Welcome to Day 2 of “Condo Week” on the Sacramento Appraisal Blog. Let’s take a look at a panoramic view of the condominium market in the City of Sacramento. Here is a graph of all sales over the past 36 months.
Two things stand out from the graph to me. 1) The condo market is segmented into different markets. There is a very clear upper end of the market and an obvious lower end; 2) Property values have decreased over the past several years.
Here is a graph of all current condo listings in the City of Sacramento. It’s amazing to see so many condos priced well under $100,000. The lowest sale last year was $13,000 and 32% of all condo sales were under $50K and 34% of all sales were between $50-100K. This means 2/3 of all condo sales in Sacramento sold under $100,000 over the past year.
With such low prices there are big opportunities for buyers these days. But not everything is as smooth as possible when purchasing a condo, as shown below by Sacramento real estate broker Gena Riede of Sacramento Real Estate Voice:
I have long worked with parents who purchase condos for their Sac State students, and lately I too have found prices at an all time low with condos. But, the biggest issue lies in getting loans for these condos. Many of them have more than allowable amount of owner–occupied vs investment as well as not being on the approved lender list. More importantly, due to the amazingly low cost to purchase a condo, few if any lenders or credit unions will even loan money on such low amounts. This leads to more investors buying unless the buyer can pay cash. In my travels showing these Sacramento condos I have found many in disrepair and yet the HOA dues are in the $200/mo. With so many condo owners not paying their payments and losing their condos to the bank, many of the HOA’s are suffering with lack of funds for maintenance as well as their reserve accounts. This is where being cognizant of the maintenance or lack thereof of the complex is critical in making an informed decision as to purchasing or moving on to find a better maintained complex being key to your decision making. Certainly, parents of future Sac State students will find buying a condo is a much better financial decision than paying dorm fees, especially with these current real estate condo prices! On a good note, if a condo home buyer has cash there are some heck-a-deals out there to be had.
What are you favorite condominium complexes in the Sacramento area? If you had to purchase a unit today, where would you buy?
If you have any real estate appraisal, consulting, or property tax appeal needs in the Greater Sacramento Region, contact me at 916.595.3735, by email, on our appraiser website or via Facebook.
Another good one, Ryan. I would love to see the first chart stretched out so that it highlights the data at the bottom (prices between $1 and $150,000).
Having lived in CA for 10 years, I’m astonished that condos are available at these prices!!!
Thanks Alison. I really appreciate it. The “bottom of the market” post is coming on Friday actually after two post on lofts and condo financing issues go live over the next two days. I am still putting the “bottom” post together though, so I’m open to any suggestions in terms of what you think might be interesting.
Great Post Ryan,
I love the stats.
The biggest two issues pushing condo complex prices lower are the lack of financing and high monthly HOA dues.
Our first time buyer clients are often excluded from buying condos in the areas they like, because FHA financing is not available.
Many of our investor clients will skip condo units because the HOA dues eat too much of their cash flow when compared to similar priced homes.
That being said, there are a handful of complexes that can still go FHA in Placer County.
Any of those complexes would fit on my list of “favorite condominium complexes”.
You can find a list of those complexes at https://entp.hud.gov/idapp/html/condlook.cfm
-Patrick
Patrick, thanks so much. Great insight. I think you’re so right about investment too because those HOA fees really can eat up profit – especially depending on the area. Thanks for the link. I’m actually planning a post on Thursday for “condo lending issues”, but maybe I should just link to the comments in this post instead. 🙂
There are plenty of other “condo lending issues” to cover, so please write the post 🙂
It would be interesting to see it from an appraiser’s perspective.
-Patrick
There definitely are other issues. The post is actually written already. I hit on five of the big issues. I’ll hope for some more insight in the comments section on that day. Lots of people wonder about stuff like this, so it’s always good for discussion. Thanks Patrick.