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months of housing supply

The big and little story of inventory in Sacramento

May 8, 2014 By Ryan Lundquist 6 Comments

Do you want to see the market? Let’s look at some specific price ranges in a few local counties. I know many readers are outside of Sacramento, so I’m curious if these trends are anything like your market. Overall inventory declined this past month, which is common during Spring. Properties are still selling quickly, though definitely not as fast as last year.

Quick: I suggest scrolling down to your primary county and taking a minute to digest the latest trends. Or check out my video with commentary here or below.

Sacramento County:

number of listings in sacramento - May 2014 - by home appraiser blog

months of housing inventory by sacramento appraisal blog

days on market for april 2014 by sacramento appraisal blog

Talking Point: Inventory is very thin in Sacramento County right now and properties under $300,000 are tending to sell more quickly than higher-priced listings. Remember too there are many more listings and sales in Sacramento County each month compared to many surrounding counties.

Placer County:

number of listings in PLACER county - May 2014 - by home appraiser blog

months of housing inventory in placer county by sacramento appraisal blog

days on market for placer county by sacramento appraisal blog

Talking Point: Inventory is a tad higher in Placer County compared to Sacramento County, though it is still very low. There really isn’t much for sale under $300,000 when looking at the entire market. High dollar homes are definitely taking longer to sell than the lower half of the market (which is normal).

Sacramento Region:

number of listings in Placer Sacramento Yolo El Dorado county - May 2014 - by home appraiser blog

months of housing inventory in sacramento region by sacramento appraisal blog

days on market for sacramento region by sacramento appraisal blog

Talking Point: The higher the price, the longer it took to sell last month (generally speaking). Listings below $200,000 are definitely shrinking. Have you noticed how the quality of homes available at the low end has really changed over these past months? Options for first-time buyers to get into a good quality home under $200,000 have definitely diminished lately.

My Video: Check out my commentary on housing inventory below (or click here):

More Placer County by Request: I’ll be sharing a bit more Placer County trends in light of many requests. I’ll also be taking a wider focus at times to discuss the overall market in Sacramento, Placer, Yolo & El Dorado County. Graphs will always be clearly labeled. Sound good?

Question: What stands out to you from above?

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Filed Under: Market Trends, Videos Tagged With: days on market, DOM, Home Appraiser, House Appraiser, housing inventory, how long are properties taking to sell, inventory in placer county, Inventory in Sacramento, months of housing supply, Placer County, Placer County Real Estate Market, regional market, Sacramento Real Estate Market, trend graphs

4 reasons why housing inventory is low in Sacramento

May 6, 2014 By Ryan Lundquist 1 Comment

Why is housing inventory so low right now? Did you know it declined again this past month? Shouldn’t there be more homes on the market? I’ve been getting asked these questions quite a bit, so I wanted to take a stab at an answer. First, let’s remember that housing inventory is a metric to help tell the story of how many houses are for sale. Let’s get refreshed on how to calculate this figure and then consider a few conversation points for clients.

How to calculate monthly inventory - by sacramento appraisal blog - 530

Understanding how inventory is calculated is key to understanding why inventory is low in the Sacramento area right now. In the example above inventory is 1.97 months, which means in March there were 1.97 months worth of houses for sale on the market. Right now inventory is closer to 1.85 months, but I’ll get to that in a post on Thursday.

Four Talking Points about Housing Inventory:

  1. Normal: It is normal for inventory to become thin during this time of year because of the regular cycle of real estate. As Spring unfolds, more buyers get into contract, and this effectively reduces the percentage of active listings to sales from MLS. This is important to know because if there are less active listings compared to sales, inventory is bound to decline since it is calculated by dividing active listings by sales.
  2. 10% More Listings: For context, there are actually 10% more active listings right now compared with last month, yet inventory will show a decline in Sacramento County since the number of sales and pendings has been showing an increase. As real estate “Spring fever” comes into play, the growth of sales and pendings can outweigh the growth of new listings, which is why on paper inventory can show a decline despite more listings actually hitting the market.
  3. The Pending Factor: Pending sales are not counted when calculating housing inventory because these properties are no longer available for buyers. Remember, inventory is a metric to help tell the story of how many houses are for sale on the market rather than ones that are already spoken for (pendings). The number of pending sales in MLS has grown substantially in Sacramento County since January (which is normal), though this year the percentage of pendings to sales is a bit higher than usual. This naturally makes inventory decline since pendings are not factored into housing supply. When we look at the numbers, there are over 2600 active listings in Sacramento County right now, but there are roughly the same number of pending sales. The interesting part is despite having a high volume of pendings for the past few months, sales volume has been sluggish, which is why over time we’ll need to see more pending sales close escrow. Let’s watch these next two quarters closely to see if sales volume gains substantial momentum to make up for a slow Winter or if this sluggish trend persists.
  4. Bonus #4: Let me put this out there. Some home owners have an incredibly low interest rate because of how low rates were over the past two years. This has surely deterred certain owners from selling. Why? Because home owners always have to consider the price of a replacement home that will now cost more to buy since homes and loans are now more expensive. This is doubtfully driving the market, but we should nonetheless consider this as part of the reason why inventory is lower.

Question: Are you finding some home owners hesitant to list their properties? Are there enough listings for your buyers right now? Has it been easier or more challenging to to get into contract lately?

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Filed Under: Resources Tagged With: Appraiser, appraisers in Sacramento, equation for inventory, housing inventory, how to calculate inventory, inventory, less sales, listings, months of housing supply, Sacramento Real Estate, sluggish sales

3 talking points for Sacramento real estate

April 22, 2014 By Ryan Lundquist 2 Comments

Let’s look at three trends today. Instead of only unpacking Sacramento County though, let’s glance at the region as a whole to understand larger dynamics at hand. I hope this will help give you a few more real estate talking points, whether for conversation with friends or clients. Any thoughts?

1)  It’s taking 20% longer to sell properties compared to last year

days on market for sac placer yolo el dorado county - sacramento appraisal blog

It’s not earth-shattering news that properties are spending more time on the market these days compared to last year. It’s simply one of the byproducts of having more housing inventory. Keep in mind 47 days is actually really quick considering sales in March 2012 took more than 80 days.

2) Inventory is up by 110% compared to last March

inventory in sac placer yolo el dorado county - sacramento appraisal blog

The Sacramento Region had just above one month of housing supply for an entire year. Inventory began to increase when interest rates shot up from 3.5 to 4.0% between May and June 2013 (and investors also began exiting the market around this time). It’s easy to get sensationalistic about a stat like this, but remember that current inventory is still VERY low.

3) Sales volume is down 17% from last year

SACRAMENTO region sales volume - by sacramento appraisal blog

Sales volume has been really low lately. The first quarter of 2014 was down 17% in sales volume when compared to the first quarter of 2013 and 25% from the first quarter of 2012. As you can see above, cash sales are an X-factor for why volume has been low, and the market has been feeling the impact. This is true in Sacramento County, and it’s true when looking at the region (Placer, Yolo, El Dorado & Sacramento).

BONUS: The first quarter of 2014 saw a 44% decline in cash sales compared with Q1 2013.

A quick video of where the market is. Watch below or here.

I hope this was helpful.

Sacramento Bee Quote: By the way, I wanted to share that I was quoted in a SacBee article last week entitled Sellers’ market has few sales. That’s always an honor. Thank you to anyone who clicked over from the story or even subscribed. I really appreciate you being here, and I’m looking forward to talking together.

Questions: What stands out to you above? What are you seeing in the trenches of the local market? I’d love to hear your insight. Comments are welcome below.

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Filed Under: Market Trends Tagged With: 2013, 2014, cash investors, days on market, DOM, Home Appriaser, House Appraiser, housing inventory, less sales, low sales volume, months of housing supply, sacramento appraisers, Sacramento Real Estate

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