High demand. Modest value increases. Price sensitive. Those are ways to describe the real estate market in 2016. Today let’s take a deep look into where the market went last year. This post is long on purpose. You can scan it quickly or pour a cup of coffee and spend some time here. If you aren’t in Sacramento, I hope you can still find some value. Do you see any parallels to your market? Any thoughts? 

P.S. I have some really cool year-in-review images. Please share.

DOWNLOAD 76 graphs HERE: Please download all graphs in this post (and more) here as a zip file (including a one-page quick stat sheet). See my sharing policy for 5 ways to share (please don’t copy verbatim). Thanks.

A Market Rush: Overall prices saw a dip these past few months as the regional median price declined 4-5% from summer. This isn’t anything unexpected because it happens virtually every year. Just as there is a season for fishing, fashion, or television, there is also a season for real estate values. Granted, 2016 did have a more aggressive feel in that multiple offers were commonplace, it took an average of 7 less days to sell a home compared to last year, and inventory was sparse at best. In fact, the year closed with the strongest months of sales volume in the past 5 years for November / December. It’s as if there was a rush on the market from September through November that ended up beefing up these year-end stats. Why did sales volume increase? Some say it’s the power of Trump or the anticipation of a new political era. Or it could be buyers were expecting an increase in interest rates and wanted to get in before a rate hike. Or maybe it’s the byproduct of a fall that wasn’t all that dull and a market with strong demand. Or maybe it’s a combination of all or none of the above.  🙂

When looking at the entire year, most price metrics increased 7-9% and sales volume was up a modest 2% overall for the year. Remember, just because price metrics increased by 7-9% does not mean actual values increased by that much (we can talk about that more below if you wish). My sense is prices at lower levels saw larger increases than the middle and upper end of the market, which means a more aggressive bottom tends to create larger increases on paper. I say this because it’s easy to see the median price at 10.5% higher and say, “Values went up by 10.5% last year,” but that just isn’t true for the bulk of the market. On a related note, last week I mentioned trends to watch in 2017, and if I had to add one more thing I would say there could easily be a problem this year with overpricing homes because of so much focus on the market being “hot” without looking at actual data.

A few year-in-review images:

Sacramento County:

1. The median price was $315,000 in December (6.5% above last December).
2. Housing inventory is about 10% lower than it was last December.
3. Sales volume was 7% lower this December compared to last December, but this year and last were higher than 2012, 2013, and 2014.
4. It took 3 days longer to sell a house last month compared to November. 
5. One year ago in December it was taking 4 days longer to sell.
6. FHA sales volume is down 6% this year compared to 2015 (but 25% of all sales this year were FHA).
7. Cash sales are down 11% this year (they were 13% of all sales last month).
8. The average price per sq ft was $202 last month (about the same as November, but 7.5% higher than last year).
9. The average sales price at $343,670 is down about 4% from the height of summer (but is 6% higher than last year).
10. When looking at the entire year in Sacramento County it took 33 days on average to sell a home this year.

A few images to show the bottom and top of the market:

Some of my favorite images this month:

SACRAMENTO REGIONAL MARKET:

1. The median price was $350,000 in December (7% above last December).
2. It took 3 days longer to sell compared to the previous month (but 4 less days compared to December 2015).
3. Sales volume was about 1% lower this December compared to last year.
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. Cash sales were 14.4% of all sales last month.
7. The average price per sq ft was $208 last month. That’s down about 1% from the height of summer and 8% higher than last year.
8. FHA sales were 22% of all sales in the region last month.
9. The average sales price was $387,915 in December. It’s down about 5% from the height of summer but 8% higher than last year.
10. When looking at the entire year in the region it took 37 days on average to sell a home this year.

Some of my favorite images this month:

PLACER COUNTY:

1. The median price was $423,925 in December (7% above last December).
2. It took 2 less days to sell compared to the previous month (but 9 less days compared to December 2015).
3. Sales volume was about 1% lower this December compared to last year.
4. FHA sales volume is down 11% this year compared to last year (FHA sales were 18% of all sales in Placer County last month).
5. Cash sales are down a mere 1% this year compared to last year.
6. Cash sales were 16% of all sales last month.
7. The average price per sq ft was $216 last month, which is about as high as it’s been all year (about 8% higher than last year).
8. REOs were 1.5% and short sales were 1.8% of all sales in Placer County.
9. The average sales price was $472,130 in December. It’s down about 2% from the height of summer but about 9.5% higher than last year.
10. When looking at the entire year in Placer County it took 42 days on average to sell a home this year.

Some of my favorite images this month:

DOWNLOAD 76 graphs HERE: Please download all graphs in this post (and more) here as a zip file (including a one-page quick stat sheet). 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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