What’s happening in the market?  We’re in March and it’s got a different feel this year than last year.  There’s a frenzy of buyers out there who are ready to buy NOW!  There’s only a small problem holding them back…a dearth of houses to purchase.  The numbers don’t lie.  In January, we saw a 26% drop in houses for sale while we’ve experienced a 5% increase in homes sold compared to last year.  Now, to be clear, this is the picture in the tri-county area (Sacramento/Placer/El Dorado) for houses under $500k.  The data hasn’t been updated for February yet, but we’re experiencing more of the same. The word from the Fed is that interest rates are going up probably as soon as this Month.  The story is a little different above that price point (which I will highlight below).

Interest rates right now are:  FHA 4% and Conventional 4.5%.

Do you want to know what this looks like?  Here you are, the newly minted Buyer-To-Be and your bank just approved you and your honey for $400,000. Woohoo!  You’re stoked that you get to do more than window shop which you’ve been doing on Zillow and Redfin for about a year now. With your trusted Realtor you go out into the wild to find your dream home, your castle, and your sanctuary.  This quest will manifest into one of the largest financial decisions you’re likely to make (until you sell and buy another)! No small endeavor.

This pinnacle decision straps you onto an emotional roller coaster as you walk-through home after home.  You find that the in-“person” meeting with a home doesn’t always resemble its better online image. You begin to wonder if you’ll find your perfect home. And then unexpectedly, you fall in love. You walk through the door and you know, just know that this is the ONE!  You can see the way you’re going to set up your furniture, where you’re going to sit to sip your morning cup of joe, and what it’s going to feel like when your family and friends gather at your new house for big get-togethers.  

You look at your agent and ask, “Do you think they will take $390,000 for it?”  Your agent who will know the comps before they answer that question, will tell you that if market value is $400,000 that there’s a good chance you’ll be competing with other offers for the same house and it may also mean there will be offers over $400k.  Such is the market we’re in!

Here’s where more emotions come into play.  Desire, competition, and determination may take you off course.  Use your Realtor to keep you focused on aligning your goals with the process. With your submission of a robust offer of the best price and terms, you stress out while you wait for the Seller to decide. Sellers, with the help of their agents, are going to be looking for the best offer.  There’s often a pecking order of better funding options with cash being a strong suitor.

When there’s multiple offers, there’s only one offer that can buy the house so there are going to be some disappointment if yours wasn’t the one chosen.  Take heart.  It’s not personal.  You need to understand that the market moves fast.  That homes that are priced well are going to be desired by more than just you.  That you will be disappointed by a lost offer or two (possibly more).  You need a good Realtor who is willing to play hard and who knows ways to improve the odds of your offer being the accepted one.  The strategies are not going to work all the time of course, but doing the right things over and over has a higher probability of a successful outcome.  Offers are getting accepted and then you’re over-the-moon, happy!


Note:  Houses over $500,000 are taking a bit longer to sell.  Here’s my own observations.  There are lots of Baby Boomers and older who are downsizing because their kids are gone or because they just want a smaller house.  Remember that the Baby Boomers were a LARGE group of people and that sizable chunk made economic and social dents in the fabric of society.  They move in big numbers. The upper end of the market above $775k here in the Sacramento area is almost alway a Buyer’s market which means that there is more inventory giving Buyer’s more choice.  These houses are still selling too though they may take a little longer.