Sacramento Real Estate Views

Average Sales Price Declines In Sacramento Real Estate

Down 7.6% Over The Last 30 Days

With exception to last month, the average sales price in Sacramento had been relatively steady but over the last 30 days it has taken a bit of an unexpected dive.  We haven’t seen an average sales price under $160K since the downturn began but here we are at an average sales price of $159K for the month of September.

I find this a little unusual as sales are up for September and in fact, sales were the higher last month than they have been in a couple of years.  Sales were up 10.7% over the last month, 57.9% over the last 12 months and 52.6% over the last 15 months.  For prices to decline at a time when sales are higher than they have been in years just points to a unsettled market.

Normally, when prices and interest rates are this low, sales are as high as they have been since March of this year and inventory levels are below 3 months of homes available for sale at the current sales pace, you’d expect prices to edge up a little but they are not.

There are a lot of positive indicators in the Sacramento real estate market right now but is it time to buy?  I’ll be writing an article on that topic later today so stay tuned for that.

Months Of Inventory Available Remains Stable

The selection of homes for sale has been anemic all year long at below 3 months of homes for sale at the pace of sales for that month.  The decline in available homes for sale is easy to explain.

1)  The banks have slowed the foreclosure process down to a snails pace for many reasons so we haven’t had the level of bank owned homes coming on the market as we’ve had in past years.

2)  There is a very high percentage of mortgages underwater in the Sacramento region.  While there are a lot of people doing the smart thing and walking away from these loans, many more are not.  Those who are not walking away are essentially trapped and can’t move so those homes aren’t coming on the market.

Both of these factors are creating a bit of an inventory shortage in the area.  Taking into consideration that the recent increase in foreclosure actions by the banks probably won’t create an inventory increase by much, I think we can expect the current inventory levels to persist providing things stay as they have this year.

Summary

The Sacramento real estate market is still, and will be for some time, in a place where downward movement is possible.  While I believe that the market could continue to decline further, I don’t think we’ll see a dramatic trend downward like we saw from 2007 to 2009.  To presume, definitively, that one knows which direction the market will go is foolish.  My assessment is based on the last six months of home sales results.

Most of this year has been relatively stable with not much movement in either direction.  There have been subtle changes but mostly the Sacramento real estate market has been bouncing along in a narrow range. Six months is enough time to have established a trend in the Sacramento real estate market and the trend we’re seeing, as far as real estate sales is concerned, has been flat.

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Tags: sacramento homes for sale

Sacramento Real Estate Home Sales Report

Average Sales Price Increases 2 Consecutive Months

While the inventory of homes for sale continues to dwindle, it looks like we could be seeing a slight increase in the average sales price in Sacramento County.

From June to July, the average sales price increased 5.9% and from May to June we saw 1.08% increase in the average sales price.  While this is positive news, we are going into the slower time of year for real estate sales and this trend could easily be short lived.

 

Year over year changes aren’t positive but who knows, this could be the beginning of the turn in sales prices for Sacramento County.

Number of Homes For Sale Continues to Decrease

Since September/October of last year, the total number of homes for sale has decreased significantly.  It’s clear that the banks are metering out the foreclosures at a much slower pace than in 2008/2009 as the process for getting a foreclosed home through their systems has gotten longer due in part to the “robo-signing” debacle.  Additionally, the staggering amount of underwater mortgages has those who would like to sell holding off.  With the tough economic times, first time homebuyers are questioning whether or not purchasing a home is a sound idea.

Letting these foreclosures come on the market over time benefits everyone as a wave of them coming onto the market, especially considering that prices are still largely declining, would be crushing to home values as well as to the banks who would recover less from the distress sales.

That said, investors would have a field day.  Every market benefits someone.

The downside to the slow approach though?  The housing crisis will be with us for many more years to come and values, due to low demand, will either bounce along the bottom of the market or continue to go down.

The interesting thing about this report is that for as high as the pending sales are going, a 61.4% increase over the last year, you’d think that the sold numbers would reflect an increase higher than just 10% over the course of one year and a 15% drop in one month.

The mortgage market is a mess right now and getting financing has never been tougher in my career.  That could part of the reason for the low sales numbers.  I’d like to see the cancellation numbers.

Are you needing to purchase or sell a home in the Sacramento area?  Please call, text, email or simply fill out the form below and I’ll get right back to you.  We are short sale experts and can negotiate you to a successful settlement of your home sale with your lender.  Please call if we can help you.  All services and consultation are free and completely confidential.

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Tags: sacramento homes for sale, sacramento real estate

The Myth About Sacramento Real Estate

Oh Really?

This market is very difficult for Realtors at the moment.  Because I’m compensated for selling a home, some people think that this is my motivation behind my every statement and that I’d do or say anything to sell any home.

While I understand many of my peers say and do things to motivate a buyer or seller to work with them, I don’t operate that way.  I have to sleep at night and I know the only way to make money is to make money for others.

I can’t, and neither can anyone else, do that by misleading or being otherwise dishonest about a given property or the real estate market as a whole.  You don’t last 10 years in this industry by being dishonest.

I have, in my career, tried to talk people out of buying a piece of real estate because I didn’t believe in my heart that it was a good idea to the point of refusing to represent them in the transaction.

Those decisions have served me well.

I let the numbers speak for themselves and then try to interpret the market direction in the short term.  With all of the variables that can happen over the long term, that’s all anyone really has.  Short term market analysis.

The Myth About Our Market

There is a myth about our market that I’d like to address.  This particular myth is seen on the national scene but you must remember that real estate is hyper-local and what applies to the Oklahoma market may not apply here.

The Myth – The Market Is Over Saturated With Homes For Sale

On the national scene, I continue to hear this piece of news.  There are enough homes on the market to last the next 5 or 10 years, blah, blah, blah.

How we judge how many homes are on the market is by how many “months of inventory” there is for sale at the current rate of sales.  There is two ways to look at it:

1)  Months of inventory based on homes that have actually sold

and

2)  Months of inventory based on homes in pending sale

Quick Stats – The following graphs show just where we are today regarding months of inventory in all areas of Sacramento county.

Months of inventory available for sale based on pending sales.

Months of inventory for sale based on sold homes.

A “balanced” market, favoring neither buyers or sellers, is 4 to 6 months of inventory.  If we are looking at the sold numbers, we have 3 months of inventory on the market for sale.  By the pending sales indicator we have 1.8 months available for sale.

A buyers market exists when there is more supply than demand regardless of the months of inventory. A sellers market exists when there are fewer homes on the market than demand regardless of months of inventory.

In our market right now I’m seeing multiple offers on anything that is a quality home yet we are not seeing a corresponding increase in values but in fact values are still going down.

Sacramento county lost almost 8% of it’s overall value in the last 6 months.  Some areas of Sacramento county have lost more than others.

To this, I’d say that although there is demand for the number of homes on the market, buyers are picky and willing to wait to get what they want.  There are homes that are sitting only because they are considered undesirable to the majority of buyers or they are over-priced for the market.

Are you looking to purchase a home in the Placer or Sacramento county region?  If you’re looking for a Realtor to help you please call, text, email or simply fill out the form below and I’ll get back to you promptly.

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Tags: sacramento homes for sale

Number Of Homes for Sale Increases

3 County Area Inventory Jumps Up

We’ve been talking about this for quite sometime but I wasn’t sure, and I’m in good company, that we’d begin to see the number of homes for sale in Sacramento, Placer and El Dorado counties increase.

It looks like the recent slow down in sales since the beginning of the year has helped there be more homes available for sale.

Wouldn’t know it as there are still multiple offers flying everywhere.  The decrease in bank owned homes and the resulting increase in short sale homes available is making the “regular real estate” and bank owned homes very competitive.

Now that the governor has signed a new tax credit into law, I would expect that sales won’t suffer depending on what interest rates do.  Interest rates are above 5% for the first time this year and one year ago were around 4.75%.

Most sources I read think home sales in the Sacramento region will slow over the coming year barring additional intervention from the government or banks who suddenly get it and start working to get short sales processed more quickly.  More on that later.

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Tags: homes for sale sacramento rocklin roseville, sacramento homes for sale

Inventory Of Single Family Homes Continues Decline

3 County Area at Lowest Level in Years

According to Metrolist Services, Inc., there are only 5403 detached, single family homes currently available for sale in “active” or “active short sale” status’ in the Sacramento, Placer and El Dorado counties area.  This is down from around 14,000 homes for sale at the same time in 2008.

This is the lowest level of detached, single family homes for sale that I’ve seen since beginning to track this type of information 8 years ago.

Average Sales Price Increases

When comparing the average sales price in January to December, we see an increase of 13% in the 3 county area.  While that may seem like a lot of appreciation, there is evidence that this level of appreciation will not last in the Sacramento region and that a reversal of this trend may occur.

Information from several sources seems to indicate that the current housing “recovery” seems to be very dependent on government based incentives/programs and some pundits believe that when these go away (if they do) and interest rates rise (which they are) that the housing market nationally will see another dip in values.

Another Housing Crash?

Most of the Realtors I speak with are so tired of this market and many have thrown in the towel.  The government intervention has perpetuated what most thought would be over by now.  But this is where we are so now what?

There are many indicators that there is another mini crash on the horizon and that values have yet to hit bottom.

More Foreclosures?

Yep, more foreclosures.   There seems to be, from what I’ve been studying, at least two more layers if not more of foreclosures to come from the following sources:

1)  We have more mortgage resets. Apparently, someone was still selling negative amortization loans or 5 year ARM’s that have yet to reset.

2)  Just giving up. Some are seeing a housing market that will not be recovering for the next 10 years.  While I think that’s a little extreme, we’re in a stand still for the next 5 years at least in the Sacramento region depending on what price range your home falls into.  It has made owning your own home look like it isn’t the great investment it once was.  People are walking out on their homes and renting.  For some, it looks like a better financial decision.

This could translate into more homes available for sale which will be exacerbated by:

3)  Interest rates are going up. While interest rates bounce up and down in every moment, they have been kept artificially low by the Fed’s purchase of mortgage backed securities.  That program will soon be gone as well and economists are predicting mortgage rates above 6% by year end.

4)  Tax credit is expiring. On April 30th, if you’re not in contract on a home purchase, the tax credit will no longer be available to you.  If you are in contract and you don’t close by June 30, the result will be the same.  Some believe based on the November demand for housing which declined that buyer demand after April 30 will wane, reduce sales and inventory of homes for sale will increase driving prices lower.

More inventory, lower demand is the prescription for lower values.

Who Knows?

All of this is speculation, to be sure.  If the “experts” really knew what they were doing, we wouldn’t be in this mess in the first place.  There could be a knight on a white horse coming to recover the country from what it’s gotten itself into…ya think?!  Not so much.  For now speculation is what we’re left with.

And of course blog fodder!

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Tags: sacramento homes for sale

The Foreclosure Wave Is Coming

Banks to Release “The Shadow Inventory”

Through moratorium after moratorium, it appears now that the wave of foreclosures that we’ve heard are out there will be coming on the market over the next 60 days.  An article of the front page of the Wall Street Journal, “Banks Ramp Up Foreclosures” alludes to just that.

Chase, B of A, Citi and Wells are preparing to release the homes that have been foreclosed on over the last 6 months or more to the open market.  Let’s hope there is something less than reckless abandon in this release.  Home values in the Sacramento/Placer counties area could be severely impacted by a less than restrained approach.  The doomsayers are having a field day with this one.

Delay Rather than Prevention

Is there really anything that can hold off foreclosure other than a healthy economy?  I was at a party last night and listened to an appraiser who believes that there is nothing at this point that can be done to prevent the crushing wave of foreclosures from coming on the market in the coming months.  “The banks have to get these off their books”.  That may be more true than he knows.

(Here is something from the blogosphere..can you say “National Moratorium”?  That should give the government plenty of time to take over all the banks rather than just a few!)

With increased scrutiny by the goverment, the banks have to get healthy.  I read this week that the 24th or 26th bank of the year has failed.  While some of the chaff will be shed during an economic downturn, that seems like an excessive number of failures in such a short period of time.

What Does This Mean to You?

If you’re selling a home in the Sacramento area right now, price it to sell and be done with it.  If the wave that looks like it could be coming does indeed materialize, you’ll get a better price now than you will in 3 months.  More supply  means less demand and lower prices.  Simple economics.  The sharks are circling!

If you’re in the market to buy at the moment, you could either hold onto your hat and sit tight hoping that values will further deteriorate or buy now thus assuring yourself a home at prices not seen in the region since 2000 or earlier (depending on where you’re shopping).

I never like betting on what might happen.  Too much luck involved in that.  No one knows what will happen in the next 60 days but we sure know what’s happening right now.  It looks pretty good if you’re buying.

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Sacramento Average Sales Price Increases

Sales Prices Increase for the Third Straight Month

For the third straight month, the Sacramento real estate market is showing signs of stabilization, even if artificially.  Sales of existing homes has increased, average sales prices have increased as well and the inventory of homes for sale has decreased.  However there is one lingering question:

What will become of those homes that have been foreclosed on but are not on the market?

According to an article in the San Francisco Chronicle, only 30% of recently foreclosed homes have been listed for sale.  RealtyTrac.com estimates that there are 80,000 homes in California alone that are sitting there, vacant and not on the open market for sale.  This has created an “artificial” stabilizing of the Sacramento real estate market.

Why?

There could be several reasons why they “shadow inventory” is out there.  It could be for accounting reasons, waiting to find out what Washington will do to bail out the troubled assets or controlling the inventory prevent further price deterioration.

I know that releasing all of these homes on the market at once, as I’ve been saying since last October, will create a glut of inventory that will crush values in our region.  With prices going up, why not let them sit there, control the inventory and drive prices up?  This would be one of the best financial decisions the banks have made in this mess.

Freddie & Fannie

I’ve heard recently from several sources that Freddie Mac and Fannie Mae will begin releasing some of their inventory to the market very soon.  A few listing agents that I know have said they have been told that there will be more homes coming to them.  Beyond that, what will happen to that inventory is anyone’s guess. (I’m getting tired of guessing!)

For now, I guess we should be grateful that the Sacramento market appears to be stabalizing even if it does look either a) short lived or b) artificially driven.  Time will tell.

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Tags: sacramento homes for sale, Sacramento real estate market