After a booming 2013, the Placer County real estate market has been somewhat subdued so far this year. While actual sales are down each month this year compared to 2013, the larger impact has been the increase in available homes for sale.
In July 2013 there were 930 homes available for sale in Placer County compared to 1454 in July 2014. Closed home sales were at 583 in July 2013 vs. 528 in July 2014. Perhaps the good news is that pending sales were up with 488 home gone pending in July 2013 vs 586 homes pending in July 2014. The real estate activity in Rocklin, Roseville and Lincoln is also in line with Placer County.
The pendulum is always swinging and what I believe we are seeing is a somewhat typical transition to a normal market. 2013 was so strong that it is reasonable to see the pendulum swing in the other direction. In fact, it’s probably a good thing when you think of the alternative being a run-away market with prices escalating and pushing us into another bust cycle too early.
Of course, all this data is generalized. Lower priced homes have maintained momentum better than higher priced homes, as is to be expected. In addition, the change on January 1, 2014 in the maximum FHA loan limit (dropping from $580,000 in 2013 to $474,950 in 2014) took a hit on home prices mostly in the $500’s.
To further challenge the market, many home sellers expect to be able to sell their home for more than the neighbor’s home that sold earlier this year. While this may be appropriate in the $250K price range, we have seen little or no price appreciation this year in the $400,000+ market in 2014. So these homes hit the market overpriced and ultimately the prices must be reduced to market level. It doesn’t necessarily mean that home prices are declining, but it does infer that if you want to sell your home in today’s real estate market, you must price it using good comparable properties and not shoot for “pie in the sky dreams.”
The remainder of 2014 will give us a good idea of how the selling season will take off next year. I expect that we will see sales pick up over the next few months and will likely drop off over the holidays. By February 2015 I expect to see inventories start to drop again and that we will see marginal appreciation next year. The one wild card is whether or not interest rates stay low. A 1% increase in interest rate will put pressure on home values since this will push buyers into lower priced homes.
Hope this gives you an idea of where our local real estate market trends are heading.
To see charts for Placer County as well as Roseville, Rocklin, and Lincoln, please click on this link: Real Estate Market Trends for Placer_Rocklin_Roseville, Lincoln