A recap of the Sacramento real estate market in 2016

High demand. Modest value increases. Price sensitive. Those are ways to describe the real estate market in 2016. Today let’s take a deep look into where the market went last year. This post is long on purpose. You can scan it quickly or pour a cup of coffee and spend some time here. If you aren’t in Sacramento, I hope you can still find some value. Do you see any parallels to your market? Any thoughts? 

P.S. I have some really cool year-in-review images. Please share.

13516718 - white wood texture with natural patterns

DOWNLOAD 76 graphs HERE: Please download all graphs in this post (and more) here as a zip file (including a one-page quick stat sheet). See my sharing policy for 5 ways to share (please don’t copy verbatim). Thanks.

A Market Rush: Overall prices saw a dip these past few months as the regional median price declined 4-5% from summer. This isn’t anything unexpected because it happens virtually every year. Just as there is a season for fishing, fashion, or television, there is also a season for real estate values. Granted, 2016 did have a more aggressive feel in that multiple offers were commonplace, it took an average of 7 less days to sell a home compared to last year, and inventory was sparse at best. In fact, the year closed with the strongest months of sales volume in the past 5 years for November / December. It’s as if there was a rush on the market from September through November that ended up beefing up these year-end stats. Why did sales volume increase? Some say it’s the power of Trump or the anticipation of a new political era. Or it could be buyers were expecting an increase in interest rates and wanted to get in before a rate hike. Or maybe it’s the byproduct of a fall that wasn’t all that dull and a market with strong demand. Or maybe it’s a combination of all or none of the above.  🙂

When looking at the entire year, most price metrics increased 7-9% and sales volume was up a modest 2% overall for the year. Remember, just because price metrics increased by 7-9% does not mean actual values increased by that much (we can talk about that more below if you wish). My sense is prices at lower levels saw larger increases than the middle and upper end of the market, which means a more aggressive bottom tends to create larger increases on paper. I say this because it’s easy to see the median price at 10.5% higher and say, “Values went up by 10.5% last year,” but that just isn’t true for the bulk of the market. On a related note, last week I mentioned trends to watch in 2017, and if I had to add one more thing I would say there could easily be a problem this year with overpricing homes because of so much focus on the market being “hot” without looking at actual data.

A few year-in-review images:

sacramento-county-year-in-review-blog-size

sacramento-region-year-in-review-blog-size

placer-county-year-in-review-blog-size

Sacramento County:

  1. The median price was $315,000 in December (6.5% above last December).
  2. Housing inventory is about 10% lower than it was last December.
  3. Sales volume was 7% lower this December compared to last December, but this year and last were higher than 2012, 2013, and 2014.
  4. It took 3 days longer to sell a house last month compared to November. 
  5. One year ago in December it was taking 4 days longer to sell.
  6. FHA sales volume is down 6% this year compared to 2015 (but 25% of all sales this year were FHA).
  7. Cash sales are down 11% this year (they were 13% of all sales last month).
  8. The average price per sq ft was $202 last month (about the same as November, but 7.5% higher than last year).
  9. The average sales price at $343,670 is down about 4% from the height of summer (but is 6% higher than last year).
  10. When looking at the entire year in Sacramento County it took 33 days on average to sell a home this year.

A few images to show the bottom and top of the market:

all-residential-sales-in-sacramento-county-by-sacramento-appraisal-blog

all-residential-sales-under-100k-in-sacramento-county-by-sacramento-appraisal-blog

all-residential-sales-under-100k-in-2016-in-sacramento-county-by-sacramento-appraisal-blog

million-dollar-market-in-sacramento-county-by-sacramento-appraisal-blog

Some of my favorite images this month:

cdom-in-sacramento-county-by-sacramento-regional-appraisal-blog interest-rates-since-2008 inventory-december-2016-by-home-appraiser-blog median-price-context-in-sacramento-county price-metrics-since-2015-in-sacramento-county-look-at-all

SACRAMENTO REGIONAL MARKET:

  1. The median price was $350,000 in December (7% above last December).
  2. It took 3 days longer to sell compared to the previous month (but 4 less days compared to December 2015).
  3. Sales volume was about 1% lower this December compared to last year.
  4. FHA sales volume is down 6% this year compared to last year. 
  5. Cash sales are down 8% this year compared to last year.
  6. Cash sales were 14.4% of all sales last month.
  7. The average price per sq ft was $208 last month. That’s down about 1% from the height of summer and 8% higher than last year.
  8. FHA sales were 22% of all sales in the region last month.
  9. The average sales price was $387,915 in December. It’s down about 5% from the height of summer but 8% higher than last year.
  10. When looking at the entire year in the region it took 37 days on average to sell a home this year.

Some of my favorite images this month:

median-price-sacramento-placer-yolo-el-dorado-county

regional-inventory-by-sacramento-regional-appraisal-blog

sacramento-region-volume-fha-and-conventional-by-appraiser-blog

inventory-in-sacramento-regional-market

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

PLACER COUNTY:

  1. The median price was $423,925 in December (7% above last December).
  2. It took 2 less days to sell compared to the previous month (but 9 less days compared to December 2015).
  3. Sales volume was about 1% lower this December compared to last year.
  4. FHA sales volume is down 11% this year compared to last year (FHA sales were 18% of all sales in Placer County last month).
  5. Cash sales are down a mere 1% this year compared to last year.
  6. Cash sales were 16% of all sales last month.
  7. The average price per sq ft was $216 last month, which is about as high as it’s been all year (about 8% higher than last year).
  8. REOs were 1.5% and short sales were 1.8% of all sales in Placer County.
  9. The average sales price was $472,130 in December. It’s down about 2% from the height of summer but about 9.5% higher than last year.
  10. When looking at the entire year in Placer County it took 42 days on average to sell a home this year.

Some of my favorite images this month:

regional-market-median-price-by-home-appraiser-blog

months-of-housing-inventory-in-placer-county-by-sacramento-appraisal-blog

placer-county-price-and-inventory-by-sacramento-appraisal-blog

placer-county-sales-volume-by-sacramento-appraisal-blog

days-on-market-in-placer-county-by-sacramento-appraisal-blog

DOWNLOAD 76 graphs HERE: Please download all graphs in this post (and more) here as a zip file (including a one-page quick stat sheet). See my sharing policy for 5 ways to share (please don’t copy verbatim). Thanks.

Questions: Did I miss anything? What are you seeing out there? How would you describe the market? I’d love to hear your take.

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Predictions, Trump’s impact on real estate, and a Sacramento market update

I reached the point of political exhaustion last week in a big way. This doesn’t mean I’m tuned out, but right now I find myself glossing over Facebook rants or skimming certain conversations because they’re only going lead to arguments. Yet still I hoped we could chat briefly about politics and real estate – without unfriending each other. Then let’s take a deep look at the Sacramento market. Any thoughts?

18345737 - the white house, view from the south, home of the president of the united states of america in washington dc usa

Huge Data Fail & Predicting Real Estate: The media laid an egg when it came to predicting the presidency. In fact, it seemed like many political pundits were shell-shocked when election results were coming in contrary to their predictions that Hillary would win. I don’t mention this so we can argue, but only to remind us of the danger of predicting, being wrong, and then having pie on your face (losing credibility). If some of the best political minds in America couldn’t predict the outcome of the presidential race, can we really predict the future of the real estate market with certainty?

Trump Presidency and Newlyweds: I’ve been asked a couple of times this week how a Trump presidency has impacted real estate so far. My answer is simple. Imagine asking a newlywed couple after one week of marriage to tell us how their marriage is going. It’s only been a week though. We probably need more time to really know how married life is going to unfold. The same holds true with Trump’s impact on real estate. We haven’t had enough time to see waves in the market yet, and nobody really knows how his policies will affect housing. There are many predictions right now, especially about repealing Dodd-Frank, but those are only guesses (see paragraph above).

Any thoughts?

—-—–—– And here’s my big monthly market update  ———–—–

big-monthly-market-update-post-sacramento-appraisal-blog-image-purchased-from-123rfTwo ways to read the BIG POST:

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

DOWNLOAD 71 graphs HERE: Please download all graphs in this post (and more) here as a zip file. Use them for study, for your newsletter, or some on your blog. See my sharing policy for 5 ways to share (please don’t copy verbatim). Thanks.

NEW: I created a one-page market sheet to print and keep handy when talking about real estate. I figured it might be helpful to use while talking on the phone. I’m not sold on the look, but is this a step in the right direction? Download here.

Quick Market Summary: A brutal election season has ended (thank God), and many Americans feel worn out, but the market doesn’t feel that tired. The truth is when we look at the stats we are seeing about what we’d expect at this time of year. Ultimately prices are down 1-3% from the height of summer, it took two days longer to sell a house last month, and inventory is down 14% in the region from last year. It’s easy to see softer stats and assume the market is beginning to crash, but the market softens like this almost every single year (besides 2012 when Blackstone and friends gutted the market and we didn’t have a normal fall season). I’m not saying values are not inflated, affordability isn’t becoming more of a factor, or even the market won’t turn at some point, but only that things feel fairly normal right now for the season. Sales volume has been strong this year in Sacramento and is up slightly from last year despite cash and FHA volume both dropping by 7-8%. Inventory is anemic and there really isn’t a quick solution to deal with that problem, but buyers are still finicky about price despite very few homes being listed on the market. Sellers don’t get this, so they try to command whatever price they want, but that rarely works in this market. Keep in mind buyers are scouring Zillow and Redfin every single day, they are visiting properties with their agent, they are getting beat out on other homes, and they are often looking for MANY months before getting a contract accepted. Sellers frankly are not doing anywhere near this level of research, which is one reason sellers are less in tune with proper pricing. Check out specific stats and graphs below for Sacramento County, the Sacramento Region, & Placer County.

Sacramento County:

  1. The median price is $320,000 and is down a few percent from the height of summer, but it’s 10% higher than last year.
  2. The average price per sq ft was $202 last month (down 1% from a few months ago, but 8.5% higher than last year).
  3. There were only 38 short sales and 31 REOs in the county last month.
  4. Sales volume was 5% higher this October compared to October 2015.
  5. It took 3 days longer to sell a house last month compared to the previous month (one year ago it was taking 5 days longer to sell).
  6. Sales volume is up slightly this year compared to last year (1% or so).
  7. FHA sales volume is down 7% this year compared to 2015 (25% of all sales were FHA last month).
  8. Cash sales are down 8.5% this year (they were 12% of all sales last month).
  9. Housing inventory is 12% lower than the same time last year.
  10. The average sales price at $353,000 is down about 1% from the height of summer (but is 9% higher than last year).

Some of my Favorite Graphs this Month:

median-price-since-2013-in-sacramento-county

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

inventory-september-2016-by-home-appraiser-blog

cdom-in-sacramento-county-by-sacramento-regional-appraisal-blog

price-metrics-since-2015-in-sacramento-county-look-at-all

sales-volume-in-sacramento-county-since-2012

seasonal-market-in-sacramento-county-sales-volume-6

seasonal-market-in-sacramento-county-inventory-4

seasonal-market-in-sacramento-county-4

SACRAMENTO REGIONAL MARKET:

  1. The median price was $357,000 in October. It went up slightly from September but is down 3% from the height of summer (up 9% from last year).
  2. The average price per sq ft was $208 last month. That’s down about 1% from the height of summer and 7% higher than last year.
  3. It took 2 days longer to sell compared to the previous month (but 5 less days compared to October 2015).
  4. Sales volume was 4% higher this October compared to October 2015.
  5. FHA sales volume is down 8% this year compared to last year.
  6. Cash sales were 13.5% of all sales last month (FHA sales were 21%).
  7. Cash sales are down 7% this year compared to last year.
  8. Housing inventory is 14% lower than the same time last year.
  9. REOs were 1.8% and short sales were 2% of all sales last month.
  10. The average sales price was $393,000 in October. It’s down about 3% from the height of summer but 8% higher than last year.

Some of my Favorite Regional Graphs:

median-price-sacramento-placer-yolo-el-dorado-county

sacramento-region-volume-fha-and-conventional-by-appraiser-blog

inventory-in-sacramento-regional-market

regional-inventory-by-sacramento-regional-appraisal-blog

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

regional-market-median-price-by-home-appraiser-blog

PLACER COUNTY:

  1. The median price was $438,000 last month (highest point of year, but take that with a grain of salt).
  2. The average price per sq ft was $213 last month (down very slightly from the height of summer and up 6% higher than last year).
  3. It took 41 days to sell last month (same as previous month but 6 days less than one year ago).
  4. Sales volume was about 3% lower this October compared to October 2015.
  5. FHA sales volume is down 16% this year compared to last year.
  6. Cash sales were 17% of all sales last month (FHA sales were 13%).
  7. Cash sales are down 3.6% this year compared to last year.
  8. Housing inventory is 13% lower than the same time last year.
  9. Both REOs and short sales were each 1% of sales last month.
  10. The average sales price was $481,000 and is 8.5% higher than last year.

Some of my Favorite Placer County Graphs:

placer-county-sales-volume-by-sacramento-appraisal-blog

inventory-in-sacramento-regional-market

days-on-market-in-placer-county-by-sacramento-appraisal-blog

months-of-housing-inventory-in-placer-county-by-sacramento-appraisal-blog

number-of-listings-in-placer-county-2016

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

placer-county-price-and-inventory-by-sacramento-appraisal-blog

DOWNLOAD 71 graphs HERE: Please download all graphs in this post (and more) here as a zip file. Use them for study, for your newsletter, or some on your blog. See my sharing policy for 5 ways to share (please don’t copy verbatim). Thanks.

Questions: Did I miss anything? What impact do you think Trump will have for the real estate market (if any)? What are you seeing out there? I’d love to hear your take.

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

How do you know when a real estate market is increasing?

If a client asked you how to know when a real estate market is increasing in value, what would you say? Prices going up is the first and obvious answer, but what else? There are a number of different metrics to watch, and the image below helps hit on some of the main issues. Anything else you’d add?

Signs of an increasing market - 530

Markets tend to change over time rather than in an instant, so it’s important to know which metrics to watch. It’s also helpful to listen to what buyers are saying. After all, there is something about consumer confidence and the mood among buyers that cannot always be captured in one neat little metric. The other big question we must ask is: Why are values increasing? Remember that an increase in housing supply or interest rates can change the direction of the market in a heartbeat too (especially after the Spring seasonal market fades). This is why it’s also important to know the signs of a softening market.

think like an appraiserHow to Think Like an Appraiser: I’m excited to be teaching a class in a couple days at the Sacramento Association of Realtors. The class is called “How to think like an appraiser”, and we’ll hit on how to choose comps, how to make adjustments, and tips for working with appraisers. This will be very practical, and we’ll have many case studies to talk through in the class. See the image and register online here.

Question: What other signs do you watch to know if the market is increasing?

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The tallest real estate graph ever in Sacramento

Did you hear about the 100 million dollar condo sale in New York recently? It’s hard to grasp just how much money that is for only one residence. For context, $100,000,000 is about a 19% ownership of the Sacramento Kings, a 10% share of the San Francisco Giants, or a 20% ownership of the Oakland A’s (Forbes). After reading about this sale from New York appraiser Jonathan Miller, and seeing his “tall” graph of the New York market, I was inspired to do something similar.

The Tallest Real Estate Graph Ever in Sacramento: From what I can tell, the image below is the tallest real estate graph ever in Sacramento. This is a unique view of the residential housing market from 2012 through 2014. What do you see?

sacramento county sales from 2012 to 2014 - residential only - sales on mls only - by sacramento appraisal blog

The Small Version of the Graph Above:

The small version of sales in sacramento county since 2012 - sacramento appraisal blog

Sales Above $1M in Sacramento County Since 2008:

Sales above 1M in Sacramento County since October 2008 - sacramento appraisal blog

When we look at the market in different ways, sometimes we can better understand it and then explain it to clients. I hope this was helpful and interesting. As always, feel free to share this post with your contacts, and if you plan to post a graph on your site or in your newsletter, please see my sharing policy (it’s an honor when people share – thanks).

Question: What do you see in the graphs above?

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