Let’s talk some ups and downs today. Here is some context to help shed light on how the real estate market is moving in Sacramento. Any thoughts?
History of Median Price: This graph shows year-end median sales price figures from 1986 to 2013 in Sacramento County (and West Sacramento). You can see just how steep the increase was last year – even when compared to the heyday of the previous real estate “bubble” that began to burst in 2005.
Charts Instead of Graphs: Two weeks ago I shared my big market update post, and I showed how FHA is going up, cash is going down and conventional financing is also increasing. Here is a chart to help give some more specific numbers instead of a graph. After all, some of us are visual people and others simply want the numbers.
Goodbye Distressed Sales: Here are some stats on foreclosures and short sales, and it’s always shocking to see how far the market has progressed in recent years. On another note, keep in mind there have historically been far more distressed sales at lower price levels. This is important to realize because when removing so many foreclosures and short sales at the bottom of the market, it naturally gives the median sales price a huge boost. This should bring pause when we quote the median price as rising 20% last year (it definitely did, but since investors devoured the bottom of the market and there were far fewer sales at the bottom, this padded the median price and essentially means not every single property increased in value by 20%). Check out Don’t put all your eggs in the median price basket if you’d like to freshen up understanding the median price.
A Juiced Market in 2013: Lastly, I’ve been describing the market as no longer being on steroids, and I’ve found it to be a helpful description for clients and contacts. In 2013 values were “juiced” upward by increased investor activity, historically low interest rates and freakishly low inventory. Now the market has tapered off – just as if it had stopped using steroids. It’s simply a different market than it was last year.
Question: What stat stands out to you most? Comments are welcome below.
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Q1 2009 to Q4 2013 REO numbers. 72.9% and now at 5.6%. That is what stands out to me the most. Quite the change.
Thanks Lori. That is probably the most striking stat to me too. It’s incredible to see how the market has shifted. I was assisting a big REO broker during the “foreclosure flood” around 2008/2009 and it was amazing how many REOs were coming through the pipes.
Ryan – do you think we are shifting back to a buyers market? I’m feeling that it’s equalizing right now, seems like there is give and take between both buyer & seller. But I’m wondering where we are going?? I guess we’ll know for sure, once we get past it and look back!
Good question. I do think we are shifting back to a buyer’s market, though it will take a while before I stop saying the market is a seller’s market. I believe inventory and interest rates bottomed out in 2013, and both of these being higher now are helping buyers gain more power. It is still a seller’s market though since inventory is incredibly low (even now), but buyers are slowing gaining more and more strength as time goes on. Sellers offering credits back to buyers more often these days is evidence of this. It’ll be a process and it should take time for the market to evolve, but I suspect the trend will continue unless there is governmental interference to help lower inventory or interest rates. Nobody has a crystal ball of course though…