Tag Archives: appreciation

Real Estate Market Trends – Rocklin, Roseville, Lincoln

trend chart_012014 As we approach the 2014 selling season, I’ve received questions about how this year will unfold compared to the banner year we had in 2013. In a normal market, the main selling season runs from about February through May or June. Last year we experienced a strong market that carried over from 2012. Prices increased substantially, inventory levels were extremely low, and it was common to see homes selling in the first week of being listed with multiple offers; many offers above the asking price.

As prices have risen, more homeowners are now sitting in equity positions. Many wanted to move but sat on the sidelines waiting for the opportunity to sell their home as prices rose. In June/July 2013 interest rates jumped up. That event, and the fact that we were exiting the selling season, slowed market absorption. In the 2nd half of 2013, many owners put their homes on the market after the run up in prices. In many cases, these homes were priced with the assumption that prices were continuing to increase every month as was experienced in the first half of the year. Where does that leave us?

Every area is different. Lower priced homes in Placer and Sacramento Counties continue to see high demand and low inventory. However, homes in higher priced areas are trending toward (or perhaps are already in) what is typical of normal market conditions. In higher priced areas, home appreciation has been very subdued over the last six months. These homes are not seeing multiple offers as they did one year ago, it’s taking much longer to sell those homes, and inventory levels are up.

Don’t get me wrong. I’m not saying the market is declining. But I am saying that indicators point to higher inventory levels in 2014, slower price appreciation, and sellers should expect that it will take longer to sell their home than it did in 2013; unless the home is in the lower priced areas or offers something highly desirable and considered a one-of-a-kind offering. Those owners who are considering selling their home will do well to find an excellent real estate agent who will guide them in pricing their home appropriately. Otherwise, “frustration” may be the word of the day.

Below I’ve included some charts for the 95765 zip code. This demonstrates where we are in the market now as we approach the selling season. If you would like to view charts on other surrounding areas, please visit our website: www.quarantarealestate.com. Click on the Market Trends Reports in the left column. If you have questions about these or other areas, feel free to contact us.  And remember, Real Estate Market Trends are fluid and can change on a dime.
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ANOTHER HOUSING BUBBLE?

New Housing Bubble Coming?

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Another Housing Bubble Coming?

Are we entering another real estate market “bubble?” Some folks I talk to believe that prices have risen too quickly and that it will all come crashing down again.  Recent history will tell us that no one knows what the future holds in this regard.  Pricing in the market is one factor for consideration, but the strength of the market is determined by much more.  Not only can our politicians make new  laws with unintended results, but major catastrophic or world economic events can affect the US real estate market.  Here are some facts to help you decide where we are in the real estate cycle.

While prices have risen dramatically over the last year, they are nowhere near the highest prices that were  seen just prior to the downturn.  Many areas have seen 20%+ appreciation over the last year which is driven by demand.  I don’t expect us to see appreciation continue at that rate over the next year because of several factors but it will be a while before we see equilibrium between supply and demand.

ALL loans available today require documentation of a buyer’s ability to repay the loan.  Lenders require much more information from buyers today before approving a loan.  Long gone are the stated income loans (aka: liar loans) that allowed buyers to merely pull numbers out of a hat to qualify for a home loan (of course, that doesn’t mean they won’t come back).  When I was VP of Sales for Lennar’s Northern California Division, I can’t tell you how many times buyers made loan applications with our “in-house” lender and were declined; only to have the buyer return with a stated income loan approval from another lender.  Hmmm, let me see; did their income go up in just few short days? The point is that loans originated today are more sound and more likely to be repaid than in the past.

Most local market areas have  1.5- 2.0 month’s supply of inventory of homes for sale. A market in equilibrium between supply and demand will have 3-6 months of inventory available at any time.  In other words, if there were no additional homes placed on the market for sale, it would take 3-6 months to sell everything that was currently available.  We are seeing a trend toward equilibrium but we are still in a seller’s market and it will likely be several months before supply and demand are equal.

Short sales and foreclosures as a percentage of total sales are way down.  These sales tend to sell at lower prices.  So one reason that median price has increased is merely because there are fewer short and foreclosure sales in the market.  In addition, this demonstrates that the market is building real strength.

Interest rates are up 1% or more since the beginning of the summer.  This will tend to push home sales toward equilibrium in a seller’s market.  Rates will likely creep up over the next 12 months, however, it is expected that rates will stay relatively low compared to historic highs.

While short and foreclosures sales are down, traditional sales are up. Why? Because the price increases we have seen in the market allow homeowners to sell their homes without credit impairment and in some cases, actually making a few bucks along the way.  And most of these sellers will be new buyers in the market.

While there are many external factors that can affect the stability and strength of the real estate market, there is no evidence, at this time, that would lead us to believe we are in a “bubble” or even close to being there.  As more inventory comes into the market, the rate of home price appreciation is slowing yet demand is still strong.  Barring unforeseen circumstances, there is every reason to believe that we are headed toward a more stable market with reasonable price appreciation and inventory. In other words, we are heading in the direction of equilibrium, not of another crash.

Steve Quaranta
Better Homes and Gardens Real Estate

SACRAMENTO HOME PRICES BY ZIP CODE

 

imagesMedian home prices in the Sacramento metropolitan area continue to rise at a brisk rate; on average 20% over the last 12 months.  If you are interested in seeing what’s happening in your area, read on.

How long will prices continue to rise at this pace? Who knows?  But one thing for sure is this…. It may be a good time to buy a home, but for many it’s a difficult and arduous process.

For sellers waiting to put their home on the market to maximize profit or reduce losses after the market crash, timing the market is usually determined in hind sight.

Keep this in mind if you are thinking about putting your home on the market in the near future……

  • As interest rates rise, buyer’s purchasing power goes down.
  • As prices rise, more homes will be placed for sale on the market.  This will lead to increased inventory and will help to stabilize price and slow appreciation.  In addition, the number of homeowners who owe more than the worth of their property is decreasing, allowing them to market their homes and avoid a short sale which will further increase inventory.
  •  The typical selling season runs from February – May/June.  After June, people settle down and tend to focus on vacations and preparing their kids for school.  August tends to be one of the slowest  months of the year for home sales.

To see what’s happening with median price in your neighborhood CLICK HERE.

If you would like more specific information about home prices in your area, shoot me a quick email.

Steve Quaranta
Real Estate Professional – 20+ years in home sales
Better Homes and Gardens Real Estate
916-276-7653
SteveQ@TeamQ-RE.com