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Eric Peterson

What 12 Realtors are Saying About Sacramento’s Housing Market

December 19, 2013 By Ryan Lundquist 11 Comments

What do you get when you ask 12 Realtors one question? I know it sounds like I’m setting you up for a lame joke, but I’m actually going to share some insider perspective on the local housing market. I asked a handful of Sacramento area Realtors to describe the market in just a few sentences. This is first-hand insight straight from the trenches, and I hope it helps paint a picture of how the market unfolded in 2013 and what is happening right now. Enjoy.

Any thoughts? How would you describe the housing market right now?

sacramento real estate market in 2013 - image by sacramento appraisal blog

Steve-Ostrom-Realtor1Steve Ostrom – Roseville Realtor: The 2013 housing market was a roller coaster ride, with crazy turns the whole way, powered by years of government interference.

Barb Lebrecht – Realtor: It appears for now that the cash dragon is in hibernation. The Barbara-Lebrechtdecrease in competition and increase in inventory makes it a great opportunity for buyers that feel a little tattered from recent market conditions.

Jeff Grenz – Realtor: While we are looking at a little slow down, some of which is due to normal, but forgotten Jeff-Grenz-Real-Estate-Brokerseasonal trend, I am encouraged when I look at the suburbs, where the dollar volume is pretty significant, average prices are almost double and are hitting 2004 levels (vs 2003 for Sacramento)…. I’m thinking it is due to a return of confidence and ability to get loans in the higher price ranges, not necessarily income growth but I’m speculating.

Angela-Jones-RealtorAngela Jones – Realtor: I felt like 2013 was headed for the same disaster of a situation we experienced in the mid-2000s. Huge price increases, investors beating out owner-occupants, double digit multiple offers creating a feeding frenzy! Glad to see the values for the most part stabilize.

Keith-Klassen-RealtorKeith Klassen – Realtor: The market in 2013 began with a hopefulness and turned into an upward, turbo-propelled rocket. People who were upside down in their mortgage and investors who were hanging on for dear life, now could sell – and that’s what many did! During the later part of the year the mood changed as investors hit the brakes and many have pulled out of the market. It’s no secret, but at this moment at the end of the year, the savvy investors that have stuck around and are not too busy with holiday shopping may get some good deals. Busy-with-life home buyers will most likely get back on track come the end of January 2014. We are primed for more balanced, but slowly increasing market in 2014.

Doug-Reynolds-RealtorDoug Reynolds – Realtor: The market was in full sprint mode from January through July with prices skyrocketing, multiple offer competition, no inventory to speak of and cash buyers everywhere. As 2013 comes to an end, the market is taking a holiday breather where many cash investors have pulled back, inventory is trickling up and buyers are taking a bit more time to make a decision, as balance of power is being restored.

Erin-StumpfErin Stumpf – Realtor: In 2013 the Sacramento real estate market started off with a high fever, and the only cure was higher interest rates and rising prices and waning investor demand. As 2013 ends, we have higher interest rates, higher prices, and lower investor demand — and a low fever but still solid demand. It’s nice to see your average joe have a legitimate chance to actually purchase a house!

Craig-DunniganCraig Dunnigan – Realtor: Investors dominated the residential market the first half of 2013….The last half of 2013 has seen the market returning to normalcy, with more “move up” and first time homebuyers.

Bruce Slaton – Realtor: Market had overcorrected, Hedge Funds saw increasing need for rentals, Bruce_Slaton_reasonably_smalllower gains in stock market, housing undervalued.. Hedge buys until their internal data shows they may have priced themselves out, left to better markets…we captured equity, was best time to sell…2014 will be the year of no smoke and mirrors, the market will have to face reality and novel things such as Appraised Value, Condition, Pricing At Something Called Comparables…The difference between Listing Agents and Marketing REALTORS will be defined in 2014…looking forward to a medicated market in 2014…

Eric-Peterson-Praxis-Capital1Eric Peterson – Realtor: The market accelerated through the spring with higher than expected price appreciation across all segments. Unfortunately, on the 1st of July the market began to cool and once the numbers are in for the final months of 2013, I believe roughly half of the appreciation gained in the first six months of 2013 will have been given back in the second half of the year.

Gena-Riede-RealtorGena Riede – Realtor: The real estate market in 2013 saw most homes in multiple offers with buyers willing and able to pay the difference in appraisal amount & buyer’s offer. By the end of 2013 with low inventory & freezing temperatures, buyer rush somewhat cooled with fewer multiple offers & some reduction in listing prices where sellers continued thinking prices were on an upward trend. Typically, this time of year more buyers are dealing with the holidays so I believe we will see multiple offers again in 2014 even though lending will be tighter and home sellers are preparing their homes for sale.

Lori ModeLori Mode – Realtor: Although the real estate market in Sacramento has been challenging at times this year because of many changes and shifts in the market, I have great expectations for an incredible 2014. I see many more homeowners being able to move up or downsize due to added equity in their homes, which makes 2014 a very promising year.

As an FYI, here is a quick video I put together to talk through the image above. It’s amazing to see that the median price in Sacramento County increased by 53% over the past two years. That’s NOT a typo.

Closing Comments: Thank you everyone for your thoughts. I sincerely appreciate the array of insight and experience represented here. As an appraiser it’s my job to pay close attention to market trends in the Sacramento area, and a big part of that involves digesting what I hear from trusted Realtors who are riding the waves of the market with buyers and sellers. Thank you again friends.

sacramento realtors - by sacramento appraisal blog

Question: Any thoughts, insight or stories to share? I’d love to hear your take.

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Filed Under: Market Trends Tagged With: 2013 real estate market, Angela Jones, appraiser Sacramento, Barb Lebrecht, Bruce Slaton, Craig Dunnigan, Doug Reynolds, Eric Peterson, Erin Stumpf, Gena Riede, home appraisals, house appraisals, Jeff Grenz, Keith Klassen, Lori Mode, real estate market trends, Sacramento Real Estate, Sacramento Real Estate Market, Steve Ostrom

How do garage conversions impact property value?

July 24, 2012 By Ryan Lundquist 43 Comments

Should you convert your garage? Would your home be worth more or less with a garage conversion? I asked nine local real estate pros to share some thoughts on the topic, and here is what they had to say. I’d love to hear what you think in the comments below.

Should you convert your garage? Sacramento Appraisal Blog

Jeff Grenz, Real Estate Broker in Sacramento
Jeff Grenz Sacramento Real Estate BrokerWhen hunting for and evaluating homes for my flipper clients, garage conversions have a negative impact. In plain English, I calculate the cost to remove the conversion and restore the garage to original usage in 100% of cases. Why? Most conversions are unpermitted and ultimately that would have to be resolved. Most conversions are poorly executed, have issues with HVAC and access to bathrooms. Buyers want garages for vehicles and storage. While the conversion may have added temporary value for the seller, paraphrasing some of my favorite rock and roll: “you’re fooling yourself if you believe” it adds value for a buyer.

Patrick Hake, RE/MAX Gold, Real Estate Broker in Auburn:
Patrick Hake - Real Estate Broker in AuburnI believe that if done well, they are a wash. They add some value by increasing the size of the home, but at the same time detract value by removing the garage. If done poorly, they can absolutely remove value. This includes if they are done with shoddy workmanship, but also if they are done when there is a lack of other parking or storage space. I have seen numerous examples of homes with converted garages that have little on street or driveway parking and/or have nowhere to store the junk that would normally go in a garage. If someone were to want to do a conversion, they should have ample additional parking and a shed or some other type of storage space for typically garage stuff. I also think that when people do a permanent conversion that removes the garage door and replaces it with an exterior wall, it definitely detracts from the curb appeal and lowers value.

Here is an example of a home that was flipped recently in my neighborhood that had a full garage conversion: http://bit.ly/NG49Be There were numerous other things done to the home to update it and spruce it up, but one of the main things the investors did was to reverse the garage conversion and put in a new garage door. The bank sold it to the investors through the MLS for $185,000. It had languished on the market for quite a while before selling to them. After having the garage conversion removed and updating the rest of the interior and exterior, it recently sold for $250,000 after being on the market for 19 days.

Erin Stumpf Attardi, Dunnigan Realtors – Realtor in Sacramento:
Erin Stumpf Attardi - Dunnigan Realtors - Realtor in SacramentoThere are several factors that I take in to consideration when trying to determine what adds or subtracts value — OR — adds or subtracts to the desirability of a home in general. Best case scenario with a garage conversion that will add value = good workmanship, done with permits, and the presence of available garage parking that is consistent with the surrounding neighborhood. Worst case scenario with a garage conversion that will subtract value = poor workmanship, done without permits, and no available garage parking that is consistent with the surrounding neighborhood (See more of Erin’s thoughts on conversions on her blog – this text was taken from her post with permission).

Ted DeFazio, Ellington Properties – Real Estate Agent in Sacramento:
Ted Defazio - Ellington Properties - Real Estate Agent in SacramentoI can definitely shed some light on how they could possibly add value, for the right buyer. I find that the older, tiny detached garages like ones found in East Sac or Land Park barely fit a car in them as is. When converted to a game room, man cave, or office, it creates a completely private place to escape to. The best example I can think of was an episode of Interior Therapy by Jeff Lewis. In the episode, Jeff converted a backyard garage into a home office and lounge type area. This garage was previously used as junk storage and by the end of the conversion you could see how much it brought to the property.

Doug Reynolds, Better Homes & Gardens Real Estate – Realtor in Sacramento 
Doug Reynolds Real EstateIn my experience, garage conversions typically do not add value to a home. Right off the bat, a large handful of buyers will not even be interested in the property if it does not have a garage. Therefore, the seller is missing out on about 60% of the potential buyers. So now your competition/interest in the home has already dropped. Next, the question screams: “Was it done with a permit?” Most of the time, garage conversions were not done with permits. This causes red flags for buyers and also eliminates more buyers who are using financing that will not allow non-permitted garage conversion purchases. Additionally, most garage conversions have a step down into the room and it typically does not “feel” like the rest of the house. Due to this, it does not add value for the extra square footage. You lose a garage and in place have not as good quality extra square footage. This leads to using the original square footage when trying to value the home with recent sales. With all of this factored in: In most cases garage conversions decrease the value of a home. At best, the conversion equally cancels out the loss of the garage. The only time it would add value is if you are adding a bedroom and/or bathroom that was done with permits, does not have a step down, the central heat/air is tied into the space and gives the same “feel” as the rest of the home.

Rob McQuade, Better Homes & Gardens Real Estate – Realtor in Sacramento
Rob  McQuade - Better Homes & Garden Real Estate - Realtor in SacramentoAll I’d really say on the subject of whether garage conversions add value is: It depends. Are they common to the neighborhood? Some older neighborhoods of mostly two-bedroom homes have seen a large number of garages converted to additional living or bedroom space, and in neighborhoods like this it makes sense. Generally speaking, though, I think most people want a garage and are willing to double an office as a guest bedroom instead of looking for two rooms. More often than not when I take clients through homes with garage conversions I get comments like “this is kind of funky” and we have the discussion about how difficult it would be to convert it back to a garage.

Lori Najera, Fusion Real Estate Network – Broker Associate
Lori Najera Real EstateBuyers want bedrooms, bathrooms, nice living spaces and in most cases, a garage. In the past 12 years I’ve sold 3 homes with converted garages. These are their stories: 1) A single mother; 2) An investor looking for his next rental, and he liked the converted garage so he could charge more for rent (since it was called a “bedroom” – never mind that the driveway drainage was poor and it slanted down into the garage); 3) An elderly librarian who was also a first time home buyer, who had 12 cats. Yes, the converted garage was for the cats. So for those potential buyers, go ahead and convert those garages! Otherwise, please leave a garage as a garage. I haven’t even gotten into the hassle on the lending side if this conversion was done without permits. If you want to make your home appeal to the most buyers, and sell for more money, leave the garage intact.

Max Boyko, Team Hybrid Real Estate Services – Broker Associate
May Boyko, Team Hybrid Real Estate ServicesI think conversions would really be on a case by case basis… and mostly dependent on the needs of the buyer. I am a strong believer that each sale is unique, and if you are in the right place at the right time, you could sell a property for significantly more than you would at a different time. This definitely includes conversions, as some people try to maximize on their living area. Not having a garage though will definitely have a negative impact on the value. Another big factor would be the neighborhood. Many of the lower priced neighborhoods may even benefit from having a conversion (kind of like diluted price per square foot), so it may have a positive impact on the overall price. Higher end neighborhoods, however, don’t necessarily look at the total square footage to determine the price but more on the outlay, condition, and lot. It would also have a much larger negative impact in a higher end neighborhood as it’s not necessarily seen as “desirable” to live in a conversion. Maybe a cheaper alternative to an in-law quarter.  🙂

Eric Peterson, Praxis Capital – Real estate investment firm 
Eric Peterson - Praxis CapitalAs far as conversions, we usually convert them back. We’ve found that most people value a garage more than an additional bedroom. The need for extra storage space along with the reality that most conversions aren’t done very well leaves us converting about 90% back to garages.

Questions: What’s your reaction to the comments above? Agree? Disagree? In what circumstances would you consider converting your garage?

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Filed Under: Appraisal Stuff, Resources Tagged With: Better Homes & Gardens Real Estate, Doug Reynolds real estate, Eric Peterson, Erin Stumpf Attardi Real Estate, garage conversion, garage convert opinions, Home Appriaser, House Appraiser, impact on property value of garage conversion, Jeff Grenz, Lori Najera Realtor in Sacramento, May Boyko, Patrick Hake Real Estate, Praxis Capital, real estate 101, Real estate Jeff Grenz, reasons not to convert a garage, reasons to convert a garage, Rob McQuade Realtor in Sacramento, Sacramento Appraisal, should you convert your garage, Team Hybrid Real Estate Services, Ted DeFazio Real Estate

Why is inventory so low in Sacramento right now?

May 17, 2012 By Ryan Lundquist 4 Comments

If there is one conversation dominating real estate right now in Sacramento, it’s definitely the shortage of listings. It’s wild to think there is only about a one-month supply of inventory on the market. This means buyers have had to duke it out (not literally) to get into contract. Also, multiple offers and offers over asking have become much more common too.

But why is inventory low? Is it because of a coming “wave” of foreclosures or a “shadow” inventory? Do sellers have less confidence in the market? Do banks have something to do with it?

Inventory in Sacramento County - Quarterly from 2011 - Graph by Trendgraphix and modified by Sacramento Appraisal Blog

I talked with Eric Peterson of Praxis Capital about the issue of low inventory. Eric’s company pays very close attention to the market as they flip about 125 houses a year in the Greater Sacramento area. Watch the video below (or here).

What do you think? Anything else you’d add? Is there a looming shadow inventory? If you are an agent, buyer or seller, what’s it been like in the trenches for you lately?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Twitter, subscribe to posts by email or “like” my page on Facebook

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Filed Under: Market Trends, Resources, Videos Tagged With: appraiser in Sacramento, Economics, Eric Peterson, Home Appraiser, House Appraiser, PraxCap, Praxis Capital, Ryan Lundquist, Sacramento real estate investor, shadow inventory, Supply & Demand, wave of foreclosures, why are there few houses for sale, why is inventory low

The verdict on chain link fences and property value

January 30, 2012 By Ryan Lundquist 14 Comments

Do chain link fences increase or decrease property value in a neighborhood? I asked this question to some very experienced real estate agents and investors in the Sacramento area, and here is what they said:

Eric Peterson with Praxis Capital: We remove the chain link fences 100% of the time. We do the same to a house with bars on the windows. When buyers see this stuff they immediately think about safety concerns. It’s not the mindset you want to instill in a prospective buyer. If the houses around our target property have chain link fences, we likely will pass on the house. It’s just all about perception and no one wants to make a huge purchase decision while worrying about the safety of the street. 

example of chain link fence

Jeff Grenz with Erik Berry & Associates 916-425-3228: When I am evaluating homes for investor purchases… If the only home on the street with a chain link front yard fence is the home I’m evaluating, I include a cost to remove the fence, a few hundred dollars…but you can’t remove it from adjacent homes. Landscape and presentation of the subject and adjoining homes impacts the speed of the sale, and ultimately the price. Chain link yells “DISTRESSED”

When I see chain link in the front yard, I start looking for why… where is the big dog? Is there a high crime problem? Is there loitering? Will a potential buyer be asking the same thing and how many will pass by without even looking? I will lose prospective buyers.

It’s an economic decision…. as you lose prospective buyers and narrow your field, it costs more time to sell and you have to discount, both of which devalue the property.

Dennis Lanni with Housing Group Fund: It would not matter to me, but the chain link fence represents what kind of neighborhood it is. It tells me that safety is a concern, sort of like security doors but worse.

example of chain link fence

Kaleena Amuchastegui with Capri Property Real Estate: Automatically what comes to mind when you mention a front yard chain link fence is a home in an undesirable neighborhood, there is just something about chain link that screams it’s needed to be there to protect a home, not to mention it’s a huge eye sore in my opinion. I think of older neighborhoods that are run-down, I think of areas with higher crime rates… I know that if we acquired a property with a chain link fence around from auction there is a 90% chance we would remove it. I also know we would never add a chain link fence to a property.

Max Boyko with Team Hybrid Real Estate Services: Of course what I think and my investors think can be a different thing, but I would say chain link fences are definitely one of the most unappealing items in a neighborhood. It varies case by case, but primarily my investors would take them out, which I agree with. I wouldn’t say they would pass on a property if it was a good deal, but it takes away the appealing factor and creates a sense of poor security in the neighborhood, which may turn off potential buyers

Please note if you have a chain link fence, nobody is targeting you or saying you’re bringing down the neighborhood. These are simply the opinions of experienced real estate agents and investors. Of course, it may be worth considering what they are saying since they are constantly buying properties to fix and sell on the open market. Clearly they’re in touch with the perceptions of buyers, what makes a difference in property value and the reality of how important impressions are for a neighborhood. If certain elements of fence design give off a negative impression for the community, what can be done about it? What options exist?

If you want further information, I wrote a series last year called “Blight Week” that might provide some more insight into this important conversation. I wrote a previous post that shows a variety of different types of fences and considers the influence a front fence can have on a property. I firmly believe any neighborhood that is experiencing signs of decay has the potential to see better days with a little intention. There is always hope and we can find and experience that together too.

What do you think about chain link fences? Do you agree with the specialists above?

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Filed Under: Appraisal Stuff, Resources Tagged With: blight week, Capri Property Real Estate, chain link fences, Dennis Lanni, Eric Peterson, Erik Berry & Associates, Home Appraiser, Housing Group Fund, impression in a neighborhood from fene, Jeff Grenz, Kaleena Amuchastegui, Max Boyko, negative value for chain link fence, Praxis Capital, property flipping tips, Property Value in Sacramento, real estate investment tips, removing fences to increaes property value, safety concerns in a neighborhood, Team Hybrid Real Estate Services, the value of front yard fences

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