The Shock of 12 Months: April 2018 Sacramento Real Estate Market

Once upon a time in a faraway land known as Sacramento, a potential home buyer dreamed about the April 2018 Sacramento real estate market. The year was 2017 and the month, April. Last year. In the April 2017 Sacramento real estate market. This buyer said to herself, I should buy a home in Sacramento, but oh, my, the prices are so high. Why, the median sales price is $326K. The days on market are 22. Not enough inventory for me to choose from — one month is too low. I should wait. Wait for a better market to buy a home.

Fast forward one year, and now that home buyer has saved up her 3% down payment. She’s ready to buy a home with a conventional loan. She takes another look at what is now the April 2018 Sacramento real estate market. Whoa. Her hesitation cost big time. Now the median sales price is $370K. Just 12 months later! Almost $50,000 more. The average days on market remain the same at 22, meaning demand is high, unchanged. Inventory edged ever so slightly to 1.3 months.

Did she miss the boat?

This home buyer’s solutions are either to change her options or pay more. Such as maybe not buy a 3 bedroom, 2 bath home. Perhaps she can now better afford only a two bedroom, 1 bath home. Or, choose a less expensive neighborhood. Maybe she can’t buy a $400K home and must settle for $350K. It’s not just market values that are rising; interest rates are also climbing. Every half point interest rate jump means a buyer loses about $25,000 in purchasing power. If her top sales price was lowered to $350K, that type of rate hike hammers it down to $325K.

It’s like a buyer is being hit by all sides.

But let’s not forget, Sacramento is considered a very affordable place to live in California. Interest rates are still below 5%, not the 18% interest rates of the early 1980s. It’s easy to predict that buyers want the most home their money will buy. However, some buyers will not budge from a faulty perception. They expect a turn-key home at short sales prices, and it’s not happening for them. So while they think they are in the market to buy a home, they are really just shuffling in and out of homes they don’t like.

The smart thing to do based on our April 2018 Sacramento real estate market statistics is to figure out a way to stop rising prices and stop interest rate hikes. Oh, right, you can’t. The only thing a home buyer can really do is buy the best house a buyer can find at what will be next year’s lower rates and make it fit particulars after closing. Buyers can always rent, of course, but rental rates are escalating, too. In some areas, it still costs more to rent than to buy.