Sacramento Appraisal Blog

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slower market

The housing market is warm. Not blazing hot.

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The housing market is heating up, but it’s not blazing hot. The temperature so far in January feels warmer than anything. In other words, we’re seeing some spring vibes, but it hasn’t been completely insane. Let’s unpack that today. Scroll quickly by topic or digest slowly. Any thoughts?

UPCOMING SPEAKING GIGS:

1/31/25 Prime Real Estate (private)
2/6/25 She Invests event (TBA)
2/11/25 MLS Meeting TBA
2/12/25 Coldwell Banker EDH (private I think)
2/18/25 Travis Credit Union TBA
2/19/25 NARPM (private)
3/6/25 Yolo Association YPN Event
3/12/25 Windemere Sierra Oaks
3/20/25 HomeSmart iCare Realty (private I think)
4/10/25 Yuba-Sutter Association (details TBA)
4/15/25 Culbertson and Gray (private I think)
5/8/25 Private event (details TBA)
5/13/25 PCAR
6/5/25 Auburn Marketing Meeting
9/26/25 PCAR
11/4/25 SAR Main Meeting

SWEET 16 THANK YOU:

I had an incredible time at my blog party last week. Thank you to the hundreds of people who showed up. I am completely blown away, and I feel very loved.

SELLERS ARE THAWING OUT IN 2025

Check out the blue bar. Spring vibes. The number of new listings in January 2025 already outpaced the number from last January. In short, it’s good to see sellers thawing out. Granted, we are still far below normal levels, but more is what we want to see. We still have four days left in January too.

NEW LISTINGS PEAK ON THURSDAY

By the way, here’s a cool visual to help show the pattern of new listings hitting the market. Thursday is almost always the peak, and Sunday is almost always the low.

PENDINGS ARE MODEST SO FAR

Pendings are lagging a bit right now, and that likely stems from rates still hovering above 7% on average. The number of pendings is not painfully dull locally, but we are slightly below January 2024. A few months ago, lots of people talked about a “Trump bump” ahead since buyers were supposedly waiting to jump into the market after election results, but that hasn’t shown up in the stats yet. This is not a political statement either. More than anything, I don’t buy the idea that the market as a whole will improve with volume unless we see policy change or lower rates. Buyers and sellers need the math to work, which is the most important thing. Ultimately, the month isn’t over yet, but so far, the vibe has been sellers have grown more than buyers in 2025 (which is what 2024 felt like). Check out the green line (2025) from Redfin’s weekly data.

SLIGHTLY MORE MULTIPLE OFFERS

I’ve been watching the percentage of multiple offers for weeks, and we’ve been seeing a small temperature change. Granted, this is barely beyond recent sales, but it is slightly more heat (hence the market being warm instead of blazing hot).

BRO, SOME PROPERTIES ARE GETTING 15 OFFERS

It’s true. Over the past week, there were four properties that had fifteen or more offers. That’s wild competition, right? But we have to step back and recognize these are unicorns in today’s market. Four out of five units were priced under $399K too. Keep in mind just over half of pendings had only one offer, and 84.5% had three of fewer. My advice? If you have a solid offer, consider accepting instead of holding out for something higher (it’s not 2021). Another way to think about this stat is getting 15 offers was about 1% of the entire market this week.

SEEING A SPRING UPTICK IN THE STATS

Preliminary stats are showing spring seasonality. The black numbers below represent the percentage of multiple offers among closed sales for the month of December, and it was on the lower side. The dotted line though is based on January sales so far as well as current pendings, and we’re seeing an uptick (expected for the time of year). Nothing dramatic. If this was 2021, the number would be more like 70% instead of under 45%.

THE WORD ON THE STREET

We don’t have many stats for the spring market yet since it takes a bit for the trend to show up in closed sales, but we do have word on the street, and the stories of today turn into the stats of tomorrow. This is why it’s so valuable to ask people what they are experiencing in the trenches of the market. However, we have to take what people say with a grain of salt too because they might be judging the trend based on their book of business (or what they hope is going to happen) Are you seeing the trees in front of you, or are you describing the entire forest? That’s the question.

Here’s a poll I did on Instagram two days ago, and only a few people said the market was “super hot,” which I think is telling. Overall, “warm” or “mildly hot” is the operative word right now. What I really like about IG polls is I get to see who voted for which category, so it’s like I’m having a massive number of quick conversations with mostly people I know. This isn’t a scientific poll, but I think there is real value here.

And here’s a poll I did on X. Honestly, I’m giving less weight to this one for two reasons. One, X tends to be a pretty negative place (have you noticed? haha). And two, people from all over the country could have voted. The truth is the housing market is very dull in some portions of the country. In other words, the Northeast and West feel different than portions of Texas and Florida. Let’s remember, there is no such thing as a national housing market just as there is no such thing as a national weather temperature. Still though, we’re not in a market where “super hot” was the description.

CLOSING THOUGHTS:

We only have just about one month under our belt so far, and it’s not enough to judge what the entire year is going to be like. The spring market traditionally really starts to heat up in mid-February in a normal year, so let’s see what the market feels like in a few weeks. Of course, what happens with rates will be a huge factor ahead.

Thanks for being here.

Questions: What are you seeing right now in the spring market? Hot? Cold? Warm?

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The problem of giving too much weight to previous sales (or not enough)

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It must be worth more than it sold for in the past, right? In many cases, YES. But sometimes NO. Let’s talk through some things to consider when pulling comps and noticing a previous sale. I find many of these points coming up lately in conversation, so I hope this is helpful.

Here’s some things I keep in mind about previous sales:

1) Context: Previous sales can be powerful sometimes because they help us see how a property has historically fit into the market. In other words, we get to see context. What were the comps at the time of the sale? Here’s an example where a home sold three times at a very similar price position in the market. When I see something like this I can get clues into comps and where this one might fit into the market today. Click thumbnail to see larger image.

2) Unique property: Sometimes when a property is unique though a buyer might have been willing to pay more than what current buyers will pay. Thus a prior sale doesn’t always paint the perfect picture for value. For example, a home in Granite Bay sold for $4.7M in 2013 and then $4.2M in 2018 despite the market showing hefty increases over the years. Thus we have to be careful not to give too much weight to a previous sale while ignoring current comps.

3) Unicorn buyer overpaid: Buyers overpay sometimes – especially if they’re paying cash. I can think of a property that sold at a lofty level a few years back and it’s been re-listed for a while now without any bites. In this case I wouldn’t give any real weight to the previous sale because it looks like it represented a unicorn buyer at the time rather than the market.

4) Appraisal waivers: One thing I’m watching is appraisal waivers. If there was no appraisal on a property and it ended up selling too high, the previous sale likely means very little for value.

5) Inflated & distressed: When a sale took place in an inflated market (like 2005) or a distressed market (like 2007-2009), I tend to give very little weight to these sales. I’m going to look at them and probably even graph them, but I might take them with a major grain of salt.

6) Neighborhood change: One of the things we need to consider is how neighborhoods have changed over time. In other words, it’s possible the market would look at a property differently today than the past. This is especially true with gentrifying neighborhoods, so I better be careful about giving too much weight to older sales.

7) Slower market: Previous sales sometimes remind us the market is slower. I find owners today often expect massive value increases from two years ago, but comps might not be astronomically higher since price appreciation has been slowing. We just haven’t had recent 20% increases like we did in 2013.

8) Not penalizing because it sold too low: If a property sold too low in the past, it shouldn’t penalize the value for today. This is why appraisers have to take a previous sale with a grain of salt and not give too much weight to it. Let’s remember value is found in the comps – not in a previous sale.

CLOSING ADVICE: I recommend paying close attention to previous sales to get clues to understand how a property fits into the market. But don’t get so stuck that you don’t see the most important thing – current comps.

VIDEOS: If you need some background noise, here’s two videos. The first is a presentation to Realtors and the second is a Q&A after a talk I gave to investors.

10 things to tell your clients about the market (or not) – 30 min
Q&A after a presentation I did to investors – 20 min

Questions: What point stands out to you the most? Anything to add?

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7 tips to NOT stress out when the real estate market changes

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Change can be stressful. That’s obvious. I don’t know about you, but I’ve picked up on a slightly stressed vibe when talking with the real estate community lately. We had such an aggressive market for the last couple of years, but now that things are slowing down, it can feel a bit stressful for some. For what it’s worth, I wanted to share a few thoughts for anyone who is feeling edgy right now about the market.

stressed guy - image purchased by sacramento appraisal blog

7 tips to NOT stress out when the real estate market changes

  1. It’s normal for markets to change: This is what we tell our clients, and this is what we need to tell ourselves. Real estate markets are constantly morphing, so we should expect change and plan for it too.
  2. Sellers will eventually catch up to the market: Right now sellers have been lagging behind the trend, meaning they’ve been wanting to price their properties higher than the market will bear. Sellers will eventually catch up to the market though, which will help put sellers and buyers on the same page. Kevin Cooper and Tom Lichtenberg reminded me of this point last week.
  3. Find some optimism: There are always two sides to stats. Sellers might look at a softening trend as a threat, but on the positive side buyers have more opportunity to afford the market and actually get into contract. I’m not saying to turn a blind eye to stats or perpetuate real estate spin, but simply keep things in perspective.
  4. Think about your marketing strategy: When you consider how the market is moving, who are your clients going to be next year? Now is the time to work hard and diversify your clientele if needed. Also, when a market changes, sometimes that means employing different strategies instead of doing the same thing that worked last year.
  5. Keep connecting with people: Business is about people. When we start to stress about market trends, the focus is removed from the most important thing. People. Yes, watch trends carefully, but be sure to let them serve and guide you instead of stress you out.
  6. Try to keep your emotions grounded: The plight of any self-employed person or sales professional is that our emotions are often contingent on how business is going. If things are booming, we feel great, but if things are slower, we feel down. The key is to find a way to stay grounded and put your confidence in something bigger than work. I’d love to hear what you do. I’ve yet to meet someone who does not struggle with this to a certain extent.
  7. Know the context of your stats: Lastly, when a market changes we can often look at stats with tunnel vision rather than the broader picture. For instance, on one hand it’s taking 40% longer to sell a house in Sacramento compared to last year, but four years ago it was taking twice as long than it is now. Additionally, inventory more than doubled in the past 18 months, but it’s actually at a fairly normal level right now.

Three graphs to provide context for the current market:

CDOM in Sacramento Region

Regional housing inventory in Sacramento

I hope this was helpful.

Questions: Which is your favorite point? Any other points you’d add?

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What market value looks like in real estate

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What is market value? Does it depend on who you ask or is there a definitive answer? Let’s take a look at an image below to help illustrate Fannie Mae’s definition of market value – which is what appraisers use in their reports. Knowing how to think about and explain this definition can be really helpful when working with buyers, sellers, and appraisers – especially in a market with many overpriced properties right now. I created the image below, and I hope it’s a helpful visual.

KEY POINT: One buyer might be willing to pay more than anyone, but how much would most buyers pay? If you lined up 100 buyers, what would most of them pay for the property? That’s what the appraised value should represent.

what market value looks like - sacramento appraisal blog - 530

The Definition of Market Value from Fannie Mae: Market value is the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he considers his own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

NOTE: There are other definitions of value that appraisers use for different types of appraisals, but most mortgage finance transactions will use Fannie Mae’s definition of value.

I hope this was helpful.

Question: Any thoughts on stories to share? I’d love to hear your take.

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