines. This year the Assessor may look at your property and give a 10%+ boost or so. In future years if the market continues to increase in value, your property taxes can be adjusted each year until the assessed value gets back up to the original “base year” value at $400,000 when you first purchased. On the other hand if you bought a property many years ago, your assessed value should be based on the value of your home when you purchased instead of market value on January 1, 2013. This means you’ll probably have a standard 2% increase for inflation instead of a huge increase like others may have.
- Don’t Hire Someone Right Now: If you need to hire someone to help you appeal your property taxes, don’t do that until the formal appeals period is open for your county. For instance, Sacramento County has an appeals period between July 2 and November 30, 2013 (some counties go from July to mid-September). This means if you get a mailer right now promising to help reduce your property taxes, that’s bogus for two reasons: 1) The appeals period is not even open yet; and 2) New assessments for 2013 have not been revealed, so these companies sending mailers don’t really know if you should appeal or not because they don’t have your 2013 assessed value. However, keep in mind the deadlines for disputing supplemental taxes and escape assessments do operate on a different timeline than typical “decline in value” situations as mentioned above. This is why it’s important to actually read the letters the Assessor sends.
- Assessed Value & Your Wallet: Remember that every $10,000 of assessed value equals about $100-125 in property taxes. This means if your assessed value increases by $30,000 this year, that’s going to be $300 to $375 more in taxes.
- Prop 8 Form vs Appeal: Lastly, there are two forms for the appeals process. There is a free form called the “Proposition 8 Decline in Value” form, which is an informal review and NOT an appeal. There is also a form called “The Application for Changed Assessment” that IS an appeal – and costs $30. Contrary to public perception, it is technically NOT free to appeal your property taxes. However, my suggestion is for property owners to try the free Prop 8 route early during the appeals period, but then to file a formal appeal a few weeks prior to the appeals deadline if you have not heard back from the Assessor yet. Read more here.
I hope this was helpful in a small way. Keep me posted if you have any questions and feel free to read more property tax articles in case it’s useful or relevant.