The slowing, competitive, & price-sensitive market in Sacramento

Slowing down. Competitive. Price sensitive. Still more aggressive than last year. These are all ways I would describe today’s housing market in Sacramento. Let’s unpack the latest trends today to really see the market so we can better understand it and explain it to clients.

4 Hours to write this post: This post usually takes easily 4-5 hours to write each month. Keep in mind I create 50-60 graphs and then break down the trends into bite-sized talking points. I honestly LOVE doing this, and the goal is to be able to use the information for life and business. Why am I mentioning this? I just wanted to let you know how much I value helping us stay in tune with the market. New readers, the three other monthly posts are short, sweet, and general, but this one is long and hyper-local.

Two ways to read THE BIG MONTHLY POST:

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

DOWNLOAD 54 graphs HERE (zip file): Please download all graphs in this post (and more) here as a zip file (or send me an email). 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.

One Paragraph to Describe the Sacramento Market: Last month I talked about how the market has been slowing down. Sometimes when we say “slow”, it can really freak people out. But it’s actually very normal for real estate to soften during the later summer and fall after a more aggressive buying season in the spring. Moreover, when the market does change, it’s simply an opportunity to price more efficiently and explain the changing market to clients. The danger is when we say the same thing about the market all year long despite the trends really not being the same. What are some of the signs of slowing? It took 4 days longer to sell a home last month than the previous month in the Sacramento region. Housing inventory increased slightly in the surrounding four counties last month. The sales to list price ratio decreased by 1% last month. The median price in Sacramento County has been the same for four months in a row. The median price in the Sacramento region has declined by 1% over the past few months. I could go on and on. Of course let’s remember that sales volume is up by a whopping 10.9% so far this year in the region, and housing inventory is actually 22% lower right now in the region compared to the same time last year. Ultimately it’s still very competitive out there as buyers are hungry to get into contract before interest rates rise too much or while they feel like they can still afford the market (that’s so 2004). All year the market has been remarkably price sensitive too, which means buyers have been hesitant to write offers on overpriced homes. As housing supply presumably continues to increase over the next few months, watch out for price reductions to continue to increase, unrealistic expectations from sellers, and buyers gaining more power.

Sacramento County Market Trends for August 2015:

1. The median price has been hovering at $290,000 for 120 days.
2. It took an average of 34 days to sell a house last month (up 3 days from July).
3. Last year at this time it was taking an average of 40 days to sell a house.
4. FHA sales were nearly 27% of all sales in Sacramento County last month.
5. Sales volume is 9.7% higher so far in 2015 compared to last year.
6. Sales volume was 15% higher in August 2015 compared to August 2014.
7. There is a 1.76 month supply of homes for sale (slightly lower than July).
8. Housing inventory is nearly 27% lower right now compared to August 2014.
9. The average price per sq ft is 185 (5.5% higher than last August).
10. The average sales price is $319,636 (slightly lower than past two months).

Sacramento Regional Trends for August 2015 (Sac, Placer, Yolo, El Dorado):

1. Sales volume was up 12.8% in August 2015 compared to August 2014.
2. Sales volume for the year is up 10.9% compared with 2014.
3. The median price at $328,825 is up 6% from last year, but down 1% from the past two months.
4. It took an average of 39 days to sell a house last month (4 days longer than last month).
5. FHA sales were 23% of all sales in the region last month.
6. There is 2.05 months of housing inventory (up from 1.98 last month).
7. The average sales price is $367,545 (4.2% higher than last year, but down slightly from two months ago at $370K).
8. It took 3 less days to sell a house this August compared to August 2014.
9. FHA sales volume has increased by 30% in 2015 compared with 2014.
10. Housing inventory is nearly 22% lower right now compared to August 2014.

Placer County Market Trends for August 2015:

1. Sales volume was up 11.7% in August 2015 compared to August 2014.
2. Sales volume for the year is up 17% compared with 2014.
3. The median price in Placer County is $402,900 (increased from last month, but it’s been hovering from $390-400K generally).
4. Cash sales were 18.5% of all sales last month (very normal level).
5. It took 46 days on average to sell a house last month (6 more days than July).
6. Last year at this time it took 1 day longer to sell a house.
7. FHA sales were 19% of all sales in Placer County last month.
8. There is 2.35 months of housing inventory (up from 2.17 months in July).
9. The average price per sq ft is 201.8 (been hovering around this level for a few months).
10. REOs were less than 2% of all sales and short sales were roughly 2.5% of all sales last month.

I hope this was helpful. Thank you so much for being here.

Quick Pricing Advice:

1. Remember it is normal for the market to cool off during the latter part of the year. Knowing seasonal cycles and communicating them is key.
2. Price according to the most recent listings that are getting into contract rather than the highest sales from the spring. Remember, it’s normal for housing inventory to increase during the fall, so this will only allow buyers to be more picky.
3. The market is still very price sensitive, which means buyers are not biting on overpriced listings despite inventory and interest rates being relatively low.
4. Price according to the neighborhood market rather than county-wide trends since your neighborhood might be more or less aggressive compared to the entire county.

DOWNLOAD 54 graphs HERE (zip file): Please download all graphs in this post (and more) here as a zip file (or send me an email). 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: How do you think sellers and buyers are feeling about the market right now? What are you seeing out there?

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