How did the real estate year begin in Placer County? What about the entire regional market in Sacramento? Let’s take a good look today so we can better understand how things are moving and how to explain trends to clients.
Longer on purpose: If you’re new to subscribe (thank you), know that twice a month I break down the trends so we can better see the local market. Most of my other posts are general enough to apply anywhere in the United States. Is your market similar though? I’m curious.
Two ways to read this post:
- Scan the talking points and graphs quickly.
- Grab a cup of coffee and spend a few minutes digesting what is here.
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PLACER COUNTY:
1) The median price saw a dip in January (which is normal):
The median price cooled in Placer County, but as you can see in the graph above, it often cools off toward the latter part of the year and the beginning of the year. The seasonal market is a reality, and it’s important to consider what the market typical does during different seasons of the year.
2) It took an average of 68 days to sell a house in January:
Last year it took 58 days to sell a house in January, and this year it took 68 days to sell a house (a 17% increase). When it takes longer to sell, it’s a sign that the market is overall slowing down. It’s actually a good thing for properties to take longer than just 30 days or so to sell because it evens the playing field and slows down rapid appreciation in value. Remember though that well-priced properties are still moving quickly (and even receiving multiple offers). At the same time, buyers are not quickly pulling the trigger on overpriced listings or properties with an inferior condition or adverse location (unless priced correctly).
3) Monthly sales volume was just about the same as last January:
Monthly sales volume in January was virtually identical to last January. Sales volume tends to hit a low point in January, and that’s exactly what happened again this year.
4) Monthly inventory increased in January (not a surprise):
Monthly housing inventory has been flirting with 2.5 to 3.0 months for the past year in Placer County. Last month inventory shot up to 3.16 months, which means there are 3.16 months worth of houses for sale on MLS. However, this is a weak figure since it is calculated by dividing the number of current listings as February 1 by the number of sales last month. Since there were very few sales last month, this actually means there really aren’t very many listings right now (not yet, but they are starting to come as the spring market unfolds). As you can see, the higher the price, the more inventory there is.
5) Layers of the market at work:
I like this graph because it’s a beginning to help show there are many different “layers in the market” so to speak. It’s never just about supply and demand. There is so much that goes into driving the market.
PLACER COUNTY SUMMARY: Stats for January showed just what was expected. The median price softened (which almost always happens in January), sales volume was just about the same as last January, it took longer to sell compared to the previous month, and inventory increased. The market is bound to feel more competitive to a certain extent because of lower interest rates, but sellers must remember to price according to this market instead of the very aggressive market in 2012 and 2013.
SACRAMENTO REGION:
1) Comparing Sacramento, Placer, and the Region:
It’s easy to get so focused on data from one county or neighborhood that we lose sight of the big picture. What are values doing in the overall regional market? When we take a wider look with far more data, we can sometimes get a better sense of the trends. Remember of course that not every neighborhood, price range, or property type is experiencing the same trend.
2) The regional median price took a dip last month (normal):
Sometimes people react with fear when they hear prices softened at the end of the year and beginning of the year, but that’s a very normal part of the real estate cycle. The market as a whole is still definitely slowing down, and we’ll watch that trend, but a slowness during this time of year was to be expected. Keep in mind there are almost 3000 pendings in the region right now, which represent more sales in coming months. It’s also normal to see a high volume of pendings right now because the spring sales spike in March happens because of all the listings that got into contract in January and February.
3) It took 65 days to sell a house in the Sacramento region:
On average in January it took 65 days to sell a house. Last January it took 53 days to sell a house, which means it took 22% longer this year to sell.
4) Monthly inventory is now at 2.9 months:
Right now housing inventory is at 2.9 months, which is slightly above where it was last year at the same time at 2.7 months. Since there is more data to consider for the regional market, it really helps show the way the market works: The higher the price, the more inventory there is.
5) Layers of the market at work:
Just as I shared for Placer County above, here is a graph with different “layers in the market” so to speak. There is so much that goes into driving the housing market.
SACRAMENTO REGIONAL MARKET SUMMARY: Stats for January were not a surprise at all. The median price softened, it took longer to sell this January, and housing inventory increased. This is usually what happens with January stats.
I hope this was helpful.
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Questions: What are you seeing out there? How does the market feel to you? Anything you’d add?
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