SACRAMENTO'S REAL ESTATE MARKET - A SWITCH WAS FLIPPED

Diane and Bill are going out to their favorite Sacramento restaurant to celebrate. Months ago they made the exciting and scary decision to purchase their first home. They researched the process for purchasing in the Sacramento real estate market and discovered that first, they had to get prequalified to be certain they could qualify for that perfect home and could give a letter reflecting this to the seller when they made their offer. Then, after talking to friends and family, they interviewed several Realtors, settling on one that they felt they could trust and, at the same time, one that they thought would make the process a smooth and enjoyable one. They were ready.
Then, someone flipped a switch and the Sacramento real estate market changed. No longer was there a plethora of homes to view. Homes in their price range started selling before they even had a chance to view them. In a strange turn of events, it was no longer a buyers market, even though homes were still very affordable. Simply put, there were too many buyers and not enough homes to buy.
This is not a unique story in the Sacramento real estate market, or the California one for that matter. In an industry where a normal inventory is 5-6 months (the amount of time it would take to sell all of the homes on the market at any given moment in time), Sacramento's inventory is below 1 month. Prices are still competitive, but certainly not dropping any lower. As a local lender put it, interest rates are truly at an all time low.
The result of all of these factors is that most properties priced well are receiving multiple offers and selling over the asking price. 3-6 offers for a property is not unusual. That translates to many buyers having their offers not being accepted multiple times...a frustrating experience for the buyers and their agents alike.
Enter the appraiser and a whole new set of issues arise. The properties list price was determined by the comparable properties that have recently sold. Unfortunately, with the shortage of inventory and resulting shortage of sales, there aren't many com-parables for appraisers to use. Their only option is to go back further in time, which was in a different market where there was inventory and sales were slow and as a result, sales prices were lower.
Who are the buyers who are winning out in this market? Cash remains king. If buyers can make an all cash offer, their odds of having their offer accepted increases dramatically. If they cannot offer all cash, then certainly make the largest down payment possible. Offers should be written as cleanly as possible - don't ask for the refrigerator, a pest clearance or participation by the seller in closing costs. If a buyer is purchasing through an FHA loan, they should probably be looking at homes that have been on the market a while where the sellers will be more motivated to go through the FHA process.
The market has turned a corner. Those who were waiting for the perfect time to buy are too late...that was last year. Oh, and Diane and Bill had their 7th offer accepted and they are on their way to their first home!

GET ON SACRAMENTO'S REAL ESTATE BAND WAGON!

Anyone who is claiming doom and gloom for Sacramento's real estate market, simply isn't paying attention.

I just read a post on my Facebook page in which an agent is asking for everyone to keep their fingers crossed....they are among 10 other offers presented for a listing that has been on the market one day. One of the comments expressed appreciation that they are only competing with 2 other offers. I wrote an offer last weekend on a property that already had 2 offers and, by the time an offer was accepted, there was a total of 5.


This isn't an anomoly. I have been hearing the same stories at regional association meetings, charitable events and in conversations with other Realtors around the city. Our market has been increasingly strong for the past 5 months. Our inventory is frustratingly low. We have way more buyers than properties to sell them, so when a good one comes along, they are chaffing at the bit to purchase.


Here is the new advice: be prepared to pay over asking price for a new listings priced right. Be prepared to have sellers be not quite so accomodating. As banks slowly but surely get their act together and allow more short sales be approved in a more reasonable time, be prepared to make offers on short sales. There is no onslaught of shadow inventory coming...so waiting won't help.


The bottom line? If you are looking for a home, don't wait a minute longer. Interest rates are amazing...I had a client who just locked in a 3.5% interest rate for a conventional loan with no points. Prices are not going to keep dropping. It is now time to get on the bandwagon, because it simply isn't going to get any better!

WHOOHOO...FINALLY SOMEONE ELSE IS SAYING IT!!

In recent months I have been saying that Sacramento is stabilizing...we are done with about 80% of our foreclosures, our sales have doubled since last year at this time and it appears that the decline in market values is creeping rather than racing down the speedway.
On April 28th, an article came out on the Wall Street Journal with the headline "First Housing Markets to Heal? Analyst Bets on Sacramento, Washington". Whoohoo! The analyst is John Burns. According to Mr. Burns, the fact that Sacramento's new home supply has shrunk more than other markets he tracks, along with very affordable housing and the ability to get loans improving is evidence that Sacramento has early recovery potential. He cites that employment could be a deterrent in this recovery. Personally, I am going to continue to believe that we are on our way!
Washington DC is also poised for an early recovery. While jobs are not the issue that Sacramento has, he felt that the housing market might fall an additional 5%-10%.
There are a few cities he cited as taking the longest to recover, but I want this post to be positive, so I am going to leave it here...life is getting better by the day!