Here we are at the mid point of August. School is starting for many children which means back to a more structured and settled time of year. This is usually the last hoorah for home sales as many families take houses off the market and focus on the regular routine.
On August 10th, we have a snapshot that shows that there’s been some substantial price reductions (202). There’s still new inventory that is coming to market (315). There’s still strong buyer demand with 259 getting into contract.
|Back on Market||72|
There are still plenty of buyers who are buying. There’s still an influx of buyers from other locales (the Bay Area still is a strong influencer of our market), and first time buyers continues to be a force. What’s new is that I’m seeing renters who are becoming buyers out of necessity because they’ve been given 60 day notices from their landlords who are selling their rental properties.
William got his 60 day notice just days before he was heading off to a vacation in Singapore with his family. All of a sudden, summer plans had to change. He quickly moved from vacation mode and got to work reviewing his options. He considered renting again and realized that rents were increasing substantially with a decrease in rental inventory and so he decided to buy. Fortunately, he knew what he wanted, was quick to get the lender the information needed to qualify, and we were able to get him into a home with days to spare even with a bidding war on the property! He moves in today!
The inventory situation is NOT getting any better unfortunately and in fact, one might argue that it’s continuing to get worse. Check out the following graph. The light green represents the inventory of homes for sale. There’s been a dramatic decline with 1,000 fewer homes available for sale to buyers just over the course of the last 3 years. Experts predict that we will be suffering with low inventory for possibly 2-3 more years!
Another point worth noting for those buyers who think they should just wait it out…the prices keep going up rather sharply. Five years ago, the median price of a home here in Sacramento was $188,000 and now it’s about $356,000. That’s almost a 90% increase over 2012!
|Months of Inventory||1.3||1.6||2.1||0.7|
|Median Home Price||$356,000||$335,000||$285,000||$188,000|
The Sacramento region is trending well for employment which is a huge driver for continued growth. Here’s the Bureau of Labor Statistics Economy Summary for the Sacramento Region. Then if you’re so inclined to compare it to other regions, you can find their reports here.
With a strengthened economy, demand for homes for both renters and buyers here in the Sacramento Region continues to outpace the supply. That’s good for Sellers who benefit from strong appreciation, but it’s also good for Buyers who buy with a fixed rate mortgage that locks in their housing stability and expenses for the long term.