concessions increasing in Sacramento

Nobody is buying today. Everyone has left the market. Or wait, I mean, it’s only buyers at the very highest prices who have backed off. No, maybe it’s first-time buyers who are getting crushed. There are lots of ideas floating around, so let’s take a look at some stats. I hope this is helpful, whether you’re local or not.

UPCOMING (PUBLIC) SPEAKING GIGS:
10/07/22 Market update with SAR (9am-10:15am Sign up here)
10/11/22 Folsom MLS Meeting (9:15am)
10/13/22 Market update in Midtown (12-2pm Sign up here)
10/18/22 Orangevale MLS Meeting Q&A (9am)
10/20/22 How to Think Like an Appraiser (9am-12pm) (Sign up here)

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The goal today is to offer a glimpse into current buyers. This isn’t a full picture because we’re still at the beginning of change.

ALL SHIPS RISE AND FALL WITH THE TIDE

We’ve seen a dip in sales volume at every single price point. This means no price range has been immune from the trend. In other words, all ships rise and fall with the changing tide. This is a new visual. Do you dig it?

IT’S NOT JUST A DIP AT THE TOP

Here’s a different way to look at volume with the number of sales instead of percentages. This gives a different view of things, and it’s clear that change isn’t just happening at the top of the market. The housing narrative is often that it’s really the high-end that’s experiencing change, but that’s simply not true when looking at the numbers. So, we often talk about the median price being affected by fewer sales at the top, but let’s not ignore lower-priced sales also. The median price in the Sacramento region in September is $569,000 for reference, and what happens at lower prices can affect price metrics too.

THE SKINNY (FRESH STATS)

Here are a bunch of different stats to try to get a sense of what is happening. Remember, we are living in the midst of change, and we’ll understand more fully what is happening as we have more time and stats.

NOT JUST ONE BUYER

This is a perfect tweet from my friend Erin Stumpf because it shows there isn’t just one buyer out there. It’s easy to fall into the trap of thinking this market only makes sense for one group of people, but that’s not true. The market is never all good or all bad for everyone, so we need to be careful about sweeping statements about entire groups of people. This isn’t me sugarcoating the problem of affordability either, so save your hate mail.

CONCESSIONS, GET IN MY BELLY

The percentage of sales with concessions to buyers are increasing, which is to be expected in this market as sellers are bending toward buyers to help get deals done. We pretty much see sales with concessions throughout all price ranges, but there are clearly more credits happening at lower prices.

A CREDIT IS NOT A SILVER BULLET

The truth is a credit to the buyer doesn’t guarantee you’re going to sell at or above the original price. In other words, giving a credit isn’t a silver bullet to keeping the price higher (even though it likely helps). This visual shows how properties with concessions sold in relation to their original list price. Anything above the 100% line sold above the original list price, while anything below this level sold below. In short, the bulk of sales right now are selling below the original list price in the entire market, and it’s not a shocker to see that happening with homes getting credits too.

WHAT FINANCING ARE BUYERS USING?

Watching the financing buyers are using will be a clue into the market. Over the past few months, we’ve seen slightly more FHA, a dip in conventional, and slightly more cash.