softening fall market

It’s easy to get stuck in a rut of speaking fluently in real estate clichés. While there’s maybe nothing wrong with saying, “The market is ‘on fire'”, or “It’s a good time to buy and sell,” there has to be more depth we can tap into, right? It’s almost like if I asked someone how they were doing, and the person said, “I’m on fire at work” or “It’s a good time to be alive.” Okay, that’s great to hear, but what does that really mean? I want to catch specifics because it’s in the details where I can really know a person. The same is true in real estate. When we step away from vague clichés and begin to speak fluently in current market trends, it can be very powerful. Whether you’re an agent, appraiser, or home owner, I hope you can glean something from this post as you tell the story of the market to clients and contacts, and I’d love to hear your take in the comments below. If you’re not in the Sacramento market, how would you describe your area? Are trends unfolding in similar ways?

CHALLENGE: Share one talking point below with a client or contact today (or include a point in conversation on Facebook).

Two ways to read THE BIG MONTHLY POST:

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

DOWNLOAD 62 graphs HERE (zip file): Please download all graphs in this post (and more) here as a zip file (or send me an email). Use them for study, for your newsletter, or some on your blog. See my sharing policy for 5 ways to share (please don’t copy verbatim). Thanks.

One Paragraph to Describe the Sacramento Market: The latest stats show a couple of things: 1) The market is slowing down as it almost always does during the fall (no surprise there); yet 2) The market is definitely not as slow as it was last year at the same time. For instance, last month in the region it took one day longer to sell a home than the previous month, which shows the market is cooling, but it’s actually taking ONE WEEK LESS to sell a home this year compared to last year. There is roughly two months of housing inventory in the Sacramento region, which essentially means there are only two months worth of houses for sale on the market. This is very low considering last year inventory was at 2.65 months at the same time. This might not seem like a big difference, but the market is actually VERY sensitive to increases in inventory, which is one of the reasons why the market last year felt much slower (and even sluggish) compared to this year. Many times we hear 5 months of inventory is normal, but keep in mind values have declined any time inventory even approached 4 months in Sacramento County over the past 15 years. Anyway, despite inventory being low right now, buyers are not pulling the trigger unless the price is right. In short, Sellers, if you want your property to sit on the market, overprice it. In terms of values, the overall median price in Sacramento County has been about the same for 6 months and the regional market has softened by 2% in recent months. By the way, if you missed my recent post, I gave some perspective on “real estate bubble” conversations, and it’s a very relevant conversation as we see price metrics begin to soften at this time of year (and people freak out about that).

Sacramento County Market Trends for October 2015:

1. The median price has been hovering around $290,000 for 6 months in a row.
2. It took an average of 38 days to sell a house last month (up 2 days from the previous month).
3. Last year at this time it was taking an average of 45 days to sell a house.
4. FHA sales were 28.5% of all sales last month.
5. Sales volume is 9.8% higher so far in 2015 compared to last year.
6. Sales volume was 7.8% higher in Oct 2015 compared to Oct 2014.
7. There is a 1.78 month supply of homes for sale (similar to previous month).
8. Housing inventory is nearly 28% lower right now compared to Oct 2014.
9. The average price per sq ft is 186.5 (7.1% higher than last October).
10. Cash sales were only 15.5% of all sales last month (18.5% last year at the same time).

NOTE: The graph below shows an increase in the average price last month, but keep in mind the median price and average price per sq ft were flat (this reminds us to not isolate one metric and make it all about that one point).

Sacramento Regional Trends for October 2015 (Sac, Placer, Yolo, El Dorado):

1. It took 7 less days to sell a house this Oct compared to Oct 2014.
2. Sales volume was up 5.5% in Oct 2015 compared to Oct 2014.
3. Sales volume for the year is up 10.3% compared with 2014.
4. The median price at $326,000 is up 6.8% from last year, but down 2% from the past few months.
5. It took an average of 42 days to sell a house last month (1 day longer than last month).
6. FHA sales were 24.5% of all sales in the region last month.
7. There is 2.06 months of housing inventory (same for past 3 months).
8. The average sales price is $364,829 (7.7% higher than last year, but down slightly from $370K a few months ago).
9. FHA sales volume has increased by 30% in 2015 compared with 2014.
10. Housing inventory is nearly 22% lower right now compared to Oct 2014.

Placer County Market Trends for October 2015:

1. Sales volume was the same in October 2015 compared to October 2014.
2. Sales volume for the year is up 14% compared with 2014.
3. The median price in Placer County is $397,500 (it’s been fluctuating up and down between $390-400K over the past 6 months).
4. Cash sales were 16.8% of all sales last month (very normal level).
5. It took 47 days on average to sell a house last month (1 day longer than the previous month month).
6. Last year at this time it took 7 days longer to sell a house.
7. FHA sales were 18.6% of all sales in Placer County last month.
8. There is 2.26 months of housing inventory (18% lower than last year).
9. The average price per sq ft is 201 (3.6% higher than last year at the same time).
10. REOs were 2.4% of all sales and short sales were 3.6% of all sales.

I hope this was helpful. Thank you so much for being here.

Quick Pricing Advice:

1. Remember the market isn’t as soft this year as it was during the same time last year, but we are still seeing values cool during the fall.
2. Talk about the difference between actives, pendings, and neighborhood sales on your listing appointments and in your appraisals. If listings are selling for less than sales from the Spring market, that shows us the market has changed (and we need to price accordingly). See How to use a CMA to gauge the temperature of the market for a fantastic way to quickly explain what the market is doing to your clients.
3. The market has been very price sensitive all year, which means buyers are not biting on overpriced listings despite inventory and interest rates being relatively low.
4. Remember there are many markets within a market, so price according to the neighborhood market rather than county-wide trends since your neighborhood might be more or less aggressive compared to the entire county.

DOWNLOAD 62 graphs HERE (zip file): Please download all graphs in this post (and more) here as a zip file (or send me an email). Use them for study, for your newsletter, or some on your blog. See my sharing policy for 5 ways to share (please don’t copy verbatim). Thanks.

Questions: How does the market feel to you this year compared to last year? What are you seeing out there? I’d love to hear your take.

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