Low Inventory Backfires on the Sacramento Housing Market

With such low inventory in the Sacramento housing market this spring, buyers may face multiple offers.

Low inventory in the Sacramento housing market tends to generate multiple offers for the super desirable homes but there can be unintended consequences for sellers. Now, even homes that are not super desirable or maybe have some sort of drawback that makes potential home buyers pass it by are receiving more than one offer, as compared to the slower activity in the 4th quarter of 2015. But this year’s start on the Sacramento housing market is very different from last year’s. What is making the difference in the low inventory this year is the low number of comparable sales available for an appraisal.

Of course, this is dependent upon area and the individual micro markets but if an agent, for example, bases sales on the last 6 months, predicting an upward swing will carry the momentum, an appraiser will use only the last 3 months. That means a February appraisal will use comps from November, December and January. Our January inventory is 27% less than our inventory from January 2015, which was mind-blowing low to start with. Low inventory can drive higher prices as buyers outbid each other. However, not every home will appraise if the number of comps available in that neighborhood are very low.

You can already see this formula at work in the median sales price in our Sacramento Housing Market, which has now dropped to $282,000. It has basically held steady from last May, around $290,000, jumping to $296,000 in December, but our January median home price has plunged by 5%. Our pending sales are rising due to the low inventory but will those homes appraise at value? What happens when pending sales outnumber the homes for sale?

Sellers sometimes don’t realize that February sales will be based on Nov-Jan comparables, and if those numbers don’t add up, it doesn’t matter which way the market is moving or how much a buyer will pay if the home won’t appraise. You can’t go to Zillow, pluck random sales and hope an appraiser will use those same numbers because they are probably too old.

Now, more than ever, you need an experienced Sacramento Realtor to help you navigate the market and to determine an appropriate course of action for you. There is a profit for sellers in a Sacramento housing market with low inventory, but it is all dependent on marketing strategy, negotiation skills and the last 3 months of comparable sales. You probably won’t find a more experienced agent than Elizabeth Weintraub. Call today at 916.233.6759.