Email Elizabethsacramento real estate market
How to Stay Happy in Sacramento Weather of Tule Fog and Rain
Low Temperature Forecast: Racine, Wisconsin
If you ever want to feel better about the tule fog and our biting cold Sacramento weather during the winter, all you have to do is call somebody in the Upper Midwest and ask how she’s doing. Eventually she’ll tell you why life is so completely horrible and stinks because of the stinkin’ weather. By comparison, let me tell you, life in Sacramento is pretty darn good, and Sacramento weather is lovely.
I gave an interview to a reporter from Eagan, Minnesota, this week. Eagan is a suburb of St. Paul that did not exist in its present form when I grew up in Minneapolis. It was mostly a farming community named after some Irish guy. Today, it is a thriving suburban area with mega shopping malls surrounding numerous subdivisions of massively huge tract homes, and it has four feet of snow. The reporter asked what my weather was like. Low 50s, about to climb into the high 60s. Bit of fog.
Pretty nice, actually. See, how that works?
We talked about curb appeal: how sellers can create curb appeal and how home buyers respond to curb appeal. She thanked me for the interview saying I gave her a lot more in-depth information that she had not expected, and her newly accumulated wealth of data would make it very easy to write her article. I did one of many good deeds for the day. Managed to list a couple of homes in the Sacramento area as well.
I then stopped by to see my dermatologist at UC Davis who somehow has locked me into visiting her every six months. In the beginning I thought she was a specialist to study suspicious spots on my body but she always finds something to take care of or recommend, so it seems like she is now a regular doctor for me to visit because of my old age. It’s those barnacles and warts and other weirdness stuff that keep appearing in strange places that she magically removes. I don’t wanna end up looking like Art Linkletter.
She asked me how I stay so healthy and vibrant. It’s positive thoughts, I joked with her, raising my hands over my head with palms up, and surrounding myself with positive people. Always looking on the bright side. But then I realized I wasn’t really joking. I do try to dissipate negativity. It’s built into my Midwest genes.
My husband is in Racine, Wisconsin, for a family memorial. With me, having just returned from my month-long winter vacation to Vanuatu and Hawaii and leaping into the Sacramento January real estate market, I would be overwhelmed if I had joined him. But he did jolt my heart a little yesterday when he sent me the photo on this page. He was concerned about the Marriott’s low temperature forecast for Racine, Wisconsin. You can see the Marriott had predicted a low of minus 460 degrees. Sacramento weather looks better all the time.
Three Things About the Sacramento Housing Market
As a blogging Sacramento agent, I try to narrow my blogs to a singular thought, but I have 3 things that keep popping up over and over in unison about home buyers in the Sacramento housing market — which, if I don’t discuss these 3 observations in one blog I might never get around to it. The first is the problem in Elk Grove. I’ve lost count of the number of offers I’ve negotiated for my last bunch of listings in Elk Grove that have fallen out and had to be sold a second, third or fourth time.
These buyers go into escrow and then immediately cancel, which tells me they are writing multiple offers when they can’t afford to buy each of the homes. Where do they get this idea? Do their agents encourage this kind of unethical behavior? Our market is not so hot that they need to do it. They can make an offer on the home they want to buy and probably buy it without competition.
I’ve seen some agents write into the offer that the buyer is making multiple offers, and I want to hug these guys. I’ve had other agents include an addendum that says the buyers are absolutely not writing any other offers and will wait for the offer negotiations to reach a conclusion before doing so. You guys can dance on my grave if you want.
The second thing I’ve noticed about the Sacramento housing market is VA buyers are becoming ubiquitous. I’ve always said if you want to buy a home with a VA loan come over and sit down next to me, and my sellers will gladly cooperate. I love love love VA buyers. Once you get a VA buyer into contract, they close and they don’t go wandering around open houses wondering if they’ve made the right decision. They understand what a commitment means. You can count on a VA buyer. They have integrity.
The third thing about the Sacramento housing market is about home pricing under the next price point. By this I mean pricing a home at $499K instead of $505K, for example. It could go one of two ways. Pricing at $499K might mean that home buyers will fight over it and bid up that price. On the other hand, a buyer might also lowball that price. They probably won’t offer $499K, though. It will be higher or it will be lower, and it’s not always easy to predict which way it will go, regardless of the home’s beauty and desirability.
In super hot seller markets in the past, a $499K listing would almost invariably sell for more. In buyer’s markets, it will fetch less. In this market, though, an agent can’t always accurately forecast because this is a fairly balanced market with no leanings either way, although our inventory is still relatively low. Inventory will get lower as we edge closer to Thanksgiving, but that’s a blog for another day.
Winter Months for Sacramento Real Estate Offer a Window
There’s a hard rain gonna fall, and I’m not talking about the drought in Sacramento but am instead focused on the real estate market coming up over our winter months. Some people are likely on the fence about whether this is a good time to sell and also buy a home. They wonder whether spring would be a better time, when there is typically more activity, more inventory and higher prices. There is one thing you probably haven’t stopped to consider: interest rates.
Interest rates will lead the real estate market next year in 2015.
When the Fed stopped buying bonds, that’s the long-awaited signal that interest rates will begin to rise. Rates have been artificially suppressed for years. They’ve been held down to stimulate the housing market and the economy but we’re just sitting on a ticking bomb. Sooner or later we have to lift our big fat butts off the rates. 2014 rates are already ahead of the average annualized percentages from 2013. And they will continue to go up.
People forget what a normal real estate market is like. They forget when 9% was considered a very attractive interest rate, or maybe they weren’t born yet. As a real estate agent, I have worked through real estate markets in the late 1970s when interest rates hovered at 18%. Interest rates have a huge affect on a home buyer’s purchasing power. Buyers are often too focused on sales prices when they should also pay attention to interest rates.
If a home seller waits until spring to sell her home and buy another, she might get a little bit more for her existing home, but that upleg, her new home, if she’s moving up, will also under those circumstances cost her more. There is no tradeoff there. Economists are predicting a slowing market for next year with appreciation edging toward 4% to 5%, if we’re lucky. If not, prices might remain stable.
But the one thing that is more likely to move than anything else is your interest rate. Consider this, every 1% increase in an interest rate will roughly lose a home buyer about $25,000 of purchasing power. A 1% bump means you may no longer qualify to buy that $300,000 home and must consider those in the $275K range. It’s not like the old days when you could wait for rates to fall and refinance at a lower rate. Those days are gone. Your window of opportunity is today.
Farm to Fork in Sacramento Real Estate
Flexibility is the name of the game in today’s Sacramento real estate, the farm to fork capital in California. If you’ve absolutely got to net a bazillion dollars for your home in order to sell it, this might not be the time for a home seller in Sacramento to be on the market. Unless you don’t care how long your home sits on the market and, in that case, the buyers will — they tend to avoid looking at homes with long days on market. Those homes hold appeal like stale bread.
Sellers don’t write the rules anymore because it’s a more balanced real estate market in Sacramento. The faster a seller catches on to market swings, the faster her home will sell. The low hanging fruit easily falls first but the rest must be yanked off the stems. Here’s a tip: don’t study stats on Sacramento real estate market movement from last spring or this summer or even early fall. Look at what the market is doing right now, this very minute, and you’ll find your answers to market movement. Then, put a fork in it.
Every so often, we run across a seller who says he needs to sell his home at list price. We might receive an offer from a buyer who wants to pay a little bit less, which is not unusual in the market today. This same buyer might also demand a big closing cost credit on top of a price reduction from market.
This situation is a bit like oil and water. You can shake it up, but let it rest a few days in escrow and it separates again.
Throw into the mix a seller who declares that the net profit must be X, and that’s a salad going nowhere. Some sellers think a solution is to reduce the agents’ commissions, but that is not a reasonable expectation, either. You don’t ask an agent to provide superior service, to bring a buyer to dinner, and then kick him in the gut when he performs.
Real estate agents are just the waiters. We bring you the food, we pour your wine, we pick up your fork when you drop it on the floor. You should not refuse to tip us because your steak was too well done.
Problems with MetroList Status of Sacramento Homes for Sale
The discussion erupted over the way MetroList allows agents to report the status of homes for sale in Sacramento, and the options available to real estate agents. The buyer’s agent huffed and puffed about the X number of real estate offices he has managed, the X number of corporations he has headed, the X number of agents he has supervised, and the X number of years he has been in the real estate business. I listened to him because that’s what I do. He finished by stating his objection:
In all of this, he has never, EVER run into a Sacramento listing agent and seller who, in collaboration, refused to change the status in MLS from ACTIVE to PENDING upon offer acceptance by stipulating such in the counter offer.
Welcome to the wonderful wacky world of Sacramento real estate in the fall of 2014.
To give myself credit, I did not point out that the buyer had written multiple offers when the buyer could afford to only buy one home, nor how that kind of nefarious thing could be justification why a seller may possibly elect to wait for the buyer to lift contingencies before changing the status to pending in MLS.
Nope, instead, I relied on history from the past few months in which the scenario goes like this:
- Buyer writes offer.
- Seller counters offer.
- Buyer accepts counter offer.
- Escrow is opened.
- Buyer cancels offer.
The problem with this is the agent changes the listing in MLS to pending, and when the buyer flakes out, the listing then is changed back to the awful status, that dreaded garlic-waving status, that kiss of death walking zombie status: back on market. It’s like tearing off your clothes in public to reveal you have herpes and asking who would like to have sex with you.
See, in California, our purchase contracts give a buyer 17 days by default to cancel the contract for just about any reason: It’s too hot today. I don’t like the garage. There’s a plane overhead. The next-door neighbor is grumpy. I just don’t feel like buying this house. It would make more sense if MetroList would give us the option for status by allowing us to leave the “pending” listing active through a modifier, so if it fell out, the active status would remain intact. Like a virgin listing. Yeah.
Because pending ain’t pending if it ain’t closing. Pending happens after the contingencies are released. Until then, just about anything can occur. Oh, I realize changing the status in MetroList would mean pointing out clearly to buyers that they can cancel, and not everybody wants to be that direct with a buyer (holy cow, I can cancel?), but it just makes sense, doesn’t it? I’d like to rid of that back-on-market stigma, but I don’t run MLS. I just gripe about crap.
The best we can do at the moment is put a pending rescission modifier on that listing so if the buyer cancels, it can just be removed and the listing stays active. But you’ve got to have written permission from all parties to do that.
