Sacramento Appraisal Blog

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Unfolding trends and fresh stats under $200K in the Sacramento market

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Let’s unpack some fresh stats today to help interpret the market and see trends as they are unfolding before us. In the past month I’ve shared about hedge funds, cash and FHA, but let’s throw in conventional sales into the mix today. What is the quarterly percentage of FHA, cash and conventional sales in Sacramento County over the past few years? The chart below shows all sales under $200,000. Why have I been focusing on the market under 200K? This is why: 35% of all sales in Sacramento County this quarter have been cash, but 49% of all sales under $200,000 have been cash deals during the same time period. As you can see, cash has been devouring the market – particularly in Q4 so far. Conventional sales have seen a slight uptick from previous years. FHA deals have been suffering as cash has trumped the market.

By the way, last Sunday The Sacramento Bee wrote a solid piece on investment funds purchasing in Sacramento. I recommend reading it. You’ll see a quote from yours truly in the article too.  🙂

What else do you see? Does anything surprise you?

Chart of Cash FHA and Conventional Sales in Sacramento County - by Sacramento Appraisal Blog

Sacramento County Unemployment rate - Hostess - by Sacramento Appraisal BlogUnemployment Rates & Hostess: Jobs are an important economic indicator. When interpreting real estate stats, I tend to go back to how many people are working in the Sacramento area. This impacts people’s ability to purchase as well as how much house they can afford too. Click on the thumbnail image on the side to see the trend of unemployment in Sacramento County over the past few years. Do you think we’ll see lower numbers next month in light of Hostess closing its doors in Sacramento? Feel free to use the image on your own blog or website (please use according to my sharing policy).

If you have any questions or Sacramento home appraisal or property tax appeal needs, let’s connect by phone 916-595-3735, email, Twitter, subscribe to posts by email (or RSS) or “like” my page on Facebook

The pain of remodeling in a flood zone in Sacramento

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Imagine your house catches fire and sustains substantial damage, but then you cannot repair it because your property is located in a flood hazard area. Or picture wanting to do a kitchen remodel as well as replace the roof, but when trying to pull a permit, you are denied because the cost is considered to be too much of an improvement.

Three Options: There are portions of Sacramento in Natomas and North Sacramento that are dealing with these very issues. Because the levy needs updating, these homes are located in a Special Flood Hazard Zone (Zones A, AE, AR, AH or AO). This leaves property owners with three options:

  1. Improve a home up to 40% of the county assessed structural value of the house. Or obtain an appraisal and get up to 50% of the market value of the structure.
  2. Raise the house above the flood area so you can spend however much you’d like. This is impractical though since there are portions of Sacramento where one would have to raise the house more than a dozen feet off the ground.
  3. Remodel without permits (probably not a great option).

Can this house be remodeled? The total assessed value of the structure is $20,297 (it is located in a flood area).

Fixer house photos on Sacramento Appraisal Blog

Value of the Structure: It might seem like quite a bit to get to spend up to 40-50% of the value, but keep in mind this is ONLY the value of the existing structure – not the total resale value of your property that includes the land, house and all improvements. For example, if the total value of your home is $100,000, the structure is only a part of the value and may only be $50,000 or so depending on the situation. It’s also important to remember that the Assessor’s figures are sometimes really low. They might have the value of a home’s structure at only $40,000, for example, while the land is valued at $50,000 (NOTE: Postage stamp vacant lots do NOT go for that much in flood areas). This means based on the Assessor’s figures you can only spend $20,000 to improve your home. If you have repairs that exceed that amount, there is really not much you can do unless you plan to spend big money to raise your house (or do work without a permit). However, if an appraiser provides an appraisal (with a Cost Approach), the value of the structure might be higher, which could help your situation.

City of Sacramento Document: The following document is from the City of Sacramento. It might be helpful to dig in a bit deeper. If you have any questions or needs, let me know.

Sacramento FEMA Substantial Improvement Rule

Question: What ways do you think rules in flood hazard areas can impact a neighborhood?

If you have any questions or Sacramento home appraisal or property tax appeal needs, let’s connect by phone 916-595-3735, email, Twitter, subscribe to posts by email (or RSS) or “like” my page on Facebook

Should agents give appraisers the first page of each contract?

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I’ve been hearing from a few real estate agents that their brokers are telling them to give appraisers the first page of each contract to help show support for the market’s acceptance of a certain price level. Is this a good idea? Here’s my take.

real estate contracts - Sacramento Appraisal Blog

I think it’s great when Realtors share data about a listing. It’s helpful for appraisers to sift through first-hand information to shape an understanding of how the market perceived the subject property. It’s definitely a plus to see contracts instead of just hearing “there were multiple offers”. However, here are a few points to consider:

  1. What about the other pages? The first page is a very limited portion of a contract. There could always be an addendum or a requested credit or concession on another page of the contact that effectively reduces the contract price.
  2. A focus on sales and market knowledge: It’s a nice touch to get the first page of a contract, but I’d rather have Realtors offer data in the form of recent sales, listings AND any insight into how buyers perceive the market. What are buyers willing to pay more for in the neighborhood? Is there something premium about the subject street? What facets of the neighborhood market impact price? What sales did you use to support your list price?
  3. Supplementary data: Keep in mind appraisers use sales and listings in an appraisal report to support value – not the number of offers (even though that can be supplementary data). I’ve had agents bring me nothing but the front page of multiple offers, which is nice, but the number of offers and level of offers is secondary to more primary data like sales and listings.
  4. Contract price does not equal value: Inventory has been so low in the Sacramento market that some buyers are offering far above a reasonable value. This means offers might not always reflect value. There are several reasons why buyers are willing to overpay for properties right now, which is something appraisers are watching closely.

Summary: In short, I’d love to get the first page of each contract from agents (and have the agent let me know about any concessions, credits or addendums that might impact the price level on the first page). Ultimately though, if a Realtor wishes to communicate more thoroughly about a property, I’d prefer to hear about more “meaty” market items like recent sales, listings and insider-knowledge of the neighborhood.

Some tips for talking with appraisers: If you’re looking to communicate more effectively with appraisers, check out Quick tips for agents for talking to appraisers and Talking to appraisers in today’s changing real estate market [infographic].

Any questions, thoughts or stories to share?

If you have any questions or Sacramento home appraisal or property tax appeal needs, let’s connect by phone 916-595-3735, email, Twitter, subscribe to posts by email (or RSS) or “like” my page on Facebook

The Box of Thankfulness (an emerging tradition)

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Around this time each year I do a Thanksgiving post where I say all the usual things. But this year I’d rather share an emerging tradition in my home that helps my family express thankfulness. Maybe this would even work for your household?

This is what our “Box of Thankfulness” looks like. Duct tape and markers (can you tell the guys made it?).

Let me tell you about the The Box of Thankfulness. This is something my family has done before and will do again this year. It can be a meaningful way to connect, laugh and be intentional about being thankful together. 

What is a Box of Thankfulness?

  1. Make a box: Have someone in the family (even kids) make a box with a slot in the top to drop in messages written on small pieces of paper. If you’re short on time, just use a jar or cereal box. It doesn’t have to be fancy (look at ours).
  2. Set the box out before your Thanksgiving meal: As soon as people arrive at your home, let them know there is a box awaiting them to write out a few messages that will be read during the meal. They can write however many they want at some point before the meal (whenever they want to). Family members can list out things they’re thankful for in life or even direct a message to someone else specifically. Use small pieces of paper too since you’re not looking for novels. It might help if one family member was in charge of gently reminding others to write something down. Give people a few ideas by saying, “it could be something funny, a couple of things you’re thankful for, write a message to someone…” Keep in mind kids might need ideas for how to get started too. Remember to have fun. My family definitely has some sentimental things to say, but we’ll also read messages like “Thank you Bruce Willis for making Die Hard” or “Hostess, you kept me happy for so many years.”
  3. Read the messages: At some point during your meal, pass around the box and have one family member pick out a message to read at random. Once the message is read, pass the box to the next family member or friend. Do this until each message is read and the box is empty. If someone doesn’t want to participate, no problem at all. Just let that person listen. It’s fun to hear what people say and wonder who wrote what, but most of all it’s neat to be thankful, laugh and have conversation beyond the usual stuff.
  4. Save the box: Keep the box for next year.

NOTE: My family has tried in the past to have everyone go around the table to say something they’re thankful for. That’s been nice and all, but at the same time it can feel forced, awkward and difficult to articulate feelings off the cuff like that. That’s why I prefer this idea. If you’re traveling too, why not bring a box with you?

No matter what your circumstances are this year, may you be filled with joy and a sincere contentment during this Thanksgiving week. If you end up trying out the Box of Thankfulness, do let me know how it goes. Blessings from Lundquist Appraisal Company and the Lundquist family.

Does your family have any special Thanksgiving traditions?

If you have any questions or Sacramento home appraisal or property tax appeal needs, let’s connect by phone 916-595-3735, email, Twitter, subscribe to posts by email (or RSS) or “like” my page on Facebook

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