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Rancho Cordova

Seeing the market over two decades

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Buckle up and let’s take a drive through the past 20 years. Where has the market been over these two decades? Since MLS recently made it much easier to extract older data, I had to do this post. I hope you find it useful or interesting – even if you aren’t in the Sacramento market.

SOME THINGS TO KEEP IN MIND:

1) Data: We are only as good as our data and our ability to understand. Some graphs below are very clear in their trends, but others probably aren’t meaningful because of massive data or an enormous price range.

2) Not back: Many lower-priced areas are not back to their price peak in 2005.

3) Back: Some well-established areas have exceeded previous peaks.

4) Different trends: Not all price ranges, locations, and property types have moved the same way, so let’s be cautious about sweeping generalizations about the entire market. After all, the condo market might be far different from the 2-4 unit market or vacant land.

5) Inflation: Prices might be similar today to where they were in 2005, but that doesn’t mean values are the same. I know, that’s so technical, but when we factor in inflation over 13 years, it’s really not the same thing when comparing today’s prices with prices from 13 years ago. Keep in mind the market today has far different dynamics from 2005 also.

6) Bubble: Graphs like this can often lead to conversations about a housing “bubble.” If it’s relevant, please read peak prices and an open letter to buyers worried about another housing bubble.

SIDE NOTE: I’ve been having major website issues over the past 2 months. I’ve switched hosts, and that should solve the problem of down time.

DOWNLOAD ALL GRAPHS: You can download all images as a zip file. I included both a web-friendly size and larger ones. Please use as you see fit (unaltered). If you post somewhere online I always appreciate a link back.

Rosemont:

River Park:

Meadowview:

Vacant Residential Land:

Million Dollar Sales:

Pocket / Greenhaven:

Rancho Cordova:

Sierra Oaks:

Loomis:

East Sacramento:

Duplex Sales:

Gold River:

Land Park:

Elk Grove:

Garden of the Gods:

Sales under $50K in Sacramento County:

Del Paso Manor:

Tahoe Park:

Fair Oaks:

Treelake / Ashley Woods (Granite Bay):

Condo Sales in Sacramento County (and Downtown):

Colonial Heights:

College Glen:

Davis:

West Sacramento:

Bella Vista High School Boundaries:

Arden Park:

Folsom:

Arden Manor:

95815 Zip Code:

4-Unit Sales in Sacramento County:

Roseville:

I hope this was interesting or even fascinating. I’m intrigued and excited about having more data at my disposal (thank you Metrolist). Thanks everyone for your graph suggestions too. I reached out on Facebook, Twitter, and LinkedIn and got to most of what people asked for, though I couldn’t do them all.

Questions: What are your thoughts about the market after seeing the graphs above? I’d love to hear your take.

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Fake real estate trends & rising rents

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Let’s talk about fake news. No, not anything political. Let’s consider a couple of examples where it’s easy to misunderstand trends and then report fake real estate news. Then let’s look at how rent increases are fueling the 2-4 unit market. Anything to add? I’d love to hear your take.

Part I: This is Part I of my big monthly market update. Part II will come next week. If you need a few graphs now for marketing, send me an email. This post is long on purpose. Scroll or read in depth.

1) FAKE NEWS: The market is starting to turn because sales volume is down.

TRUTH: Sales volume declined by 21% last month in Sacramento County. That sounds dramatic, right? Should we be concerned? Is the market shifting? Nope. It’s actually normal to see volume drop like this between December and January. I circled January in red below as proof. This January was actually the strongest we’ve seen since 2013.

2) FAKE NEWS: The market is flat and didn’t have a price lull during the fall.

TRUTH: The median price has been flat in Sacramento County for six months, and normally it softens by about 5% during the fall, but that didn’t happen this year. So it’s easy to say that the market is so “hot” that prices didn’t dip, but that’s not true. Here’s the thing. Sometimes the median price ends up being a bit more flat despite the market showing a legitimate cooling. Besides, if we step back and look at the average sales price and average price per sq ft, both declined during the fall. Moreover, the median price in the region also declined. The moral of the story? Don’t put all your eggs in the median price basket.

3) *FAKE NEWS: Bay Area residents are buying EVERYTHING in Sacramento.

Truth: Bay Area folks are getting lots of attention and they should since there are over 20,000 new Bay Area residents migrating to Sacramento each year according to the Greater Sacramento Economic Council and Mercury News. That’s jaw-dropping to hear, but let’s pause and consider a few things.

* WHAT I AM NOT SAYING (update): I am not saying Bay Area buyers are not a factor in our market. They are. Bottom line. All I am saying is they are not buying everything. Thus it can be misleading news to perpetuate the idea that our market is being utterly gutted by Bay Area residents. As we have conversation about Bay Area buyers, let’s consider some of the points below. I find these fascinating for the sake of our conversation. Moreover, when we are talking about trends, let’s look to not only how the market feels, but actual stats too where possible.

A) Bay Area cash is not gutting Sacramento. Only 15% of all sales were cash in the region last year. Cash used to be about 30% during the “Blackstone” days.

B) Nearly 20% of sales in the region last year were FHA, which tells us first-time buyers are winning in this market – not just loaded Bay Area residents. 

C) There are 20,000 new residents every year from the Bay Area, but there are only about 28,000 single family detached home sales in Sacramento per year. This tells us not everyone who moves here is actually buying. Of course if Bay Area buyers are picking up the slack of locals not buying, then that’s another story. If anyone has data to suggest that is the case, do share. For now though let’s admit not everyone who moves here is getting a mortgage.

D) I might be more bullish on thinking the Bay Area is dominating the purchase market, but having more than twenty thousands residents migrate to live in Sacramento is definitely putting pressure on rents. According to Yardis Matrix, rents are up 8.5% this year, and that translates to renters paying an average of $105 more each month for rent (or $1,260 more over the course of the entire year). Yikes.

4) NOT FAKE NEWS: Rising rents are heating up the 2-4 unit market.

TRUTH: An investor told me the other day, “Sacramento’s hot rental market is now the worst kept secret in the nation”. Such a headline quote (thanks Eliot). He is 100% correct because news of rising rents has seemed to permeate the marketplace lately. For years after the housing collapse prices seemed more subdued, but lately it’s been eye-opening to see how much demand there is for the 2-4 unit market. Yet many units hitting the market actually have below-market rents because the rents have not been raised in many years. This is why most of the time it seems like I cannot fully trust rental data in MLS because it reflects older rental contracts from years ago rather than the market today.

What the? There are also some lofty sales that leave us asking, “What the? It sold for how much?” I thought this recently when seeing a triplex sell for 1.8M in Midtown and a 4-plex at $850,000 in Curtis Park. A “lone-ranger” outlier sale might reflect the “hot” market in some senses, though remember a high sale could also be a trophy property, have a subdividable lot, or maybe a buyer overpaid in light of needing to do a 1031-exchange.

I hope this was helpful or interesting.

Questions: What do you think of the “fake” real estate news above? How much of an impact are Bay Area buyers really making? What are you seeing in the rental market? Did I miss something?

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Revisiting goals I mentioned in January for 2013

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Let’s get real today. No appraisals, graphs or market trends. My first post this year listed out five business goals and five personal goals. So far I’m plugging away and aiming to meet all of them, though one in particular has not been going so well. If I do not do something right away, there is no way I am going to meet my goal to lose weight. In the beginning of the year I mentioned the need to drop 15 pounds (really it’s closer to 20), so now it’s time to take some action.

I posted this on Facebook two days ago:

my post on Facebook

I don’t know about you, but it seems much easier to meet goals when teaming up with others and making them public too. The response from my Facebook post was immediate and overwhelmingly positive, so there should be quite a few friends and business contacts joining up with this effort. Initially I did not want to manage another community emphasis, but I’m definitely game now that response has come through so strongly. Project 680 supports homeless students in the FCUSD, so it’s wonderful to be able to turn some fat into advocacy for local kids.

Charity Weight Loss: Does this resonate with anyone? Would you or your friends be interested to join? Maybe do this with your family, the office, church? This will begin September 1 and go through December 1, 2013. Visit the 90-Day Health Challenge on Project 680’s website.

By the way, how are your goals coming along this year so far? I’d love to hear about a goal you have already met or are close to meeting. Comments are welcome below.

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Seeing the reality of Blackstone’s mass purchases

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It’s one thing to hear about investors purchasing so many properties in Sacramento, but let’s see it. Even if you’ve only been following real estate casually, you’ve likely heard the private equity fund Blackstone has picked up well over 1000 properties in the Sacramento area since last August. No, that’s not a typo.

Let’s look at a few areas of Sacramento to visualize some of the neighborhoods where Blackstone has been most active. Each red label below represents a property that is owned by Blackstone. The bulk of these sales were purchased since last August, but there are still quite a few that have been owned for years.

Properties owned by Blackstone in Natomas

Blackstone has been purchasing as “IH2 Property West” and “THR California”. They’ve had a strong presence in Natomas as you can see – especially in older Natomas. It is important to note the information above is based on Tax Records alone and could very easily not include MANY other purchases that did not end up listed in Tax Records.

Properties owned by Blackstone in Rancho Cordova

There have also been quite a few purchases by Blackstone in Rancho Cordova. Most of the sales are in the 95670 zip code, while only a small amount have been located in the 95742 zip code.

Properties owned by Blackstone in Rosement and College Glen

There are also a decent number of Blackstone properties in Rosemont and a few sprinkled through College Glen and La Riviera. Neighborhoods that are ripe for first-time owners have typically been the primary target of this investment fund.

Properties owned by Blackstone in South Sacramento

Last but not least, here are Blackstone-owned properties in South Sacramento. This market has been a very affordable area under $200,000, which has been a sought after target price for the investment fund. By the way, Deutsche Bank just gave Blackstone 1.5 billion in additional credit over the past week (on top of their initial 2.1 billion credit line to purchase properties). We’ll see if any of the money finds it’s way into the local market.

Video interview with Blackstone from Bloomberg (worth a watch):

Questions: How do these images stir you? Or what do they make you think of? If you are renting from THR / IH2, what has it been like to rent from them so far? Any stories to share?

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