decline of foreclosures

Let’s talk some ups and downs today. Here is some context to help shed light on how the real estate market is moving in Sacramento. Any thoughts?

Median Sales Price in Sacramento - 1986 to 2013 a

History of Median Price: This graph shows year-end median sales price figures from 1986 to 2013 in Sacramento County (and West Sacramento). You can see just how steep the increase was last year – even when compared to the heyday of the previous real estate “bubble” that began to burst in 2005.

fha cash conventional stats for year

Charts Instead of Graphs: Two weeks ago I shared my big market update post, and I showed how FHA is going up, cash is going down and conventional financing is also increasing. Here is a chart to help give some more specific numbers instead of a graph. After all, some of us are visual people and others simply want the numbers.

foreclosures and short sales - by home appraiser in sacramento

Goodbye Distressed Sales: Here are some stats on foreclosures and short sales, and it’s always shocking to see how far the market has progressed in recent years. On another note, keep in mind there have historically been far more distressed sales at lower price levels. This is important to realize because when removing so many foreclosures and short sales at the bottom of the market, it naturally gives the median sales price a huge boost. This should bring pause when we quote the median price as rising 20% last year (it definitely did, but since investors devoured the bottom of the market and there were far fewer sales at the bottom, this padded the median price and essentially means not every single property increased in value by 20%). Check out Don’t put all your eggs in the median price basket if you’d like to freshen up understanding the median price.

bumper sticker sign - from sacramento appraisal blog

A Juiced Market in 2013: Lastly, I’ve been describing the market as no longer being on steroids, and I’ve found it to be a helpful description for clients and contacts. In 2013 values were “juiced” upward by increased investor activity, historically low interest rates and freakishly low inventory. Now the market has tapered off – just as if it had stopped using steroids. It’s simply a different market than it was last year.

Question: What stat stands out to you most? Comments are welcome below.

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One of the best trips I ever took was a European backpacking vacation after graduating college. A friend and I traveled through England, France and Scotland for two weeks, and it was simply incredible. In fact, I hope to get back there again in a couple of years as my wife and I have begun talking about doing something big for our 15th anniversary.

Unfortunately my wallet is not thick enough to take every blog reader to Europe today, but I can give you a “Tour de Sacramento” so to speak. Let’s make four quick stops to uncover some of the real estate trends during the first quarter of 2013.

Stop 1: Distressed Sales

Over the past year the market has seen a significant downturn in foreclosure sales. Bank-owned sales essentially have decreased by 20% since the first quarter of 2012, whereas short sales had been seeing an increase until this past quarter.

Distressed Sales in Sacramento County Foreclosures and Short Sales Graph - by Sacramento Appraisal Blog

The market has persisted to gain health as the total percentage of distressed sales has seen a decrease yet again over the past quarter. However, it’s also noteworthy that inventory has been at its lowest point in years.

Distressed Sales in Sacramento County - by Sacramento Appraisal Blog

Stop 2: The Cash Factor

Cash purchases have generally been up in 2013 so far. There are rumors of certain investment funds slowing down their purchasing, but the market is clearly still saturated with investors.

Graph of Cash sales in Sacramento Placer Yolo County 2012 and 2013 - by Sacramento Appraisal Blog

The stats below consider all single family detached sales in Sacramento, Placer & Yolo County. It’s amazing to see that 36.28% of all single family detached sales in Sacramento County were cash. However, when considering all single family sales including condos and halfplexes, 39.06% of all sales were cash in Q1 of 2013.

Cash sales in Sacramento Placer Yolo County 2012 and 2013 - by Sacramento Appraisal Blog

Stop 3: The Breakdown of Buyers

One out of every two sales under $200,000 in Sacramento County has been a cash purchase lately. No, that’s not a typo. It’s no wonder why financed offers have had to be more creative in hopes of getting an offer accepted. It’s become increasingly more common to see buyers make offers above list price, ask for no credits from the seller, offer to pay a certain amount above the appraised value or even remove appraisal contingencies altogether. Yikes! FHA offers saw a slight decrease, and I wouldn’t be surprised to see that persist so long as the climate of low inventory and high-volume cash persists.

Q1 Sacramento real estate stats - cash conventional fha - by Sacramento Appraisal Blog

Stop 4: Unemployment in Sacramento County

Unemployment dropped to 9.5% in Sacramento County as of February 2013. As you can see in graphs below, the jobless rate has overall been trending downward in Sacramento, California and the United States. For reference, the unemployment rate in California right now is 9.6% and the national unemployment rate is 7.7%.

February 2013 unemployment Sacramento County - graph by Sacramento Appraisal Blog