Values are going to keep going up. The market is so “hot” we’re not going to have a fall slowdown this year. I’ve heard this sentiment quite a bit lately and I’ve even thought it myself. Yet today let’s remember five things about the fall season. Then for those interested we’ll dive deeply into the latest Sacramento trends.
5 things to remember about the fall market:
1) A general truth: Unless we have reason to believe there won’t be a slower fall season, let’s believe there will be one because it’s normal for real estate to have seasons.
2) The typical signs are happening: When the market starts to slow we usually see certain symptoms, and we’re seeing those right now. Inventory has increased slightly, sales volume is starting to slough, and prices in the region dipped a bit last month. Yet Sacramento County stats are nothing but glowing, which makes it hard to believe a slowing could happen.
3) Slow vs. slowing: The market is NOT slow, but we’re seeing slowing. That’s a big distinction for many markets in the country right now. In reality it almost sounds offensive to say the market is slowing when we have multiple offers and bidding wars, but things right now don’t feel quite as aggressive as they did in April and May. We’re seeing slightly more price reductions, slightly less offers, and buyers more frequently not accepting counter offers like they did a few months ago. I know, this isn’t true in every transaction. All I’m saying is we are generally seeing more symptoms of a slowing market (but it’s NOT slow).
4) Not always dull: Sometimes the fall months can be really dull, but other times not so much. Thus even though the stats sag at the end of the year, it doesn’t always feel like the market is dragging. My guess is the fall softening this year will not feel as dull because of how low inventory is right now.
5) Rare: It’s rare to not have a seasonal market. The only time I can think of us not having a fall slowdown in recent years was in 2012 when investment funds and flippers were gutting the market. Values simply kept going up, and investors basically trumped the seasonal market that year.
I hope that was helpful or interesting. Any thoughts?
–——-——- Big monthly market update (it’s long on purpose) ———–——-
Glowing and slowing. That’s a good way to sum up the market. The stats are generally glowing, but we’re starting to see subtle signs of a seasonal slowing. Price stats in Sacramento County increased by about 1% last month and they’re up 8-10% from last year (that doesn’t mean actual values are up that much in every neighborhood and price range). Though if we look closely, especially in the region as a whole, prices dipped by 1% last month, inventory is up slightly, and sales volume sloughed off last month (which isn’t a surprise). Properties have been selling very quickly still in only 9 median days in Sacramento County and 11 in the region. For perspective, on average it was taking about a week longer to sell a home last year. The market actually tends to normally show a slowness in days on market between June and July, but we didn’t see that this year, which is a reminder the market feels a bit more aggressive right now compared to last year. Overall housing inventory increased last month, but the bigger story is it’s down about 14% in the region from last year. Despite all the glorious stats, the market is still price sensitive, which means buyers aren’t willing to pull the trigger at any price (did you hear that sellers?). Oh, and by the way, the median price in Sacramento County is now 10% from the peak in 2005. I could go on and on with words, but let me share some graphs to show the market visually.
DOWNLOAD 65 graphs HERE: Please download all graphs in this post and more here as a zip file (includes a stat sheet too). See my sharing policy for 5 ways to share (please don’t copy verbatim).
Sacramento County graphs this month (more graphs & stats here):
Sacramento Regional graphs this month (more graphs & stats here):
Placer County graphs this month (more graphs & stats here):
DOWNLOAD 65 graphs (and stats) HERE: Please download all graphs in this post and more here as a zip file (includes a stat sheet too). See my sharing policy for 5 ways to share (please don’t copy verbatim).
Questions: What signs of glowing or slowing are you seeing? Do you think we’ll have a fall market? Did I miss anything? I’d love to hear your take.
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Great points, Ryan. Interesting to see how things are shaking out in your market. The Birmingham market, while being quite active does not seem to be at the level the Sacramento area is. We are seeing increases in the median price due to shortages in inventory, though. Keep up the great work, Ryan.
Thanks Tom. I appreciate it. It’s good to hear about your market too. The median price has definitely been increasing in our market, but it’s on the verge of slowing up for the season. We may not see it in the stats for a couple of months, but we shall see. Sales data always lag the real trend of the market by 30-60 days or so, which is why we are feeling some slowness right now (but it won’t show up in the stats yet). The struggle happens at lower price ranges where there is less inventory. It’s still a battle out there.
Great post Ryan. This time of year, it always feels like the increasing prices are going to end and then we pick right back up again in the early spring. I did not expect to have another great year after stringing together so many. I am interested to see and hopeful that next year will be as strong as this year was in my area.
Thanks Gary. I think you’re right about that feeling – especially as values rise. Can they keep going up? Can the market still continue to perform as increasing? Those are valid questions. I hope you have another strong year ahead my friend.
For any onlookers, the median price in Sacramento County is now 10% from the peak in 2005. This doesn’t mean properties are within 10% of their 2005 value. That is true in some neighborhoods for sure, but it’s definitely not true in others. My sense is many of the classic areas are back or just about back to peak pricing, though 2-4 unit properties in Midtown look like they’ve exceeded those levels. Many first-time buyer neighborhoods are still easily 10-15% off in value from the peak. Some depressed areas are even further away. Vacant land has not returned to the insanely inflated levels of 2005 either where speculators were paying huge amounts.