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low sales volume

3 talking points for Sacramento real estate

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Let’s look at three trends today. Instead of only unpacking Sacramento County though, let’s glance at the region as a whole to understand larger dynamics at hand. I hope this will help give you a few more real estate talking points, whether for conversation with friends or clients. Any thoughts?

1)  It’s taking 20% longer to sell properties compared to last year

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

It’s not earth-shattering news that properties are spending more time on the market these days compared to last year. It’s simply one of the byproducts of having more housing inventory. Keep in mind 47 days is actually really quick considering sales in March 2012 took more than 80 days.

2) Inventory is up by 110% compared to last March

inventory in sac placer yolo el dorado county - sacramento appraisal blog

The Sacramento Region had just above one month of housing supply for an entire year. Inventory began to increase when interest rates shot up from 3.5 to 4.0% between May and June 2013 (and investors also began exiting the market around this time). It’s easy to get sensationalistic about a stat like this, but remember that current inventory is still VERY low.

3) Sales volume is down 17% from last year

SACRAMENTO region sales volume - by sacramento appraisal blog

Sales volume has been really low lately. The first quarter of 2014 was down 17% in sales volume when compared to the first quarter of 2013 and 25% from the first quarter of 2012. As you can see above, cash sales are an X-factor for why volume has been low, and the market has been feeling the impact. This is true in Sacramento County, and it’s true when looking at the region (Placer, Yolo, El Dorado & Sacramento).

BONUS: The first quarter of 2014 saw a 44% decline in cash sales compared with Q1 2013.

A quick video of where the market is. Watch below or here.

I hope this was helpful.

Sacramento Bee Quote: By the way, I wanted to share that I was quoted in a SacBee article last week entitled Sellers’ market has few sales. That’s always an honor. Thank you to anyone who clicked over from the story or even subscribed. I really appreciate you being here, and I’m looking forward to talking together.

Questions: What stands out to you above? What are you seeing in the trenches of the local market? I’d love to hear your insight. Comments are welcome below.

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Seeing Sacramento real estate in chunks

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Let’s break down the market in chunks. It’s always nice to get a county-wide view of real estate, but today let’s unpack what is happening in specific price ranges in Sacramento County. I hope this will be helpful for you and your clients. When we can explain the market, we become a valuable resource and we earn people’s trust. By the way, be on the lookout for my big monthly post in two days.

1) How many properties are available at different price levels?

months of housing inventory by sacramento appraisal blog

Inventory in all of Sacramento County saw a decline from February to March as the Spring market is beginning to unfold. Housing inventory is just under 2.0 months now after being closer to 2.5 months last month. But what does inventory look like in various price ranges? As you can see, inventory is at its lowest between 200-300K, and that makes complete sense since a great bulk of buyers find this range hot and affordable (it had the most sales out of any price range). On the other and, inventory above 400K and upward really shows a dramatic increase, doesn’t it? This helps us see there are different markets within the market.

current listings vs sales in price ranges in Sacramento county - by sacramento home appraiser

Here is another way to look at inventory. You can see the number of sales in red and the number of listings in blue. Knowing the sales vs. listings ratio can open our eyes to understanding demand, marketing time, how to price properties or even how aggressive an offer might need to be.

2) How long are listings take to sell?

days on market for sacramento sales in march 2014 - by sacramento appraisal blog

On average listings are taking about 40 days to sell (or 45 days cumulative). This is about 20% longer than they were taking last year during the same time, but we all know it’s a much different market this year (more on that in two days).

3) What is happening with sales volume?

sacramento real estate market trend graph houses sold since 2008 by sacramento appraisal blog

Sales volume is definitely down from last year by over 20%, but March sales were “normal” since volume increased from February to March by 25%. The market usually sees this type of increase, so in this regard the market behaved normally.

cash sales vs conventional sales in sacramento county - by home appraiser blog

Why is sales volume down? In large part it’s because of cash investors exiting the market. As you can see in the graph above, cash sales in the first quarter of 2014 were about half of what they were in 2013 during the same time period. As investors, particularly institutional investors, have taken their foot off the gas pedal, the market is definitely feeling it. Last year the market was on “steroids” so to speak, but this year the market is in withdrawal mode trying to figure out how to live without the extra layer of cash to drive the market.

Share the Graphs? If you want to share one or two of the graphs above in your newsletter or in a blog post, go for it. Please link back here and see my sharing policy so we are on the same page about what I mean by “share” (thanks).

Questions: What image resonates with you the most? Why? Should I keep breaking the market down by price range? (I’m looking for feedback)

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