In Sacramento It’s Fast Becoming a Sellers Market
The Sacramento Real Estate Market has done a 180 in recent years and is transitioning from a buyers market into a sellers market. Paul Anderson has had his eye on a nice brick 3 bedroom home in Carmichael, it’s got everything he’s ever wanted – except the right price. The single-story home on Linda Lou Drive was offered at $299,000, which Anderson’s realtor Becky Lund said was “well-priced,” for the Sacramento Real Estate market where inventory has essentially dried up this season. To have any chance of getting to the closing table, he would have to go in at least $320,000, his agent told him. The price was well above what he’d be comfortable paying so he didn’t even put in an offer.
MEDIAN HOME SALE PRICES HAVE STEADILY RISEN IN RECENT MONTHS, WITH THE RESALE PRICE FOR A SINGLE-FAMILY HOME IN SACRAMENTO COUNTY HOVERING AT $310,000 – REPORTED CORELOGIC.
This isn’t the first time Paul walked away from a deal because the price was too high. His ideal price point is around $300,000, a figure that is shared with over 80% of Sacramento area house hunters, say local real estate experts.
“The lower the price point, the hotter that competition is,” says Pat Shea, president of Lyon Real Estate. “Below $350,000, there’s only 1.3 months of inventory. A typical seller’s market is below four months.”
Boomerang Buyers Compete With Millenials in Sacramento Real Estate Market
As the economy has improved, demand for homes in Sacramento has skyrocketed, driven largely by demand of folks who lost homes during the recession that are looking to buy again. At the same time, these “boomerang buyers,” as they’re known in the Sacramento Real Estate market, are also competing with millennials – those in their 20s – who often get financial help from family. Both sets of buyers are drawn by historically low interest rates, improved wages and job security. And are competing for the same properties.
The Carmichael home in question incidentally sold for well over it’s asking price, according to listing agent Cheryle Ackerman Griffin. She said the property received nine offers after just three days on the market. Eight of them were above the asking price.
“It’s a coveted home,” said Ackerman Griffin, who refused to disclose the final contract price. “It’s in a first-time homebuyer price range, in a nice residential neighborhood. That’s harder to find.”
Sacramento 10th Hottest Real Estate Market in The Nation
Sacramento was recently listed 10th in the nation’s hottest residential real estate markets, according to the National Association of Realtors. Median home sale prices have been on the rise in recent months, with the resale price for a single-family home in Sacramento County peaking at $310,000 recently – reported CoreLogic
Prices have risen steadily driven by low inventory because there are simply fewer people selling. Jeffrey Michael, an economist at the University of Pacific, attributes this condition in the market to a “decline in mobility” since the end of the recession. The real estate market is red hot right now and is not expected to slow down whatsoever in 2017.
“You may have your nose above water, but you’re still not in that position to move up into another home,” said Michael, referring to the homeowners who saw their home values drop as the real estate market crashed in the late 2000s. “That’s why people are cautious. This might prevent people from listing their home.”
Buyers Turning to New Construction During Feeding Frenzy
Despite the extended period of leaving the nest (this generation of home buyers has stayed an average of 4 extra years at home compared to the generation which proceeded it), millennials are beginning to settle into home ownership – with a loan or down payment assistance from the bank of Mom & Dad. Parents understand all to well the urgency of buying while prices and interest rates are low. However in contradiction – there has been a steady rise in demand for affordable homes in the Sacramento Real Estate market and competition has been fierce.
Expect a rise in sellers overbidding and then feeling buyer’s remorse. 2017 will tell for sure whether this feeding frenzy dries up. The lack of resale inventory has potential buyers turning to new construction. Taylor Morrison Sacramento has tripled in size over the last two years. In 2014, they had three communities. In 2017 they will have 16. It’s an indicator that frustration-less buying has drawn people who feel their options are limited in the resale market. Median sales price for homes in the resale market have risen 10,5% from $280,000 in 2015 to $309,500 in 2016, according to CoreLogic.