Sacramento Appraisal Blog | Real Estate Appraiser

Real estate appraisals for divorce, estate settlement, loans, property tax appeal, pre-listing and more. We cover Sacramento, Placer and Yolo County. We're professional, courteous and timely.

House Appraisal

Three ways the pandemic has affected buyers

By 14 Comments

How has the pandemic affected buyers? Today I want to share a few fascinating shifts concerning home size, pools, and migration. If you’re local, have you been seeing this? If you’re not local, what’s happening in your area?

1) BUYERS WANT LARGER HOMES

If you’ve been cooped up for months it makes sense that you’re going to want a larger home, and that’s exactly what the stats show in the Sacramento region. Do you see that spike in home size on the right side of the graph over the past three months? For the first time ever the average monthly home size was over 2,000 square feet in the Sacramento region too (two months in a row).

The Takeaway: Be in tune with shifting buyer expectations so you price it right since larger homes may be more marketable right now.

2) POOLS ARE MORE POPULAR

Lots of buyers want a home with a pool. After all, if you’re going to quarantine somewhere you might as well have the ultimate backyard. Home sales with built-in pools are up 4.2% this year in the Sacramento region so far. This is something we could have guessed, but it’s good to see what the stats actually say rather than going with what we feel might be true.

The Takeaway: Homes with pools are in high demand. They are more marketable and they may be more valuable too.

3) FLOCKING TO PLACER & EL DORADO COUNTY

This is where it gets interesting, so bear with me. Noticeably larger homes have shown up in sales stats from June to August this year, but a big part of that comes down to buyers focusing more heavily on Placer County & El Dorado County. In fact, over the past three months compared to last year Placer County sales volume is up 16.8% and El Dorado County volume is up 31.5%. Why does this matter? If you didn’t know, monthly sales in these two counties are routinely 400+ square feet larger in size than Sacramento County (mostly due to having newer homes through the years that were built larger). This data does NOT include brand new homes currently being sold from builders – only MLS sales. Anyway, when we consider why the home size in the region has jumped so much lately, a huge reason looks to be buyers flocking to these two counties in search of more space.

The Takeaway: When we consider large price gains lately it’s important to recognize some of the hefty gains are because larger homes have been sold.

I put some of this post in a video in case that’s easier to digest. Enjoy.

a

I hope that was interesting or helpful. Thanks for being here.

Questions: In what ways have you seen buyers and sellers change because of the pandemic? I’d love to hear your take.

If you liked this post, subscribe by email (or RSS). Thanks for being here.

Sellers, you don’t need 20 offers

By 27 Comments

Sellers, getting twenty offers is the dream, right? That way you can be choosy about accepting the buyer with the strongest terms and probably a higher price too. But do you really need that many? In other words, can you get the same price with just a few offers? Let’s kick around this idea today.

THE SHORT VERSION:

1) No surprise. Getting more offers tends to lead to a higher sales price.
2) Sometimes just one offer can go way above the list price.
3) Homes with one offer also more regularly close way below the list price.
4) You don’t need 20 offers (but it sure does help).

THE LONGER VERSION:

Let’s look at some visuals and then consider some takeaways.

County Visuals: First off, I’m concerned these visuals are going to be confusing, so sorry if you’re thinking, “Dude, I only see dots and I have no idea what’s going on.” The goal is to show how much higher the sales price is compared to the original list price while considering the number of offers. Basically, when a dot is at 100%, it means a home sold at exactly the original list price. Or if a dot is at 110%, it sold 10% above the list price. Or 95% means it sold 5% lower than the original list price.

Question: What happens to prices when there are more offers?

The big plain truth: The truth is properties with more offers tend to close higher above the original list price than properties with fewer offers. Duh, I know we could have said that without the research, but it’s good to see what stats actually show rather than going with what we feel might be true. With that said, sometimes a home with just one offer can actually close at the same high percentage above the list price as a home with ten offers. So technically you don’t need ten to twenty offers to command a huge price (but it sure does help).

Neighborhood Visuals: Let’s check out some neighborhoods too instead of just the county. What do you see?

Conclusion: There are fewer data points to consider in the neighborhood visuals, but the takeaway is the same as the county (see above).

QUICK THOUGHTS:

1) 20 offers: If you’re getting 20 offers, it’s probably because you’re priced too low unless that’s what every listing is getting.

2) Aim for a few: Price it reasonably and you’re more likely to command a few solid offers and statistically be in the zone to compete above the list price. The reality is you don’t need 20 offers to get a huge price (but it helps).

3) Hang in there buyers: It’s not easy out there right now, but it’s worth noting not every sale is getting ten offers. It may feel true, but the stats don’t show it is.

4) Not everything is getting bid up: While many properties go 10% to 15% above the original list price, many homes sell below the list price. The narrative is Bay Area buyers are swooping in, paying cash, and everything is getting bid up, but that’s not true when looking at how many homes recently sold below the original list price (basically any dots below the 100% line).

5) Clear advantage: Having lots of offers gives sellers a huge advantage to be selective and accept contracts with the best terms (and probably higher prices).

6) Layers of the market: Not every price range is experiencing the same dynamic when it comes to multiple offers and getting bid up. This is why it’s so dangerous to take an experience with just one property and call it a trend for the market. Maybe. Maybe not.

I hope that was helpful. Thanks for being here.

Questions: How many offers do you think is ideal for a seller to get? Why are some listings able to command a huge price even though they only get one or two offers? What is it about those ones? Any other insight? I’d love to hear your take.

If you liked this post, subscribe by email (or RSS). Thanks for being here.

My health went crazy & so did the market

By 43 Comments

Long time no blog. I don’t know if you noticed, but I haven’t been around these past two months. Today I want to talk about why, say thank you, and then share some cool visuals I’ve been making these past couple weeks.

What happened: In late June I began to have an ulcerative colitis flare and it got really bad to the point I had to be hospitalized for six nights. Fourteen years ago I was diagnosed with UC and this is frankly the worst it’s ever been. Thankfully my flare is subsiding and I’ve since been slowly regaining energy.

I’m blown away at your support: This has been a difficult season for my family. It’s hard to not feel well and it was scary being in the hospital. But in the midst of this it’s been incredible having an army of support rise up. The cards, flowers, meals, text messages, advice, gifts in the mail, DoorDash, emails, prayers… It all meant so much.

An army of support: While I was in the hospital a GoFundMe was started by my friends Erin Stumpf and Joe Lynch. I’m honestly a guy who hates accepting help. I would never in a million years have asked for something like this because I always want to be the giver. So it was humbling to see my face online and to have my colon become internet famous (haha). I received a text message basically saying, “We’re going to do this and your peeps are going to take care of you.” And that’s what happened. Everyone, I cannot put into words how grateful I am for you carrying my family during this time. As the hospital bills start rolling in and I haven’t had income for over two months, your generosity has been a tremendous blessing. It’s frankly taken off some pressure and given me space to adequately heal. I still have lots of individual thank yous to say and I will get to those over time, so please be patient. But for now I want to publicly thank everyone for your support. I have no words to express how deeply grateful I am.

NOT ASKING FOR MONEY: I wanted to clarify that I am NOT asking for anything. I did not link to the GoFundMe on purpose. We have received plenty and I think we are good in terms of finances.

I’ll be back: I was hoping to be back to work the day after Labor Day, but these past couple of days I’ve been exhausted, so we’ll see. In the meantime I’m posting some visuals on Facebook, Twitter, and LinkedIn.

Okay, enough about me and my colon….

THE MARKET WENT CRAZY

While I was gone the market went absolutely nuts. In short, competition has been fierce and we’ve begun to see one of the most competitive markets we’ve had.

WAY TOO MANY VISUALS FOR YOU:

Multiple offers: They were up 25% this August compared to last year at the same time. As you can see, the percentage of multiple offers is at its highest point in recent years too since the metric began to be included in MLS. We started to see the market soften during the beginning of the pandemic, but then it sped up to create a V shape as mortgage rates went down.

Here is a new visual. What do you think?

Price reductions: This is another brand new visual. About 9% of the market had a price reduction last week. This isn’t much, but it reminds us the price has to be right – even in the midst of such low inventory.

Sales volume: We’ve seen a recovery in volume lately after a slump during the beginning of the pandemic. Usually volume tops out around July or August each year too and it looks like that may be starting to happen. This topping is normal for the season and we’ll know more in the next few weeks how the market is moving. Stay tuned.

Prices: Prices have been ticking up and preliminary stats for August so far show another increase from July. For a while the market was subdued and we were seeing year over year growth anywhere from 2-4%, but it’s been more like 8% and higher lately from last year.

Listings: It’s as if listings have been cut in half from last year. When I pulled stats at the beginning of September last year there were over 4,700 listings on the market in the region, but yesterday there were just over 2,200. Isn’t that crazy?

Six years of listings: Here’s another way to look at the number of listings. These are listings from 2015 through 2020 pulled on the first day of September each respective year.

Inventory doing the limbo: Inventory has been shrinking as I mentioned above. Here is a look at a few local counties.

Distressed sales have bottomed out: We are not seeing more distressed sales hit the market. There is talk about a new wave of foreclosures coming, but if that ends up happening it would take a while before anything actually shows up on MLS. Moreover, many owners are in distressed situations, but they are sitting on equity and could sell instead of give the house back to the bank. Let’s keep watching.

Unemployment: Let’s keep watching the job market and economy.

Other visuals: I have lots of other graphs. Check out my social media in coming days and weeks. I am posting daily stuff. I may or may not put up a weekly blog for now, but I probably will since I have so much to share.

Thanks for being here.

Questions: What are you seeing out there in the market right now? I’d love to hear your take.

If you liked this post, subscribe by email (or RSS). Thanks for being here.

Seven hundred missing sales

By 12 Comments

We’re obsessed with prices. OBSESSED. But real estate is about way more. In fact, if we want to understand a market we need to move beyond a laser focus on prices. On that note, let’s talk about sales volume.

1) Seven hundred missing sales: There were about 700 fewer sales this April compared to last year in the Sacramento region. In other words, sales volume was down about 30% last month from April 2019.

2) Volume reflects pendings from the past: In mid-March the housing market started to react to the coronavirus and in three weeks pending contracts dropped 45%. Well, pending contracts from back then started to close in April, and that’s the reason why we saw a big drop in monthly volume.

3) Sensational: It’s easy to get sensational with stats like this and say the housing market is crashing, but we’ve been in a pandemic and these types of numbers at 30% are what we’d expect. Moreover, we’re seeing figures like this in many markets across the country. Keep in mind pending contracts have been on the rise for the past month, which means we can expect sales volume figures to grow in a month or two when these new ones close.

4) It’s about more than prices: The reason I’m so interested in sales volume is because it’s possible for prices to remain stable even though the number of actual sales has changed dramatically. So while it’s easy to say, “Hey, prices are okay,” I think the bigger headline has to do with what is happening behind the scene with sales volume. I talked about this in a webinar this week here.

Now let’s get visual.

FRESH VISUALS TO SHOW SALES VOLUME:

OTHER VISUALS TO SHOW WEEKLY / DAILY CHANGES:

RESOURCES:

New market video: Here’s my weekly market update. It’s 15 minutes and I talk through some big stats this week that show buyers and sellers are coming back to the market. Check it out below (or here).

A pandemic webinar: On Monday I did a 90-minute webinar with the Sacramento Association of Realtors. This is almost an hour and I trimmed the first ten minutes because it was a recap of my weekly video. Watch below (or here).

Videos this week: I’ve been doing lots of video conversations lately. I figured I would post the recorded ones in case anyone wants to listen.

4/30/2020 Conversation with Steve LaMothe
5/01/2020 Conversation with Anthony Alfano & Others

WEBINAR NEXT WEEK: I’m doing a one-hour webinar next week for Safe Credit Union on May 13th. It’s free. Sign up here if you wish.

Appraiser John Carlson GoFundMe: John is an appraiser in Southern California and he was diagnosed with cancer and hospitalized. I invite you to pray for him and donate if you can. See more here.

I hope this was interesting or helpful. Thanks for being here.

Questions: What are you noticing happening with the market these days? Anything to add? What did I miss?

If you liked this post, subscribe by email (or RSS). Thanks for being here.