Sacramento Appraisal Blog

Have you ever taken a selfie from a particular angle to make sure you look as good as possible? Be honest. Of course you have, and so have I. Well, housing stats can be just like selfies. It’s easy to pick the best angles (stats) to share while missing the real picture. Let’s keep this in mind as it’s tempting in real estate to gravitate toward “hot” headlines while missing the full story. Let’s kick around some ideas below and then take a deep look at the Sacramento market. Any thoughts?

1) Market hotness: It’s been blasted all over the news that Sacramento is going to be one of the hottest markets in the nation next year. The SacBee wrote about this a couple of weeks ago and I was actually quoted in the piece. In short, Realtor.com predicts we will see a 7% increase in value. The irony is price stats showed a 7% increase in 2015 and we’re on track to see something similar for 2016 in Sacramento. Thus I suppose Realtor.com could have just said “Sacramento will do what it’s done for two years in a row.” Zing. Remember, just because the median price went up 7% doesn’t mean actual values increased by that much. This is a huge point and we can talk about it in the comments if you wish.

2) Deciding to wait to sell: When sellers hear the market is “hot” or sense values are increasing, they sometimes wait to list their homes. Last week an agent told me an owner who was ready to get her property on the market called and said, “We’re going to wait because we just saw a story on TV that said the market is going to be the hottest in the nation next year.” On a related note I spoke with a client who is now concerned about his home increasing in value too much since he is going through a divorce. This reminds me of a video John Wake shared on Twitter. He was talking about San Francisco values and how sellers tend to wait to list their homes when values are increasing. The thought is, why list now when values are going to be higher next year? But then when values do eventually turn there can be a flood of houses hit the market as a “race to the exit”. Really good stuff from John.

3) VA appraisal fees just increased: If you haven’t heard, VA increased their appraisal fees from $450 to $600 in the Sacramento area. Unlike other loan programs, VA pays a standard fee for every appraisal. Just a heads-up.

4) Fannie Mae waiving appraisals: A few days ago Fannie Mae officially began a program to waive appraisals for certain refinances. In the background Fannie has been mining data from appraisal reports for the past two years for their Collateral Underwriter program, and with a database of millions of appraisals they can now eliminate the use of appraisals in some transactions. It’s like Fannie Mae in a small way is helping appraisers dig their own grave. I understand efficiency and how this makes reasonable sense for some transactions, but let’s not forget the very important role appraisers are supposed to play in a transaction.

Any thoughts?

SKATEBOARD GIVEAWAY: If you didn’t know, I love woodworking. Anyway, I made a skateboard and I’m giving it away in two days to someone local (or not local if you know we’re going to see each other soon). Keep it or re-gift it for Christmas. Leave a comment on Facebook if you want to enter the contest and I’ll pick a random name in two days (we don’t have to know each other).

—-—–—– And here’s my big monthly market update  ———–—–

Two ways to read the BIG POST:

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

DOWNLOAD 71 graphs HERE: Please download all graphs in this post (and more) here as a zip file. 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.

NEW: I created a one-page market sheet to print and keep handy when talking about real estate. I’ll keep it around if it seems relevant (not sure yet). Is this a step in the right direction? Download here.

Quick Market Summary:

The market normally softens each year in the fall and we are definitely seeing that right now, but this fall isn’t as dull as some of the seasons we’ve seen in the past. Yes, it took 4 days longer to sell a home compared to the previous month and prices are down from the summer, but sales volume was up a whopping 18% in the region last month. If you didn’t know, sales volume has actually been higher for four months in a row in the Sacramento region. On the other hand, one of the big issues that just won’t go away is housing inventory is anemic as it’s about 20% lower than it was the same time last year. Of equal importance is interest rates have been ticking up, so buyers are anxious to get their rates locked and their appraisals in on time. As rates presumably rise more next year it will naturally soften values because higher rates take away purchasing power from buyers. Yet the big question is whether lenders will get more creative with financing to help buyers artificially afford higher prices. This reminds us how much power lenders have right now to direct the market.

Check out specific stats and graphs below for Sacramento County, the Sacramento Region, & Placer County.

Sacramento County:

1. The median price is the same as it was in August 2007.
2. Housing inventory is 22% lower than the same time last year (there is only a 1.36 month housing supply).
3. Sales volume was 17% higher this November compared to November 2015 (up 2.5% for the year).
4. There were only 36 short sales and 34 REOs in the county last month.
5. It took 3 days longer to sell a house last month compared to the previous month (one year ago it was taking 3 days longer to sell).
6. FHA sales volume is down 6% this year compared to 2015 (24.4% of all sales were FHA last month).
7. Cash sales are down 11% this year (they were 11% of all sales last month).
8. The median price is $325,000 and is down 2% from the height of summer, up 1.5% from last month, and 12% higher than last year.
9. The average price per sq ft was $202 last month (down 1% from a few months ago, but 7% higher than last year).
10. The average sales price at $349,659 is down about 2% from the height of summer (but is 8% higher than last year).

Some of my Favorite Graphs this Month:

SACRAMENTO REGIONAL MARKET:

1. Housing inventory is 26% lower than the same time last year.
2. It took 4 days longer to sell compared to the previous month (but 4 less days compared to November 2015).
3. Sales volume was 18% higher this November compared to November 2015.
4. FHA sales volume is down 6% this year compared to last year.
5. Cash sales are down 8% this year compared to last year.
6. REOs were 2% and short sales were 2.1% of all sales last month.
7. The median price was $355,000 in November. It went down slightly from October but is down 3.5% from the height of summer (up 8% from last year).
8. The average price per sq ft was $208.6 last month. That’s down about 1% from the height of summer and 8% higher than last year.
9. Cash sales were 13.3% of all sales last month (FHA sales were 22%).
10. The average sales price was $392,500 in November. It’s down about 3.5% from the height of summer but 8% higher than last year.

Some of my Favorite Regional Graphs:

PLACER COUNTY:

1. The median price was $438,000 last month (highest point of year, but take that with a grain of salt).
2. The average price per sq ft was $213 last month (down very slightly from the height of summer and up 6% higher than last year).
3. It took 41 days to sell last month (same as previous month but 6 days less than one year ago).
4. Sales volume was about 3% lower this October compared to October 2015.
5. FHA sales volume is down 16% this year compared to last year.
6. Cash sales were 17% of all sales last month (FHA sales were 13%).
7. Cash sales are down 3.6% this year compared to last year.
8. Housing inventory is 13% lower than the same time last year.
9. Both REOs and short sales were each 1% of sales last month.
10. The average sales price was $481,000 and is 8.5% higher than last year.

Some of my Favorite Placer County Graphs:

DOWNLOAD 71 graphs HERE: Please download all graphs in this post (and more) here as a zip file. 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: Did I miss anything? What are you seeing out there? How would you describe the market? I’d love to hear your take.

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