A slowing market & value by Starbucks cups

Imagine not being able to see home prices. How would we measure value? In other words, could we determine higher values in one area compared to another based on things like school ratings, owner occupancy rates, or the income of residents? Let’s consider that, talk about the market in terms of Starbucks cups, and then dig deep into Sacramento trends for those interested. Any thoughts?

If we couldn’t see prices, what would be the best indicator of value?

1) Income of residents.
2) School ratings.
3) Percentage of owner occupied units.
4) Crime rates.
5) Length of grass.
6) Walking score.
7) Proximity to Downtown.
8) Proximity to coffee shops.
9) Number of cats in the neighborhood (thanks Gary).
10) What else?

The Takeaway: If we didn’t have access to prices in an area we could probably analyze some of the list above to get a sense of higher or lower values in certain areas. Ultimately we have to remember value is about the stuff behind the price, so it’s key to be in tune with what’s making value move in various places.

Here is a Twitter poll I ran:

Starbucks cups instead of price: Keeping with the theme, let’s talk about the market in terms of the cost of Starbucks cups (tall size) instead of price.

Real stats in the Sacramento region (but with coffee):

1) The median price softened by 2,512 cups of Starbucks coffee last month.
2) Since summer the median price has softened by 5,128 cups of coffee.
3) The median price will likely decline by 10,000 cups of coffee this fall.
4) The median price is up 15,384 coffee cups compared to last year.

Okay, don’t take me too seriously on this. But isn’t it interesting to think about value beyond just price? Next week: Avocado toast price metrics… (kidding).

I hope that was interesting. Anything to add?

–——-——- Big monthly market update (it’s long on purpose) ———–——-

We’re at that time of year. Sales volume has likely peaked for the season. The median price probably climaxed in the summer. Housing inventory is increasing, and each month it’s taking longer to sell in Sacramento. Overall the market has a slower feel compared to a few months ago, values have begun to soften in many areas, and even rents have been flat for a few months according to Yardi Matrix. We’re seeing a seasonal softening in county-wide stats (especially regional stats), but we’re also observing slowness in many neighborhoods as homes are tending to have less offers, less traffic, and even sell for slightly less than the highest prices from a few months back. News like this sometimes freaks people out because they think the market is tanking, but like clockwork the market almost always softens during the fall.

A huge stat to know: Every year the median price and average sales price in Sacramento County tend to soften by about 5%. This doesn’t necessarily mean values decline by 5% in every neighborhood or price range, but it does mean we can expect price softening in most areas during the fall season.

A word to sellers: Don’t be that stereotypical person who doesn’t listen to the market when it comes to price. Right now the market is slowing and the number of price reductions is higher than it’s been all year. As long as you’re priced reasonably you’re going to get offers, but be cautious not to price unrealistically high because you’re hearing the market is blazing “hot”.

I could go on, but let’s get visual.

DOWNLOAD 73 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 (more graphs & stats here):

SACRAMENTO COUNTY STATS:

1. The median price is currently $347,500 and dipped 0.1% last month.
2. The median price is 9.6% higher than the same time last year.
3. Sales volume in September was 6.8% lower this year than 2016. There were 1499 single family detached sales last month.
4. It took an average of 26 days to sell a home last month (one year ago it was taking 4 days longer).
5. The median days on market last month was 14 days.
6. It took 2 more days to sell in September compared to August (median days).
7. FHA sales were 19.4% of all sales last month in the county.
8. Only 1% of sales last month were bank-owned & 1.1% were short sales.
9. The avg price per sq ft was about $223, which is slightly higher than last month (11% higher than last year).
10. The avg sales price increased about 1.3% last month and is currently $384,000. This is 10.9% higher than last year.
11. Cash sales were 13% of all sales last month.

SACRAMENTO REGION (more graphs & stats here):

SACRAMENTO REGION STATS:

1. The median price is $385,000 and declined about 1% last month.
2. The median price is 8.4% higher than the same time last year.
3. Sales volume in September was 3.6% lower this year than 2016. There were 2422 single family detached sales last month.
4. It took an average of 31 days to sell a home last month (one year ago it was taking 4 days longer).
5. The median days on market last month was 15 days, which means properties are selling really quickly.
6. The median days on market increased by 2 days last month, which helps shows a slowing in the market.  
7. FHA sales were 16.1% of all sales last month.
8. Only 1.1% of sales last month were bank-owned & 0.8% were short sales.
9. The avg price per sq ft was about $228, which increased about 1% last month (10% higher than last year).
10. The avg sales price declined about 1% last month and is currently $425,516. This is 8.3% higher than last year.
11. Cash sales were 14.9% of all sales last month.

PLACER COUNTY (more graphs & stats here):

PLACER COUNTY STATS:

1. The median price is currently $450,000 and declined about 3% last month.
2. The median price is 4% higher than the same time last year.
3. Sales volume in September was 1.3% less this year than 2016. There were 524 single family detached sales.
4. It took an average of 34 days to sell a home last month (one year ago it was taking 7 days longer).
5. The median days on market last month was 18 days, which means properties are selling really quickly.
6. The median days on market increased by 3 days last month, which helps shows a slowing in the market. 
7. FHA sales were 12.9% of all sales.
8. There were only 3 bank-owned sales last month and only 2 short sales.
9. The avg price per sq ft was $231, which is slightly higher than last month (9.1% higher than last year).
10. The avg sales price decreased about 3.5% last month and is currently $490,615. This is 1.6% higher than last year.
11. Cash sales were 17.1% of all sales last month.

DOWNLOAD 73 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).

Questions: Besides price, what do you think the strongest indicator of value is for a neighborhood? Anything else you’re seeing in the market? Should we start a Starbucks Cups Price Index maybe? I’d love to hear your take.

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