Placer County

A massive garage & paying too much attention to prices

August 13, 2019 By Ryan Lundquist 16 Comments

I saw a massive garage while on vacation that I just have to share. I also have some quick thoughts on focusing too much on prices. Those are the two things on my mind. Then for those interested let’s dive deep into the market.

I took almost two weeks off and part of my vacation was to drive to Boise to visit family. Of course my real estate mind doesn’t shut off when out of town, so I was blown away to see a brand new neighborhood with nearly every other house having a massive RV space in the garage. This one actually has two separate RV spaces. I’ve never seen two spaces like this in my market. Have you?

I’ll admit the neighborhood looked a little odd from the street because of the amount of space dedicated to garage doors. It didn’t look bad per se, but it was definitely different. And for the record, I would use both spaces for a massive woodworking shop. Forget the RVs.

Migration garage marketing plan: This is actually brilliant marketing because the builder is clearly appealing to the retiree crowd. In fact, when talking with a few neighborhood residents, they tell me there are lots of ex-Californians as well as people from Texas and North Carolina. This reminds us of the reality of migration. Who is coming to the market? And who is leaving? Those are two vital questions to ask to know a market.

And a quick thought on prices…

Focusing too much on price? Price is THE obsession in real estate, but focusing too much on price can actually cause us to miss the real story of the market. It’s common to hear stuff like, “Prices are up, so the market is doing great.” I get that, but what if we had a market where there are fewer buyers, but those who are buying are still paying higher prices? This is where fixating too much on prices would cause us to miss what’s really happening. After all, if sales volume is sliding, it could be a sign of buyers stepping away from the market, which is a much bigger issue (that will eventually show up in prices if the trend continues). My advice? Pay attention to prices, but give equal or more focus to what is happening with current listings and sales volume. Are buyers absorbing the listings? What are they saying about the market? How is volume changing? Is the number of sales normal or not right now? These are some of the questions to keep asking.

Any thoughts?

—–——– Big local monthly market update (long on purpose) —–——–

Now for those interested, let’s talk about Sacramento trends. Prices have been a bit flat, but the bigger story here is the sales volume slump streak of fourteen months has ended. If I had to pick a few phrases to describe the market it would be competitive if priced right, modest price growth, lower volume, and fairly normal stats for the spring / summer so far.

DOWNLOAD 70+ visuals: Please download all graphs here as a zip file. See my sharing policy for 5 ways to share (please don’t copy verbatim).

THE SHORT VERSION:

Prices feel a bit flat
The volume slump streak ended
July looks fairly normal stat-wise
Pendings are strong right now
Sales volume is still down this year
The market is slowing for the season
Mortgage rates are like a steroid
Inventory is sparse (but not in El Dorado County).

THE LONGER VERSION:

Here are some of the bigger topics right now:

The volume slump streak has ended: We had a fourteen month streak going, but it’s now done. For fourteen months in a row we’ve seen sales volume down compared to the same month last year until this month where sales volume was up about 4% in the region. It was a strong month for most local counties, though El Dorado County was down 15% from last year.

Modest price growth: Price metrics in the region are up about 2-5% or so this year compared to last year depending on which price metric we’re looking at. In short, this is pretty modest price growth overall, which has been the narrative all year (did you hear that sellers?).

Not surprised by slowing: At this time of year we tend to see prices begin to cool and it takes longer to sell. This is exactly what the stats are showing us below too. This comes as a shock to some, but if you follow real estate closely there’s a rhythm to the market, which means we can expect this slowing EVERY. SINGLE. YEAR. In short, in a normal seasonal slowing we tend to see most of these things below happening to greater degrees as we inch closer to the holidays. This is a good reminder that low mortgage rates and sparse inventory aren’t a trump card to buck a traditional seasonal slowing. And if you want proof, it took three days longer to sell last month in the region compared to the previous month.

Rent control: The City of Sacramento approved a rent control measure today. This is huge news and it’s absolutely something to watch. I’ll be talking lots about this in coming time as the trend unfolds. I actually ran a Twitter poll the other day about rent control.

Inventory is down overall (mostly): In the region we have less than two months of housing supply. This is actually down from last year. In short, inventory is sparse on one hand, though on the other hand the new normal is low inventory. It’s tempting to say stuff like, “It’s normal to have a 5-month supply of homes for sale,” but that’s simply not true for today. Maybe it used to be the norm, but for now our new normal looks to be somewhere between 2 to 2.5 months of housing supply.

Multiple offers: When I talk about the market slowing it can sound confusing because the market feels really competitive when properties are priced right. In fact, you’ll probably get a few offers if you price it correctly. But if you overprice you can very easily get zero offers (really). Here’s a stat I’ve been tracking each month. As you can see nearly half of all sales had more than one offer last month. But then again, nearly half of sales didn’t too.

Inventory is GROWING in El Dorado County: Inventory has been shrinking in the market, but not in El Dorado County. This is a new graph I made and I hope you like it. I know it’s busy, but can you see recently how inventory has been shrinking everywhere besides El Dorado County? I may unpack this in a deeper blog post at some point, but this is definitely something to watch. Part of it could be due to the struggle of obtaining affordable fire insurance also.

Just kidding about rates never going below 4% again: It’s unreal to hear about mortgage rates at 3.5%. Remember just a couple years ago when everyone and their Mom were saying, “Rates have bottomed out.” Just kidding. They didn’t. On a serious note, low rates can act as a steroid to help get buyers off the fence and play the market. It helps buyers also artificially afford higher prices too, which isn’t the healthiest sounding thing in the world.

Property tax appeal season: If you didn’t know, it’s now property tax appeal season in the region. Most counties allow residents to dispute their property taxes between July and late November or early December (Placer County is mid-September). Here’s how the process works. Not many people honestly pay attention to their property taxes in an up market. It’s just true. But I advise for all property owners to stay in tune to be sure they are paying a fair share and no more.

I could write more, but let’s get visual instead.

FOUR BIG ISSUES TO WATCH:

1) SLOWER GROWTH: The market continues to show price growth, but the rate of change is slowing. This almost sounds offensive to some because the narrative in real estate is often that the market is always blazing hot. But let’s remember “slow” is not a dirty word in real estate. Moreover, do you know what sellers need more than anything right now? They need to price for the real market today rather than the ultra “hot” market of yesteryear.

2) A QUICK RECAP: All year prices have shown a modest uptick. What I mean is prices are up from last year, but not by much. Keep in mind the lowest price ranges are likely the “hottest” market in town too.

3) VOLUME SLUMP: Up until this past month the number of sales slumped in the region for 14 months in a row (and 13 months in Sacramento County). Sales volume was strong in July though and actually up. This year volume is still down about 9% in the region though. Overall despite a lower year of volume, it’s still not outside of normal low ranges (see 2014 and 2015).

4) PRICES SOFTENED IN JULY: The market generally slowed in July in terms of price growth. This is why I’m saying prices feel a bit flat. This is fairly normal for the time of year, and sometimes we see prices bounce up and down as summer comes to a close. Stay tuned. Let’s keep watching.

NOTE: Take El Dorado County data with a grain of salt. Stats change significantly month by month.

Thanks for respecting my content: Please don’t copy my post verbatim or alter the images in any way. I will always show respect for your original work and give you full credit, so I ask for that same courtesy. Here are 5 ways to share my content.

Please enjoy more images now.

SACRAMENTO REGION (more graphs here):

SACRAMENTO COUNTY (more graphs here):

PLACER COUNTY (more graphs here):

EL DORADO COUNTY (more graphs here):

DOWNLOAD 70+ visuals: Please download all graphs here as a zip file. See my sharing policy for 5 ways to share (please don’t copy verbatim).

Questions: What are you seeing out there? What do you think prices are doing? What are you hearing from buyers and sellers lately?

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

Rates are low, but buyers aren’t going nuts

July 11, 2019 By Ryan Lundquist 19 Comments

Rates and inventory are really low, so on paper it seems like the market should be booming. But it’s not. The truth is sales numbers are down despite rates doing the limbo below four percent again. It’s like the market looks hot on paper, but it’s also a bit lackluster in some ways.

Affordability: A big issue today is buyers are struggling with affordability. After seven years of price increases, we’re seeing the market become too expensive for many prospective buyers since wage growth has not kept pace with price growth. Some buyers feel uncertain about the future also, which is causing hesitancy about whether to purchase.

Hot couple analogy: The market is like a super hot couple that looks great on paper. They’re rich, attractive, successful, and they get a ton of “likes” on Instagram. Everything looks perfect, but then out of nowhere they break up because it turns out their relationship wasn’t as good as everyone thought. In a similar way, the real estate market looks stellar on paper. Rates are low, inventory is sparse, and it’s actually really competitive out there. But we’re also seeing weaker sales volume which shows us buyers aren’t as enthusiastic as we’d assume them to be.

Any thoughts?

—–——– Big local monthly market update (long on purpose) —–——–

Now for those interested, let’s talk about Sacramento trends. If I had to pick a few phrases to describe the market it would be competitive if priced right, modest price growth, slumping volume, and fairly normal stats for the spring.

DOWNLOAD 70+ visuals: Please download all graphs here as a zip file. See my sharing policy for 5 ways to share (please don’t copy verbatim).

THE SHORT VERSION:

Prices are up, volume is down
It kinda feels normal right now
Price growth has been modest
46% of sales had multiple offers last month
Sales volume is down for the 14th month in a row
Low rates have helped change the feel of the market this year
Inventory is thin, but slightly higher than last year
The post is long on purpose. Skim or pour a cup of coffee

THE LONGER VERSION:

Here are some of the bigger topics right now:

Normal: The market felt really dull last year, but it’s been a somewhat normal year so far in 2019. There are certainly concerns about affordability, but from a stats perspective it’s been a pretty standard first half of the year. Pendings continue to be strong also, so buyers still clearly have a strong appetite for the market.

14 months in a row of slumping volume: Despite mortgage rates being low we’re seeing somewhat sluggish sales volume. In fact, sales volume was down 11.6% in the region last month and it’s down 8.6% so far in 2019. Moreover, we’ve had fourteen months in a row with lower sales volume compared to the previous year. In my mind it’s still best to say we’re having a slower year instead of a volume meltdown because levels aren’t alarmingly low by any stretch. Let’s watch this carefully.

Dude, rates will never get below 4% again: It’s been a little surprising to see how low rates have gone again, right? The narrative for a while was, “Dude, they’ll never go below 4% again. We’ve bottomed out.” Yet here we are. My sense is if rates keep going down it’ll only increase competition and artificially inflate prices. That would be temporarily nice for buyers, but an unfortunate byproduct is low rates in a wider picture tend to create less incentive for sellers to move. Why sell if you’re sitting on a 3.5% mortgage rate?

Purplebricks & the tech invasion: Last week it was announced that Purplebricks will be exiting the United States housing market after a 75% loss in shares. This company is going to the grave in the U.S., but the reality is we’re still in a market where tech companies are trying to disrupt the traditional real estate model. Next up? Zillow is said to be coming to Sacramento by the end of the year.

Joe Montana’s $49M overpriced listing: Former Quarterback Joe Montana listed his property for $49M and it didn’t sell because it was profoundly overpriced. In fact, the price has now been reduced to $28M. Many sellers are like Joe in trying to attract mythical unicorn buyers who will mysteriously overpay for some reason. My advice? Be aware that today’s buyers are incredibly picky about paying the right price.

The dream of selling at the top: I met a guy who wants to sell because he says the market might top out soon. His concern is a friend sold two years ago thinking the market was at its peak, but it wasn’t. The truth is it’s not so easy to time a market perfectly. We talk about how simple it is to do this, but most people pull it off from dumb luck more than anything. The reality is the bulk of buyers don’t buy based on price metrics, but rather lifestyle and affordability.

This is a fascinating chart, right? It shows a few price cycles over the past twenty years in Sacramento County. I don’t share this to say prices are about to change directions, but at some point that’s probably what we ought to expect because that’s what markets do. They go up and down. For now price momentum has been slowing and we’ll continue to watch this closely to see how it plays out. Let’s remember the collapse we saw in 2005 was not a normal trend that’s now the formula for the next price cycle. That was a market built on fraud and rampant speculation.

The coming recession: There are lots of predictions about a coming recession, and at some point one will happen. But predicting recession specifics is a bit like predicting housing market specifics. At the end of the day we might have ideas, but we don’t know the future if we’re honest. Moreover, the last “great” recession isn’t now the template or formula for all future recessions.

Eyeballs vs offers: Over two years ago I wrote about a $250M listing in Bel-Air. At the time it was the highest-priced property in the United States, and it was called “record breaking”. But today it’s still on the market and priced at $150M. Despite going viral and having global attention this listing did not sell. This reminds us it’s nice to have eyeballs on a listing, but the only thing that matters is offers. Sellers, if you aren’t getting offers, it may be time to adjust your pricing until the market bites.

Preparing for a slower season: At this time of year we typically see the market begin to slow down. The sales stats don’t show it yet, but when July stats come out we usually see it starts to take slightly longer to sell in July compared to June. This is a clue into a slowing market, and eventually we see more slowness in actual prices (but it often takes a few months to see the slow trend show up in actual sales stats). This is a good reminder to pay close attention to pendings today because that’s where we see what the current market is doing. What is similar and actually getting into contract? That is THE question.

I could write more, but let’s get visual instead.

FOUR BIG ISSUES TO WATCH:

1) SLOWER GROWTH: The market has moved forward this year, but it’s been at a slower pace. In other words, the market has felt competitive this year, but price momentum has continued to slow. Remember, “slower” and “slow” are not dirty words in real estate. They are market realities.

2) A QUICK RECAP: All year prices have shown a modest uptick. What I mean is prices are up from last year, but not by much. Keep in mind the lowest prices are likely the “hottest” market in town too.

3) VOLUME SLUMP: The number of sales has slumped in the region for 14 months (and 13 months in Sacramento County). Overall volume is noticeably lower this year, but it’s still not outside of normal low ranges though either (see 2014 and 2015).

SACRAMENTO REGION:

Key Stats:

June volume down 11.6%
Volume is down 9.9% over the past 12 months

SACRAMENTO COUNTY:

Key Stats:

June volume down 13.4%
Volume is down 9.3% over the past 12 months

PLACER COUNTY:

Key Stats:

June volume is down 10%
Volume is down 9.2% over the past 12 months

EL DORADO COUNTY:

Key Stats:

June volume down 6.3%
Volume is down 12.4% over the past 12 months

4) PRICES TICKED UP IN JUNE: The market generally showed price increases last month, though they were pretty subtle.

NOTE: Take El Dorado County data with a grain of salt. Stats change significantly month by month.

Please enjoy more images now.

SACRAMENTO REGION (more graphs here):

SACRAMENTO COUNTY (more graphs here):

PLACER COUNTY (more graphs here):

EL DORADO COUNTY (more graphs here):

DOWNLOAD 70+ visuals: Please download all graphs here as a zip file. See my sharing policy for 5 ways to share (please don’t copy verbatim).

Questions: What are you seeing out there? What do you think prices are doing? What are you hearing from buyers and sellers lately?

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

Slow is not a dirty word in real estate

June 13, 2019 By Ryan Lundquist 11 Comments

Slow is not a four-letter word. Well, technically it is. But in real estate it’s not a “four-letter” dirty word. Let’s talk about this, and then for those interested I have a huge market update below.

The situation: It’s easy to feel good about real estate when the stats are glowing because there’s always something positive to share. But when a market begins to slow it can feel uncomfortable for some because all of the sudden slower stats don’t line up with the rosy narrative that’s been used to describe the market.

The reality of slowing: The market has been slowing. What I mean is right now we’re seeing more subdued price growth in many portions of the country. In other words, prices just aren’t increasing like they were in the past. This doesn’t mean the market is dull or that it’s not really competitive, but it does mean competition is more intense than actual price growth in many cases.

Main point: I wanted to mention this because it’s important to recognize when markets change so we can back away from real estate cliches that may not fit current trends. Moreover, it’s crucial to find new language to describe the market as things either speed up or slow down. My advice? Pay attention to stats and let data inform your market narrative. Thus if you see the market slowing, it’s okay to say that. In fact, sometimes it’s the best thing sellers or buyers can hear.

Abusing price per sq ft: Last week I made a quick video to talk through the problem of abusing price per sq ft in real estate. Enjoy here if you wish.

As always, thanks for being here.

—–——– Big local monthly market update (long on purpose) —–——–

Spring is feeling fairly normal so far. In fact, May was actually a pretty strong month. What a difference from the doom we felt in 2018. Let’s talk about it.

THE SHORT VERSION:

Prices are up from the fall and it’s shaping up to be a strong spring
Prices aren’t up much from last year
There were more multiple offers this May compared to last May
Sales volume has slumped for 12 months
There are nearly 2,700 less sales this year
So far the spring has felt fairly normal
This post is long on purpose. Skim or pour a cup of coffee

DOWNLOAD 70+ visuals: Please download all graphs here as a zip file. See my sharing policy for 5 ways to share (please don’t copy verbatim).

THE LONGER VERSION:

Here are some of the bigger topics right now:

Normal: The stats for May were strong and showed what we’d expect to see for the month. Prices showed an uptick, inventory remained low, it took less time to sell, the sales to list price ratio increased, etc… In short, the market feels a bit normal right now. This doesn’t mean it’s perfectly healthy, but from a stats perspective it’s been fairly normal.

More multiple offers: We saw more multiple offers this May compared to last year at the same time. I know, it’s barely up, but all year the number of multiple offers has been lagging, so this shows us a strong spring has sprung.

Blackstone: I mentioned last week that Blackstone (Invitation Homes) is starting to sell some homes in Sacramento. For now it looks like they’re offloading some non-performing inventory, so that’s how I plan to describe it unless new information comes to light. Keep in mind lots of headlines talk about Blackstone selling, but these headlines refer to stocks instead of homes. If you didn’t know, in recent weeks Blackstone sold $1B of their stock in Invitation Homes. This is big news of course because it means Blackstone is clearly making a move to exit the market. But this doesn’t mean Invitation Homes is going to exit the actual housing market by dumping all 80,000+ homes they own in the United States. I’m doubtful this is their plan since Invitation Homes is such a well-oiled mega-rental machine. But we’ll keep talking about this as needed.

Slower growth: Prices are up from last year, but they’re not up by much. The market feels really competitive, but we’re just not seeing insane price growth. Most metrics are up anywhere from 2-3% from last year. This reminds us it’s possible to have a really competitive market without insane price growth.

Highest sale ever in Sacramento County: There is now a $5M sale that just closed in the Sierra Oaks Vista neighborhood. It was a private sale and it’s the highest residential sale ever in Sacramento County. The ultra contemporary home was previously listed a couple times and here’s a video from Nick Sadek’s listing. I mention this because we are starting to see outlier sales like this pop up. This is a reflection of where prices are at, but it’s also a reflection of growing demand for the luxury market.

Michelin star: The big news locally is Sacramento got its first Michelin star for a restaurant called The Kitchen. Yesterday someone asked me if this star will affect property value in surrounding neighborhoods. I can comment later on that, but for now I have a Twitter poll going. Please vote.

Picky about getting into contract (and staying): I haven’t run stats on failure rate yet, but I hear from lots of real estate agents about buyers falling out of contract more often these days. I’ll have to run the numbers at some point, but I wanted to say it doesn’t surprise me to hear this. The reality is today’s buyers are incredibly picky about what they purchase. They’re choosy about condition, location, and price, so they take their time to get into contract. Moreover, since they don’t want to get stuck in a bad situation, if something doesn’t go right during an escrow, they’ll bail. Thus they’re picky about getting into contract AND staying in contract. Sellers, did you hear that? Buyers aren’t desperate.

A year of slumping volume: Sales volume in the region was strong for May and has rebounded substantially from a dreadful fall season, though technically volume has been down 12 months in a row in Sacramento County (and 13 months in the region). All things considered we’ve had 9% fewer sales, which means there have been 2,700 fewer homes sold this year. Keep in mind this is not the sign of a market meltdown, but it’s definitely safe to call this a slower year in terms of volume. This is something we have to keep watching. I suspect if rates go up, we could see volume slump again too.

Rates are doing the limbo: Rates keep doing the limbo by finding lower levels, and that tends to put a steroid in the market to create more competition. This is a big factor to watch since our market feels heavily influenced by the direction of rates right now. As a side note, if rates get really low it could lead to stronger price growth.

Getting back to the top: The median price in the region is now higher than the previous peak in 2005. It took us fourteen years to get back, which is the entire lifespan of my 8th grader. Anyway, in coming time we’ll surely have more “bubble” conversations because of this. But let’s be real. Many buyers are already wondering and having these conversations. Keep in mind the market in 2005 was much different than today and there is no such thing as a formula where the market “pops” when reaching 2005 levels. Technically, current values aren’t actually anywhere near 2005 when we consider inflation. But in my experience very few buyers actually think about inflation like this unless they’re statistics nerds. In case it helps, here’s a post I wrote about buyers worried about another housing bubble.

I could write more, but let’s get visual instead.

FOUR BIG ISSUES TO WATCH:

1) SLOWING MOMENTUM: Despite the spring market clearly heating up, stats show the market is slowing down when we look at the rate of change by year. So while we might describe the market as “hot”, we can also describe it as slowing.

2) LAST YEAR VS THIS YEAR: Check out the price metrics below. Can you see why I’m saying prices seem flat lately? This may not be true in every single price range or neighborhood of course, but this shows us price momentum is slowing. With that being said, it’s still okay to say the market is “hot”. It is. But I’d say competition is hotter than price appreciation.

3) SALES VOLUME SLUMP for 12 months: It’s important to look at sales volume in a few ways to get the bigger picture. Here it is by month and year.

SACRAMENTO REGION:

Key Stats:

May volume down 4.6%
Volume is down 9.2% over the past 12 months

SACRAMENTO COUNTY:

Key Stats:

May volume down 6.1%
Volume is down 8.3% over the past 12 months

PLACER COUNTY:

Key Stats:

May volume is up 2.7%
Volume is down 8.4% over the past 12 months

EL DORADO COUNTY:

Key Stats:

May volume down 4.9%
Volume is down 12.6% over the past 12 months

4) SPRING GETTING HOT: The market is heating up for 2019. We’re seeing price changes, low inventory, and increased sales volume.

NOTE: Take El Dorado County data with a grain of salt. Stats change significantly month by month.

Quick note on how NOT to use my content: Please don’t copy my post verbatim or alter the images in any way. I will always show respect for your original work and give you full credit, so I ask for that same courtesy. Here are 5 ways to share my content.

Now here are a bunch of images. Please enjoy.

SACRAMENTO REGION (more graphs here):

SACRAMENTO COUNTY (more graphs here):

PLACER COUNTY (more graphs here):

EL DORADO COUNTY (more graphs here):

DOWNLOAD 70+ visuals: Please download all graphs here as a zip file. See my sharing policy for 5 ways to share (please don’t copy verbatim).

Questions: What are you seeing out there? What do you think prices are doing? What are you hearing from buyers and sellers lately?

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

Solar panels & a normalish spring market

May 15, 2019 By Ryan Lundquist 17 Comments

Every week I get asked about solar panels. Do they add value? Should I price my listing higher? Will buyers pay for it? These are big questions and there’s no quick answer. But here are some things I think through and bring up when people call. This is just over ten minutes. Then for those interested, I have a huge market update to talk through the kinda sorta normal spring market.

Solar Video: Watch the video by clicking the image above (or here).

A Podcast I did with Norm: If solar isn’t your thing and you need a podcast to listen to, I just talked with Norm Shriever about appraisals, owning islands, Zillow, my Dad bod, etc… Listen directly on YouTube if you wish.

As always, thanks for being here.

—–——– Big local monthly market update (long on purpose) —–——–

Spring is feeling fairly normal so far. What a difference from the doom we felt in the latter half of 2018. Let’s talk about it.

THE SHORT VERSION:

Prices are up from the fall
Prices aren’t up much from last year
There’s lots of competition if priced right
Sales volume has slumped for 11 months
There are 2,500 less sales this year
So far the spring has felt fairly normal
This post is long on purpose. Skim or pour a cup of coffee.

DOWNLOAD 80+ visuals: Please download all graphs here as a zip file. See my sharing policy for 5 ways to share (please don’t copy verbatim).

THE LONGER VERSION:

Here are some of the bigger topics right now:

It feels flat around here: Prices are definitely up from the big lull we had during the fall season, but they’re not up by much compared to last year. This is why I’ve been describing the market as flat. Most price metrics in the region are up only 2-3% over the year. In the region we’re seeing prices about level with the height of last year, though in Sacramento County we’re slightly above. This could obviously vary by neighborhood.

A more normal spring: I was talking to a real estate agent today and she said, “You know, it just feels like a normal spring.” I tend to agree. Stats are showing normalcy and we’re seeing what we’d expect to see at this time of year. Prices are up, inventory is down, sales volume has ticked up from the fall, it’s taking less time to sell, and pending sales have been strong. This doesn’t mean the market is perfectly healthy, but from a stats perspective it’s been fairly normal.

2,500 less sales this year: On one hand sales volume has recovered this spring to almost normal levels, but over the past year volume is actually down 8.5% in the region. I know that doesn’t sound like much, but think about it this way. There were 2,500 less sales this year in the region compared to last year. While this isn’t the sign of a market meltdown, it’s definitely something we have to watch. At best I would say this is an off year, and at worst it’s a symptom of the market starting to change in more significant ways (which we will only know as time unfolds). In short, don’t write home over this yet, but keep an eye on it.

Zillow: Last week Zillow announced they’ll be entering the Sacramento market by the end of the year. This is huge news, but it’s really what we expected. These days there are a handful of tech companies trying to challenge the traditional real estate model by buying privately from sellers and then re-listing on the open market. There’s lots to say about this and I’ll have some posts in the future. For now I just wanted to say I find it ironic that as much as Zillow loves to tout their accuracy rate, they won’t be buying properties based on the Zestimate. Otherwise I imagine lots of overvalued owners would jump at the opportunity, right?

Low rates are the x-factor: At the end of 2018 it seemed like the market was ready to take a dive, but lower rates this year have helped bring buyers back into the market and sustain higher prices.

Real estate is like the stock market: When I say the market is slower I get a little pushback at times. The idea is, “Dude, I just had 14 offers on my house. How dare you say the market is slow!!!” Look, it’s impossible to describe every neighborhood and price range with just one statement. This is why I say the real estate market is like the stock market. While the market as a whole might be doing one thing, not every stock is experiencing that same exact trend. In the same way, not every neighborhood, price range, or property type can be explained the same way.

Do cannabis dispensaries increase residential value? I did an interview last week with CBS 13 to talk about a study that claims cannabis dispensaries increase the value of surrounding residential properties. You can click the link to hear my take. In short, it’s true that vibrant commercial sectors can help increase value. But I’ve never met a buyer who said, “I’ll pay more because of a dispensary down the street.” In my experience locally at least, many people don’t even know dispensaries are there unless they’re cannabis connoisseurs. In short, I tend to be skeptical of studies like this.

Hey girl, let’s have bubble talk: Prices are just about back to where they were fourteen years ago when the market collapsed in 2005. In fact, most price metrics in Sacramento are within 1-3% of the peak. This means with just a little more modest price growth we might be having “Hey girl, we’re back” (yes, that was a Ryan Gosling reference (sorry)).

Keep in mind the market in 2005 was much different than today and there is no such thing as a formula where the market “pops” if we reach 2005 levels. Technically speaking, current values aren’t actually anywhere near 2005 when we consider inflation. But you know, very few buyers actually think about inflation like this – unless they’re economists, grad students, real estate geeks, etc…. In case it helps, here’s a post I wrote about buyers worried about another housing bubble.

Appraisals coming in lower: I’m hearing from some contacts of appraisals coming in lower than the contract price. As the market slows, this is something we’ll likely see more frequently if properties are getting into contract at prices that cannot be supported by market data. Of course some appraisals may legitimately come in too low, and I’m not naive about that. Whatever the case, I’d advise sellers to price realistically and in some cases pick the strongest offer instead of the highest one.

Price sensitivity: Literally half of all homes last month had multiple offers in the Sacramento Region. This reminds us buyers need to bring strong offers. But sellers ought to price correctly too. Buyers are not desperate and willing to pay unrealistic prices, so I advise aiming for the market instead of that one mythical buyer who will overpay for some reason. Remember, the market is very competitive, but that doesn’t mean prices are going crazy.

I could write more, but let’s get visual instead.

FOUR BIG ISSUES TO WATCH:

1) SPRING GETTING HOT: The market is heating up for 2019. We’re seeing price changes, lower inventory, and increased sales volume. So prices are up from the dull fall, but they’re also flat as you can see under #4.

2) SLOWING MOMENTUM: Despite the heating, stats show the market is slowing down when we look at the rate of change by year. Looking at monthly, quarterly, and annual numbers helps give a balanced view of things.

3) SALES VOLUME SLUMP for 11 months: It’s important to look at sales volume in a few ways to get the bigger picture. Here it is by month and year.

SACRAMENTO REGION:

Key Stats:

April volume down 8.2%
Volume is down 8.5% over the past 12 months

SACRAMENTO COUNTY:

Key Stats:

April volume down 6.8%
Volume is down 7.2% over the past 12 months

PLACER COUNTY:

Key Stats:

April volume down 4.3%
Volume is down 8.9% over the past 12 months

EL DORADO COUNTY:

Key Stats:

April volume down 2.4%
Volume is down 12.5% over the past 12 months

4) LAST YEAR VS THIS YEAR: Check out the price metrics below. Can you see why I’m saying prices seem flat lately? This may not be true in every single price range or neighborhood of course, but this shows us price momentum is slowing. With that being said, it’s still okay to say the market is “hot”. It is. But I’d say competition is hotter than price appreciation.