layers of the market

How much did values increase last year in the Sacramento Region? What about Placer County? How would you describe the market to friends or clients? Let’s take a stroll through the trends today.

Dude, this is a long post: If you’re new to subscribe (thank you), most of my posts are not this long. But twice a month I break down the local trends so we can better know how the market is moving. If you are outside of the area, you can still glean from what is here. Beyond these two monthly posts, my other posts tend to be general enough to apply throughout the United States.

Two ways to read this post:

1. Scan the talking points and graphs quickly.
2. Grab a cup of coffee and spend a few minutes digesting what is here.

Thank you for being here.

SACRAMENTO REGION (scroll below for Placer County)

Email me if you want the graphs: If you would like all the graphs in this post (and others), send me an email (make sure to write “I want the market graphs” in the header). You can use these in your newsletter, some on your blog, and some in other social spaces. See my sharing policy for ways to share.

Regional Market Year-End Stats:

1) Median Price ended at $309,000
2) Average Sales Price ended at $339,182
3) Average Price per sq ft ended at $179
4) Sales volume was down 6.6% in 2014 compared to 2013.
5) FHA sales increased by 4.6% from 2013.
6) There were 32% less cash sales this year.
7) Short sales represented only 6.7% of the entire market in 2014.
8) Bank-owned sales were only 5.8% of all sales in 2014.

1) Values saw a modest uptick, but the market was flat for most of the year:

The graph above shows an increase in the median price at the beginning of the year, but then the market was basically flat for more than half the year. Overall the median price increased by 10.3%, the average price per sq ft increased by 5.3%, and the average price increased by 6.6%.

 2) Cash volume declined by 32% this year in the regional market:

Having 32% less cash sales in 2014 definitely softened up the market compared to 2013. For much of the year there was a sense the market was “normalizing” in that it was learning how to exist without cash investors driving the market, inventory was approaching more normal-ish levels, and interest rates were increasing. Of course now that rates have begun to decline again, that will help put a bit more “steroid” back into the market.

3) Sales volume was down by 6.6% in the region:

There were almost 1800 less sales this year in the Sacramento region, which translated to a sales volume at 6.6% lower than the previous year. This year volume was lower, and we began to get a better picture of what real demand is like in the Sacramento market. In 2012 and 2013 we saw a market that was driven by buyers outside of our market (investors). In short, the demand wasn’t a result of the local market or the local economy. But this year we saw a market that was more driven by local buyers, which is why volume was so much lower than the previous year. Granted, interest rates are still helping buyers afford far more than their wages would otherwise allow, and that’s going to be important to watch over time.

4) Housing inventory increased over the year (declined in December):

Housing inventory saw a clear upward trek throughout 2014. There was not a steady increase every single month, but overall the trend was increasing, wasn’t it? The truth is in real estate some months are going to be higher or lower in a particular category, and sometimes data will even seem conflicting. That’s why we need to look at the big picture as well as hyper-local neighborhood data and county-wide data. It all helps us understand and tell the story of the market.

Here is what inventory looks like in December. We should see increases this next month as some properties slowly begin to hit the market. We like to think real estate fever begins in March, but remember the sales in March are often the pendings from February.

5) It’s taking about 25% longer to sell a house in today’s market (but 35% more quickly than it was three years ago):

These days it’s taking about 25% longer to sell a house than it did last year. This sounds alarming, but let’s remember this is normal. We remember the days in mid-2013 when it was actually taking less than 30 days on average to sell a house. That was insane. For context, at the end of 2011 it was taking about 90 days to sell a house in the Sacramento region (that was three years ago). Of course I still recommend pricing to sell in 30 days or less so you hit the sweet spot of buyers looking for properties. In most price ranges  you don’t want to be on the market for 90 days right now because you begin to lose your power to negotiate a higher price with buyers.

6) Listings and Trends:

Here is the price spread of current listings in the regional market. The bulk of current listings are priced between 200-400K. We can also see as of last month there were only 50 properties for sale under $100,000. It’s just no longer the market to pick something up for dirt cheap.

Last but not least, here is a picture of some of the “layers of the market” working together.

Email me if you want the graphs: If you would like all the graphs in this post (and others), send me an email (make sure to write “I want the market graphs” in the header). You can use these in your newsletter, some on your blog, and some in other social spaces. See my sharing policy for ways to share.

PLACER COUNTY MARKET TRENDS

Placer County Year-End Stats:

1) Median Price ended at $387,000
2) Average Sales Price ended at $428,629
3) Average Price per sq ft ended at $192
4) Sales volume was down 2.96% in 2014 compared to 2013.
5) FHA sales decreased by 9% from 2013 (76 less sales).
6) There were 19% less cash sales this year.
7) Short sales represented only 5% of the entire market in 2014.
8) Bank-owned sales were only 3.5% of all sales in 2014.

Email me if you want the graphs: If you would like all the graphs in this post (and others), send me an email (make sure to write “I want the market graphs” in the header). You can use these in your newsletter, some on your blog, and some in other social spaces. See my sharing policy for ways to share.

1) Values increased only a few percent over the year:

How much did the market increase in Placer County last year? Overall the median price increased by 8.1%, the average sales price increased by 6.3%, and the average price per sq ft increased by 7.8%. The market saw some appreciation in the beginning of the year, but was fairly flat and really softened over the last two quarters. The stats actually seem a bit higher than the market felt in light of December’s numbers (which were quite a bit higher than the past few months). For instance, the median price had cooled to $375,000 in October, then $365,000 in November, and then December showed up at $387,000, which is just $1,000 under the highest monthly median price of the year. We’ll see how this figure pans out in coming months, but don’t put too much weight on it. As I said a couple days ago when discussing Sacramento, remember that these figures don’t necessarily mean each property has increased in value by 8.1%, 6.3%, or 7.8%. Actual value is only something we can determine on an individual basis.

2) Inventory increased steadily over the year (down in December):

Housing inventory in Placer County increased steadily throughout the year and was hovering in the higher 2s for the most part. It peaked once over three months at the end of the year, and saw a dramatic Fall to 1.8 months in December (its very normal for inventory to decline in December because there aren’t many new listings coming on the market).

Housing inventory was freakishly low in Placer County last month (besides the market about $1M). Keep in mind there are only four listings below $100,000, so don’t put any weight on the “4” number you see for inventory under 100K.

3) It’s taking 20-25% longer to sell a house in today’s market: 

Last year at this time it was taking anywhere from 45 to 50 days to sell a house, and this year it was taking anywhere from 55 to 60 days to sell a house. Well, technically on average it took 61 days to sell a house last month in Placer County. It’s normal for properties to take longer to sell in the Fall months, and then shorter when the market heats up during the Spring. As you can see, there are different price segments that tend to sell more quickly than others. Generally speaking, the higher the price, the longer it takes to sell.

4) Sales volume was down 2.9% in 2014 compared to last year:

There were 164 less sales in 2014 in Placer County compared with the previous year. This translates to sales volume being 2.9% lower compared to 2013. In contrast, Sacramento County had a volume that was 7.7% lower than the previous year.

5) The Fall showed a normal real estate seasonal cycle:

It felt like a fairly normal Fall for the most part (beyond the higher uptick in median price). Remember, don’t make too much of the median price. It may have increased 6% from the previous month, but the average price per sq ft only went up 1%. What does that tell us?

6) The layers of the market at work:

Real estate is never just about supply and demand. There are so many “layers of the market” that are working to impact the direction of values. Both interest rates and housing inventory will be important factors to watch this coming year.

Thanks for letting me post today. I know these posts are long, but twice a month we get to delve into some big-time real estate trends, and I hope it’s been helpful for you (I know it is for me). The more we can explain what the market is doing and why it is doing it, the more we can help our clients make informed real estate decisions.

Questions: What else are you seeing out there? Anything you’d add?

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