Sacramento Real Estate Views
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All Cash Offers Abound
All cash offers from both investors and owner occupied buyers is somewhere between 30% and 35% of the market. Normally, all cash purchases represent about 10% of the market. This makes it tough for any financed first time buyer to purchase a home as, most seller’s will say, cash is king. When offers involve the fewest contingencies of sale the better for the seller.
Sacramento County is seeing a higher percentage of all cash offers as the price for a single family home is lower than in Placer County. Obvious but noteworthy nonetheless. In a previous post (click here) I reported that agents are seeing offers lost on homes after writing them for $35K over list price to offers coming in at $50K over list. We’re all seeing this and there is a a concern among some agents about home values being artificially inflated by the lack of homes to sell and the competition.
That said, we are where we are…embrace it!
Just as in Placer County, Sacramento County had a spike in the available homes for sale in January. As with Placer County, I believe this could be just a seasonal spike as the selling season tends to slow around the holidays.
I would LOVE to see the inventory come up to about 3 months of homes to sell just to help my buyers get into a home. It’s taking an extraordinary amount of time to get offers accepted.
Average Sales Price Keeps Rising
The average sales price in Sacramento County has been on the rise for 13 months with only one month where values dipped down then up again. How high can it go? Depends on supply, demand and interest rates. While 30% to 35% of buyers are all cash, at worst 65% are financed and this represents the majority of buyers.
What we know: 1) Inventory of homes to sell is down 2) Prices are rising 3) A higher than normal percentage of home buyers are buying with all cash 4) the Fed has said they will keep rates low through this year 5) Financed buyers are finding it tough to purchase a home.
I think that sums it up generally speaking.
Thus the 2013 outlook is pointing toward purchasing a home, if you’re in the market to, as soon as possible. What will happen in the near term with values no one can say. I mean, NO ONE can say. There isn’t a soul alive who can tell you what will happen. All predictions on housing by the top economists in the nation in December of 2011 for 2012 were wrong. 100 of the countries brightest economists missed the mark by a long shot, again.
All we know is right now.
I’ve heard it said that the real estate market is being artificially inflated right now. I don’t know if I subscribe to that thinking. If there were fewer seller’s underwater and we had more move up buyers there would be more homes available for sale and yes values could stabilize or increase more slowly.
It’s possible the appreciation that is happening now is a correction in a market that has been undervalued since January of 2009. When it’s cheaper to purchase a home than rent one, as it has been in our region for some time, it’s commonly accepted that the market is undervalued. I believe this correction in values has been accelerated by a lack of available homes to sell and low interest rates.
As appreciation continues, more and more homeowners will be in a position to sell and move up thus increasing the inventory. When the inventory increases, values will begin to stabilize perhaps even settle down a bit. This seems a longer term scenario.
Another possible scenario to increased inventory is if an institutional investor, seeing values beginning to stabilize, decides to liquidate their holdings in the region. This sudden increase would calm down appreciation but it seems as if it would be temporarily until those holdings are depleted.
Of course, all of this is speculation. No one knows what will happen with the market. What are your thoughts? Share them!
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