Seeing the signs of a slowing market in Sacramento

I’ve been saying things like, “How did you get so big?” lately to my kids. Sometimes I look at them and just wonder where the time has gone, and how it’s even possible that my oldest is starting to look more like a teenager every day. It’s both sobering and exciting. The truth though is it’s taken 12 years for all this change to happen in my son, but I don’t always see the growth every single day until all of the sudden he looks bigger or older. Can you relate?

slower market - image purchased from 123rf and used with permission by sacramento appraisal blog

No way, the market isn’t slowing: The same thing happens with real estate. It’s easy to plug away and use all the normal cliches to describe the market, but when we pause to really take a closer look, we begin to notice things are different. Let’s take a deeper look into the numbers below. If you’re local, absorb what is here and feel free to share some of the talking points with your contacts. If you’re out of town, I’d love to hear about your market. Email subscribers, I recommend reading this big monthly post on the blog instead of email.

Two ways to read THE BIG MONTHLY POST:

  1. Scan the talking points and graphs quickly.
  2. Grab a cup of coffee and spend a few minutes digesting what is here.

DOWNLOAD 51 graphs HERE (zip file): Please download all graphs in this post (and more) here as a zip file (or send me an email). Use them for study, for your newsletter, or some on your blog. See my sharing policy for 5 ways to share.

One Paragraph to Describe the Sacramento Market: The housing market has had an aggressive feel for most of the year. Pending sales have been a good 10-15%+ higher than normal, sales volume in the Sacramento region is up 10% this year, and values have seen a modest seasonal uptick too. Overall the market is still quite competitive in some price ranges because inventory and interest rates are still low, but there have been some subtle changes lately that help us see the market is beginning to slow down. Remember, it is normal for markets to slow, and the past two years have seen a very definitive seasonal market where the Spring is hot and the Fall is soft. For instance, it took 2 days longer to sell a home last month compared with the previous month, price reductions are growing in number, the median price in Sacramento County has been hovering at the same level for 90 days, interest rates have seen a minor increase, and housing inventory has seen a slight uptick. As housing supply presumably continues to increase over the next few months, watch out for more price reductions, unrealistic expectations from sellers, and buyers gaining more power.

I’m NOT saying the market is declining. I’m simply saying the strong seasonal market is showing signs of beginning to slow. Those who take notice can make informed real estate decisions and/or help clients price their homes properly (see 3 points below about pricing).

Sacramento County Market Trends for July 2015:

  1. The median price has been hovering at $290,000 for 90 days.
  2. It took an average of 31 days to sell a house last month (30 in June).
  3. Cash sales were 16.7% of all sales in July (very normal level).
  4. Short Sales and REOs were only 4% of sales last month.
  5. FHA sales were 26.5% of all sales in Sacramento County in July.
  6. Sales volume is 8.6% higher so far in 2015 compared to last year.
  7. Sales volume was 12% higher in July 2015 compared to July 2014.
  8. There is a 1.9 month supply of homes for sale (1.6 in June).
  9. The average price per sq ft is 185 (6% higher than last July).
  10. The average sales price is $320,732 (slightly lower than previous month).

price metrics since 2014 in sacramento county

inventory in sacramento county  Since 2013 - part 2 - by sacramento appraisal blog

CDOM in Sacramento County - by Sacramento Appraisal Blog

inventory - July 2015 - by home appraiser blog

sales volume through june 2015 in sacramento county

median price and inventory since jan 2013 - by sacramento appraisal blog

layers of the market sacramento county since 2011 - by sacramento appraisal blog

Sacramento Regional Trends for July 2015 (Sac, Placer, Yolo, El Dorado):

  1. Sales volume was up 14.5% in July 2015 compared to July 2014.
  2. Sales volume for the year is up 10.3% compared with 2014.
  3. The median price at $330,000 is up 6% from last year, but down 1% from the past two months.
  4. Cash sales were 17% of all sales last month (very normal level).
  5. It took an average of 35 days to sell a house last month (33 days in June).
  6. FHA sales were 23.1% of all sales in the region last month.
  7. There is 1.98 months of housing inventory (up from 1.85 in June).
  8. The average sales price is $367,775 (6.8% higher than last year, but down slightly from previous month at $370K).
  9. It took 5 less days to sell a house this July compared to July 2014.
  10. Distressed sales were less than 4% of all sales last month (REOs / Short Sales).

median price and inventory in sacramento placer yolo el dorado county

Regional market median price - by home appraiser blog

days on market in placer sac el dorado yolo county by sacramento appraisal blogmonths of housing inventory in region by sacramento appraisal bloginterest rates inventory median price in sacramento regional market by sacramento appraisal blog

Placer County Market Trends for July 2015:

  1. The median price in Placer County is $395,000 (it’s been hovering between $391,000 to 401,000 over the past few months).
  2. The median price is 4.2% higher than one year ago (July 2014).
  3. It took 40 days on average to sell a house last month (4 more days than June, but 5 less days than last year).
  4. Cash sales were 16% of all sales last month.
  5. FHA sales were 18.8% of all sales in Placer County last month.
  6. Sales volume was 14% higher this July compared to last July.
  7. Sales volume is up 17.8% in 2015 compared to last year.
  8. There is 2.17 months of housing inventory (up from 1.88 months in June).
  9. The average price per sq ft is is 202 (up from 182 last July).
  10. The average sales price is $430,599 (5.4% higher than July 2014, but lower than June).

Placer County median price since 2012 - by home appraiser blogPlacer County sales volume - by sacramento appraisal blogPlacer County median price and inventory - by home appraiser blogmonths of housing inventory in placer county by sacramento appraisal blogdays on market in placer county by sacramento appraisal blognumber of listings in PLACER county - July 2015 - by home appraiser blog

I hope this was helpful. Thank you so much for being here.

Quick Pricing Advice:

  1. Price according to the most recent listings that are getting into contract rather than the highest sales from the Spring.
  2. Remember how price sensitive the market is right now. Despite inventory and interest rates being low, buyers are not biting on overpriced listings.
  3. Price according to the neighborhood market rather than county-wide trends. The county-wide market may show increases or declines, but your neighborhood might be more or less aggressive compared to the entire county.

DOWNLOAD 51 graphs HERE (zip file): Please download all graphs in this post (and more) here as a zip file (or send me an email). Use them for study, for your newsletter, or some on your blog. See my sharing policy for 5 ways to share.

Questions: How do you think sellers and buyers are feeling about the market right now? What are you seeing out there?

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

10 quick talking points when someone asks about Sacramento real estate

The holidays are here, so if your Uncle Bob asked you next week at a family gathering what the real estate market is doing, what would you say? Or if a neighbor heard the market has been slow, how would you respond? Below I have 10 quick talking points to help you impress your Uncle Bob or anyone else with your knowledge of the local market. So let’s unpack some real estate trends in Placer County and the Sacramento region to hone in on two important questions: What are values doing? And why are they doing it?

Two ways to read this post:

  1. Scan the talking points and graphs quickly.
  2. Grab a cup of coffee and spend a few minutes digesting what is here.

 

PLACER COUNTY

1)  The median price dipped about 2.5% last month:

Placer County median price since 2013 - by home appraiser blog

It’s not surprising to see the median price dipped last month by about 2.5% in Placer County. The median price had been at $375,000, and now it’s at $365,000. It is very normal for prices to soften at this time of year, which is seen in the graph below. Yet at the same time, the market really is getting much softer in light of increasing inventory, which is also important to watch.

Placer County median price since 2012 - Fall season - by home appraiser blog

2) Inventory increased to 3.24 months last month.

Placer County housing inventory - by home appraiser blog

months of housing inventory in placer county by sacramento appraisal blog

Housing inventory saw an increase from 2.75 months to 3.24 months from October to November 2014. This increase sounds dramatic, but fewer sales last month played a big role in seeing inventory increase. Remember, housing supply is calculated by dividing the number of current listings by the number of sales over the past 30 days, so a lower amount of sales will naturally drive inventory up. As you can see, inventory is not the same at ever price level, is it?

number of listings in PLACER county - October 2014 - by home appraiser blog

3) It’s taking an average of 55 days to sell a house in Placer County:

days on market in placer county by sacramento appraisal blog

It took one more day this month to sell a house compared to the previous month, and about 10 more days compared to mid-Summer. It’s still taking much less time to sell a house than it used to about 5 years ago, but it is still very important to price listings correctly. When prices are softening and houses are taking longer to sell, this means overpriced homes are simply going to sit. Generally speaking, the higher the price, the longer the marketing time. Keep in mind sales above $1M took only 91 days, but there were only 12 sales, so take that stat with a grain of salt. Realize too that current actives above $1M have been on the market for 198 cumulative days.

4) Sales volume is slightly lower right now compared to last year:

Placer County sales volume - by sacramento appraisal blog

There were only 345 sales in Placer County this past month, and that’s a fairly low number, though last year in November the figure was only 365.

SACRAMENTO REGION:

5) Regional values in Sacramento softened by about 2% last month:

median price sacramento placer yolo el dorado county

The regional market was extremely flat for about six months, but it finally dipped over the past couple of months in light of the onset of Fall. An increase of inventory is definitely putting pressure on values too. Housing supply lately has been hovering about where it was when prices hit bottom in January 2012.

Regional market median price - by home appraiser blog

When watching real estate, it’s important to take a broad look at how values are unfolding in surrounding counties as well as the entire region. If we look too closely at any given county, we might not be able to see the bigger picture. By the way, the median price in Placer County is $100,000 higher than Sacramento County. Does this mean prices are $100,000 higher in Placer County? Nope. Keep in mind the average size of house that sold last month in Placer County was about 450 sq ft larger in size than in Sacramento County. This makes for huge price differences, don’t you think?

6) Sales volume is down 7.5% this year compared to last year:

SALES volume in sacramento region - by home appraiser blog

Sales volume is down in 2014 by about 7.5% when compared to the same time period in 2013. This might seem like a trivial number, but it equals about 1900 less sales on MLS so far this year.

7) Cash sales are down 34% in the Sacramento Region in 2014:

cash sales and volume in sacramento region - by home appraiser blog

Our regional market was heavily driven by cash investors over the past couple of years, but cash is no longer king. In fact, there have been 34% less cash sales in 2014 compared to 2013, which effectively means there have been 2186 less cash sales so far this year. This is a huge reason why housing inventory has increased this year because there are simply less buyers in the market right now. As time goes on, non-cash sales continue to show an increase as owner-occupant buyers are ultimately beginning to drive the market more and more. Some good news in the market is that FHA, conventional, and VA buyers have been increasing in numbers.

8) It’s taking an average of 50 days to sell a house in the Sacramento Region:

days on market in placer sac el dorado yolo county by sacramento appraisal blogIt took one more day last month to sell a house compared to the previous month (10 more days since July 2014). It’s important to be in tune with the trends of each price range too since the market is not the same at each segment.

10) Housing inventory is a HUGE driver for the regional market:

months of housing inventory in region by sacramento appraisal blog

The higher the price, the more inventory there is (generally speaking).

number of listings in Placer Sacramento Yolo El Dorado county - Oct 2014 - by home appraiser blog

median price and inventory in sacramento placer yolo el dorado county

As you can see, housing inventory in the region is definitely increasing, and that has dramatically slowed values over the past couple of years. Remember that housing inventory was artificially low at times in 2012 and 2013 because of the massive influx of cash investors who came from outside of the market to take advantage of the lower prices at the time.

interest rates inventory median price in sacramento regional market by sacramento appraisal blog

Since the current market is no longer driven by cash investors, real estate is more prone to be strongly influenced by the health and strength of the local job market as well as increases in inventory.

I hope this was helpful, and I do hope you can share something here in a conversation soon. Thank you so much for being here.

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? What are you seeing out there?

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

Parenting and watching real estate unfold in Placer County

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:

  1. Scan the highlighted text and graphs quickly.
  2. Grab a cup of coffee and spend a few minutes digesting what is here.

placer county real estate trends june 2014

PLACER COUNTY:

1) Prices have been flat in Placer County:

Placer County median price and inventory - by home appraiser blog

median price in placer county and sacramento county by sacramento appraisal blog

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:

Placer County housing inventory - by home appraiser blog

months of housing inventory in placer county by sacramento appraisal blog

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:

days on market in placer county by sacramento appraisal blog

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:

Placer County sales volume - by sacramento appraisal blog

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):

number of listings in PLACER county - june 2014 - by home appraiser blog

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:

interest rates inventory median price in placer county by sacramento appraisal blog

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:

months of housing inventory in region by sacramento appraisal blog

number of listings in Placer  Yolo El Dorado Sacramento - by home appraiser blog

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:

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

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:

number of listings in Placer Sacramento Yolo El Dorado county - June 2014 - by home appraiser blog

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.

porch footstool

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.

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

10 quick real estate trends to know about in Placer County

Flat. That’s sort of how the market has felt in Placer County. Well, there has been a slight uptick lately, but otherwise the market seemed to level out a few quarters ago after a massive stint of appreciation. Let’s take a look at the latest trends below, and touch on what is happening in the regional market too. I hope this is helpful.

Two ways to read this post:

  1. Scan the highlighted text and graphs quickly.
  2. Grab a cup of coffee and spend a few minutes digesting what is here.

If you want an email with all graphs in this post for free, fill out the form below:

free graphs from sacramento appraisal blog

PLACER COUNTY:

1) Prices have been mostly flat (small uptick):

Placer County median price and inventory - by home appraiser blog

The market has felt much more flat in Placer County compared to Sacramento County. The median price and average price per sq ft did see an uptick last month on paper, but by in large values have been somewhat flat overall. The market has felt very price sensitive in that if a property is not priced right, it’s going to sit. Of course not all cities or places in Placer County are experiencing the same trends, so take county-wide stats with a grain of salt since they do not apply across the board to every market niche.

2) Inventory is about the same as it was last month:

months of housing inventory in placer county by sacramento appraisal blog

The higher the price, the more inventory there is. Right now inventory is at 2.5 months for Placer County, which is about the same as it was last month. There are actually more listings this month (which is normal), but there are also more sales (also normal).

3) The higher the price, the longer it is taking to sell:

days on market in placer county by sacramento appraisal blog

On average properties took 54 days to sell in May compared with 55 in April (cumulative days on market). Just as it is in Sacramento County, the same holds true in Placer that higher-priced listings take longer to sell.

4) Volume is down by 12% from last year, but up 15% from April:

Placer County sales volume - by sacramento appraisal blog Sales volume is up by 15% from last month, but for some perspective it is down 12% from May 2013. Nonetheless, it’s been good to see more sales these past two months after a more sluggish start to the year.

5) Listings increased by 15% from last month to this month (normal):

number of listings in PLACER county - May 2014 - by home appraiser blogThis is what the market looks like in terms of listings in Placer County. There is very little for sale under $200,000, but quite a bit between $300K to $750K.

6) “Layers” to watch over the next two quarters:

interest rates inventory median price in placer county by sacramento appraisal blog

What is driving the market in Placer County? Low interest rates and low inventory are two of the bigger “layers of the market” right now. Values really leveled off last summer after cash investors began to pull back from the Sacramento Region and inventory increased. Cash investors were far more dominant in Sacramento County during the heat of the market last year, but you have to remember cash had a ripple effect throughout the market, and what happened in Sacramento County impacted surrounding counties too. Interestingly enough, Blackstone is still buying properties in Placer County. Their purchases have been fairly minimal in 2014 in Placer County, but virtually non-existent in Sacramento County these past six months. The job market is also a factor in Placer County as we need to see higher paying jobs to support higher values. The unemployment rate as of April 2014 in Placer County is 6.1% (compared with 7.1% in Sacramento County).

7) Sacramento County vs Placer County:

median price in placer county and sacramento county by sacramento appraisal blog

For reference, there is about a $100,000 median price difference between Placer County and Sacramento County.

THE SACRAMENTO REGION:

8) Inventory increased slightly last month in the Sacramento Region:

months of housing inventory in region by sacramento appraisal blog

number of listings in Placer  Yolo El Dorado Sacramento - by home appraiser blog

Keeping an eye on regional trends is important for context. When considering Sacramento, Placer, Yolo, & El Dorado County, inventory saw a slight uptick from last month and is now hovering at 2.23 months for May 2014 (still very low). The higher the price, the higher the inventory.

9) On average it’s taking 52 days to sell a house in the Sacramento Region:

days on market in placer sac el dorado yolo county by sacramento appraisal blog There was no change in CDOM from last month to this month. On average properties are taking 52 days to sell (which is about 40% longer than last year).

10) What prices look like in the Sacramento area:

number of listings in Placer Sacramento Yolo El Dorado county - May 2014 - by home appraiser blog

This is evidence of a market that has really changed these past few years. There are increasingly less listings available under $100,000 since the market is no longer saturated with REOs, and values have simply risen exponentially.

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.

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