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May 2018 Sacramento Housing Report is In From Trendgraphix
Before I get into the details of the May 2018 Sacramento Housing Report, I thought I would use the above excellent illustration to help my readers absorb the facts. We need a little serenity and reflection on calming influences before examining the numbers. This particular photo is a new Buddha addition I found at Pier I in Kailua-Kona. As my husband knows, I am fond of repeating that a person can never have too many Buddhas. Unlike, his beliefs about the number of cats in any given household.
Further, all Buddhas are not the same. This is a meditation Buddha. Not only that, but it is a meditation Buddha sitting in a double lotus position. One of the first poses my mother taught her children, who knows why. Perhaps so we could feel special that we can flatten our feet on top of our thighs. To this day, I prefer to sit crosslegged, like some teenager. If you suffer from back problems, try it.
Now for the May 2018 Sacramento Housing Report. As you can see from the numbers above and the graph, everything is going up. Inventory is increasing, but so is demand. Our closed sales in May were up 5% over April, yet on par with the same quarter a year ago. Inventory jumped 14% over last month. Pending sales increased 18.1%.
You might be asking yourself, is there any end to this madness? At what point will demand drop off? When will inventory exceed demand? Not any time soon, it looks like. Perhaps not even by fall because even with an uptick of inventory, our homes for sale still stands at fewer than two months. Inventory would have to creep closer to 6 months of inventory before we could see a buyer’s market.
The Sacramento Bee reports our population in Sacramento proper exceeds 500,000 people now. For the first time ever. We are the 6th largest city in California and growing like crazy. Sacramento is the fastest growing city in California. Building is not keeping up with demand for new homes, and finding a resale home is tough. Tough but not impossible, as evidenced by the large number of homes we sell every month.
Don’t let the May 2018 Sacramento Housing Report stop you from trying to buy a home. People buy homes every single day in Sacramento. With the Elizabeth Weintraub Team on your side, your odds of buying a home are pretty much guaranteed. Call Elizabeth at 916.233.6759.
Sacramento Home Selling: When is Escrow Over and Closed?
Knowing when is escrow over and closed, well, it’s one of the highlights of selling a home. It’s that time when you realize a heavy load has been lifted off your shoulders. Often a burden you didn’t even know you had carried until it’s gone. In the case of my sellers in south Sacramento who lived in a hard-to-sell neighborhood, it took us more than 6 months to close that house. Then, last month, we had 2 strong offers, hours apart. Multiple offers for that house.
Right before signing the paperwork, I asked the sellers to leave all the remotes / keys / manuals in a kitchen drawer. As long as they left that stuff before closing, we are good. Because after the deadline for possession at closing — which by contract default is 6 PM — the seller is supposed to be gone. It doesn’t mean the seller can go over to the house that night or the following day to leave keys. That would be considered trespassing.
But people don’t know that. Even agents don’t know when is escrow over and closed. I’m not kidding. The buyer’s agent emailed me the day after closing to ask if it was OK if he gave the key from the lockbox to the buyer. I let him know he could have given the key to the buyer on the day it closed. He should know that. Don’t know why he did not.
However, I was not prepared for my elderly seller to ask when is escrow over and closed. Three days after it closed. Because I called her on the day it closed. I let her know it had closed and recorded and it was over. Reminded her again to make sure the keys are in the house. Suggested she cancel the utilities and her homeowner’s insurance. Thanked her for choosing me to be her Sacramento Realtor.
Yet, three days later she called to ask: when is escrow over and closed? When I asked why she did not realize it is over, she said, “It still shows online as pending.” I’ve had a relationship with this seller for 6 months. Did she think I was making it up when I informed her last Thursday that escrow is over and closed? Or, more accurately, is the public so addicted to the internet that they believe every single website that displays homes for sale in Sacramento publishes real time information?
Even our company doesn’t put a sold home into closed status until it receives all of the paperwork from escrow and sends it to the branch office. First, escrow sends the closing docs to corporate, and not necessarily on the same day it closes. Then, corporate sends the paperwork to the branch office. It can be 3 or 4 days later before MLS gets changed.
Closing escrow is confusing. There is the day you sign, which we call closing, but it’s not closing. On the East Coast, signing documents is closing. On the West Coast it is not. We’re more particular. In California, closing is the day the grant deed records at the County Recorder’s office and your agent calls you upon receipt of confirmation from the title company.
What this has made me realize is to be even more sensitive to the needs of elderly clients. Sometimes, an agent might have to explain a situation in a few different ways for it to sink in. Realtors can never forget that although we might sell a couple of homes a week, our sellers sell very few houses in a lifetime.
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.
Benefits of Working With Bay Area Agents to See Sacramento Listings
Not all Sacramento listing agents are happy to take on working with Bay Area agents, but it’s never bothered me. Probably because I do not care to double-end transactions. I would much rather let somebody else represent the buyer. My business is such I don’t need to squeeze every dime out of every corner of a transaction to make a good living for myself and my family. So, I do not have that problem that some other agents have when it comes to elbowing out, er, working with Bay Area agents. I will assist Bay Area agents anyway I can.
Now, it used to be that Bay Area agents did not have a Supra lockbox key so they could not access our lockboxes. But now there is some system where they can register to use it. I don’t know the exact specifics because I do not show property outside of my MLS nor go to San Francisco to show homes. But in the old days, listing agents in Sacramento could try to force Bay Area agents to turn over their clients to the listing agent in exchange for a referral fee. Because if they couldn’t show listings, that was a setback for them. Something is better than nothing mentality.
It hardly seemed fair. Besides, Bay Area agents have a right to sell outside of their area if they want to. Maybe some of them have even lived in Sacramento at one point? They do things a little bit differently in the Bay Area, however. For example, agents expect to get all of the disclosures upfront, which we don’t do in Sacramento. They might divide fees a little bit differently between sellers and buyers. But those are small issues.
The important thing that I see about working with Bay Area agents is . . . they have a buyer. That’s a huge benefit. It benefits my sellers and it benefits me. Further, those buyers are typically very well qualified. Many are paying cash. Will I ever tell an agent we won’t work with her to show a home to her Bay Area buyer? Hell, no. I’d have to be half insane to turn down that kind of situation.
It’s even better when after an open house on Sunday a Bay Area agent calls me. They typically say their buyer came through the open house and they want to know what they can do to help their buyers purchase the home. These are buyers who generally conduct little to no inspections, they understand buying AS IS, and they are sophisticated.
Further, in comparison to the price of a home in San Francisco, where the median sales price is $1.61 million, the median price of a Sacramento home is peanuts.
Read it and weep. Yup, the median price in Sacramento County for April of 2018 is $370,000.
But let’s look at the pros and cons. Now, we know that agent in the Bay Area did not show the property their buyer wants to purchase. Their buyer came through an open house alone, hosted by my team member or another Lyon agent. Downside. But the upside is tremendous. So, how motivated is that Bay Area agent to close a transaction in Sacramento? An agent who is doing little work apart from writing a contract? Well, I’d say very motivated. Which is yet another reason to love working with Bay Area agents.
If Bay Area agents can’t find a listing agent to work with in Sacramento, they are welcome to come over and sit down next to me.
The Trouble With Looking at Homes for Sale on Zillow
Because I have been a subscriber to Zillow since its inception in 2006, I am very familiar with looking at homes for sale on Zillow. I’ve participated in all of the changes on Zillow as it has evolved over the years. Watched it move from an inconsequential website with only a smattering of listings to receiving direct feeds from Metrolist. Making it a giant of websites. Then it bought Trulia, so properties feed into Trulia from Zillow.
But the trouble with looking at homes for sale on Zillow is that is not the best place to do it. You’re probably better off searching on Trulia, if you insist on using a non-Realtor website. And using a non-Realtor website is not the best way to search for homes online at all because you might not get all of the information you need. But sellers and buyers don’t always want to figure out how to find a Realtor-based website, so they go the easy route. Which is how they end up looking at homes for sale on Zillow.
Zillow presents a lot of interesting statistics, and if you have a good feel for comps, you can run your own comps. However, many users of the Zillow website struggle with its complexities. Users don’t know what a preforeclosure property is and they erroneously believe it is a home for sale. They do not realize it is simply an unsuspecting homeowner who fell behind on making mortgage payments. This is how a home could end up on a preforeclosure list without the homeowner’s knowledge. More than half of all of preforeclosures are redeemed. Almost all have equity, so few would ever go to sale as a foreclosure. Fairly worthless to track.
If a home does go to foreclosure, it will be sold on the courthouse steps to the highest cash bidder. You’ll compete with professional investors whose job is to buy homes sight unseen.
Users also struggle to figure out whether a home is for sale or for rent. Many Zillow users cannot tell the difference. It’s almost like Zillow needs a different website for rentals. Tenants will click that box that says “I own a home similar to this one and I would like to sell it.” Except they are a tenant. If you ask why they sent that email, they will say they don’t know. There was a box that populated a form with words, but they do not read words. It was a clicky thing, so they clicked.
Others, like the poor young guy who called me yesterday, found a pending sale. It states “pending” right on the listing, but hey, they’re not in real estate. How would they know a pending from an active listing? They all look the same to a consumer. He mentioned last talking to the listing agent during multiple offers. So decided to get prequalified while the home went under contract. They wanted to lie low and just “watch homes.”
Watch homes do what? Sell to somebody else? Because that’s what’s gonna happen when they’re looking at homes for sale on Zillow. In our tight seller’s market in Sacramento, home buyers need to be a pro or to work with a pro. One or the other. But this guy knows a cousin who just got her license and works part-time in real estate. He thinks he might want to work with his cousin. Fine, as long as he doesn’t expect to buy a house, that’s a good direction to go.
When he decides to get serious and become a contender, he needs to hire a professional Sacramento Realtor. I gave him my information and offered to introduce him to an exclusive buyer’s agent. Why a person would leave to chance the biggest purchase of their life or, worse, to inexperience, always floors me. But you can’t make people wise up. Some insist on learning from the school of hard knocks.
