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Has Your Sacramento Home Price Increased by 30%?
In a conversation with my financial advisor yesterday, she asked if every Sacramento real estate transaction has its share of problems or if it just seems that way. She recently sold her home and bought a new home, so she’s had a little first-hand experience. The answer to that question is yes. Your agent might spare you all of the unnecessary details, but almost every real estate transaction has some glitch pop up. Part of the problems are fueled by the parties themselves: the sellers and buyers. Part is just due to the new climate: the post-Bubble real estate climate, without tossing in limited inventory and rising rates. And newspaper headlines don’t really help.
It’s not that the newspapers are wrong, it’s that people don’t read newspapers. They scan the headlines, believe they have digested the entire story and move on to other things. We live in an Attention Deficit Disorder society.
The headline in the Sacramento Bee story a few days ago was Sacramento-area home prices jump almost 30% in a year, lead 30 biggest metro regions. I read that and my stomach sank. Stomach sag is something that can happen completely out of the blue to us old people who forget that planking is our friend, but the main reason for my distress is because I know that many sellers will believe they can get one-third more for their home than they can actually get, based on that article headline. Please, listen to your Sacramento real estate agent, that article doesn’t literally apply to a Sacramento home seller. The reporter is talking about median prices for last month as compared to median prices from a year ago.
Median prices means half the homes sold for more and half of the homes sold for less. It doesn’t mean YOUR home. Every neighborhood is different. For example, we have a ton of inventory in Land Park right now. At the moment, a quick check in MLS shows 27 homes for sale in 95818 under $400,000 — which encompasses homes for sale in Land Park, Curtis Park and a few blocks north of Broadway. According to Trendgraphix, in July of last year, we ended that month with 18 homes for sale under $400K in 95818. There’s a bit of a glut right now in that price range in Land Park.
But take a look at 95757 in Elk Grove. That neighborhood is in high demand, over by I-5 / Franklin /Whitelock. Part of the demand is the schools. It’s also on the edge of construction, and many of the homes are somewhat newer, slightly more expensive than other parts of Elk Grove. A check in MLS for 95757 shows 23 homes for sale in Elk Grove under $400,000, which is a hot price point. Last year in July, Trendgraphix showed 24 homes for sale. Pressure is on this ZIPcode.
In other words, a seller will get more offers and a higher price for her under $400,000 home in that particular area of Elk Grove than she is likely to get for a similarly priced home in Land Park. Real estate is local. I sell a lot of homes in Elk Grove as an Elk Grove agent, especially in 95757, and I see it first-hand. I also specialize in Land Park because that’s where I live, and many people know I am also a Land Park agent.
As usual, the devil is in the details, and if you wonder whether your home has enough equity to sell, call a Sacramento real estate agent to get a free opinion of value. You can call Elizabeth Weintraub at 916 233 6759.
Note: Interest rates are going up. Interest rates have increased by 1% already this year and, when rates rise, real estate prices tend to take a dip.
Is Your Sacramento Home Listing Under Priced?
You’ve got to love this crazy seller’s market in Sacramento right now, even if you’re not a Sacramento real estate agent who sells a lot of listings like me. It challenges an agent to be her best each and every single day. Sometimes, being your best involves biting your tongue a little bit, and other times it means providing lengthy explanations to your clients so they thoroughly understand the marketplace. In my experience, an informed seller is a happy seller.
A buyer’s agent in West Sacramento told one of my sellers yesterday that her buyer would have paid almost $150,000 over list price for her home that went into escrow last week. The agent claimed the home was deliberately under priced. First, the home was in pending status, so why the agent was over there talking to the seller is beyond me. Second, it violates the Code of Ethics to discuss pricing with a seller when that seller is represented by another agent. But those are minor irritations when looking at the big picture. The big picture is that statement is a big, fat lie. Oh, man, no wonder people are confused.
This seller’s home would not have sold for more than it sold. It was not under priced. Not in a seller’s market. It’s literally impossible to sell an under-priced home in a seller’s market for less than market value. That’s because no matter how much a seller wants and asks to get, the market will dictate. Buyers are not stupid. OK, maybe some of them are a little undereducated about comparable sales and market movement, but buyers will pay about what a home is worth. Especially when facing a multiple-offer situation.
If a home was worth a hundred thousand dollars more, don’t you think a buyer somewhere, anywhere, would have offered a whole lot more for that home? Yes, they would, because that’s how multiple offers work. When buyers discover a seller has received 5, 10, or 20 offers, buyers tend to put their best offer forward. Buyers who can’t think of any other way to make their offer more attractive to a seller will tend to offer a higher sales price.
Aside from of all that, homes need to appraise at the purchase price, what an appraiser calls “at value,” if the buyer is obtaining financing. It’s pretty darn difficult to pull an appraisal out of thin air these days. A home is worth the price at which others around it of similar square footage sell. There is no magical fairy about to tap her wand and dump hundreds of thousands of dollars on a seller’s doorstep just because a buyer’s agent wishes it.
