Sacramento County Real Estate - Elk Grove Real Estate

Sacramento County Market

Some of the most heated markets in the nation, namely the Sacramento Housing Market, have been impacted the most by this change in events starting back in late summer of 2005. Sacramento went from ranking number 41 last year in price appreciation, nationwide, to near the bottom of that list, surveyed from nearly 300 cities.

Our local Metrolist MLS reveals the following for the last 24 hours: (01/9/07 6:45 PM)

24-Hour Market Watch

New Listings

458

Back on Market

Price Increases

Price Reductions

365

Pendings

159

Solds

118

Expireds

117

Inactives

171

The above chart does not show, however, the alarming increase of distressed properties. Take a look at the following pattern:

Inventory dropped a distinct 20% from December 1, 2006 to January 7, 2007. This can be attributed to end of the year seasonal flux plus Holidays and end of the year listing expirations. Inventory patterns are expected to rebound quickly to where they have been. The 18% increase in distressed properties, however, is a marked growing pattern as a result of adjustable rate mortgages taking their toll and the onslaught of declining market prices.

An interesting pattern that I have noted in showing properties and listing for my clients is the increase of vacant properties with remote sellers. This strongly relates to distressed properties that may have become bank owned and or vacant as empty rentals with speculative investors scrambling to sell while taking a loss on loan payments.

It is unfortunate for the many folks that have made a purchase or refinance in 2005 and for whatever reason now have to sell. This has created a hardship and resulted in a high number of short sales. Consequently, you may increasingly hear that term along with NOD, foreclosure, or lease option. If you have questions or concerns about any of these, I encourage you to contact me.

The only hard stats I could find for the vacancies were from the month of October 2005. Granite Bay faired the best with only 25.96% vacancies as compared to a high of 44.68% vacancies coming from Carmichael. Elk Grove comes in at 33.76% vacancy rate. All the other local cities fall somewhere in-between.

Here is a current view of the Sacramento Metro Area median home prices and inventory numbers. These represent only single family homes or condos. These numbers cover 7 local counties. The median price home in Sacramento County is about $350,000.

New housing starts came to a screeching halt in 2006 with builders retaining excess inventory with pressure to reduce prices and offer incentive packages for buyers. 2007 is expected to retain similar building cutbacks. California Association of Realtors reports an anticipated 2% price drop statewide in 2007.

Sacramento has one of the nations top 10 multi-family rental markets. Rents in the fourth quarter fell from the third quarter. Mixed reports come in some saying a slight improvement in rental rates and other reports suggest continued competition for the rental market with reduced rates.

Here in Elk Grove the rental market for 2500 plus square foot homes is ailing. Two examples include a 3500 square foot home, 2 years old, renting for $1850 and a 3000 square foot home, 3 years old,renting for only $1450. Speculative investment buyers trying to keep renters in their larger homes while tallying up equity gains are taking a significant loss. The good news is some of these property owners are forced to sell creating a glut of large homes for sale in the Elk Grove area. This makes it a perfect market to buy a large home and negotiate a favorable deal.

From November 2005 to November 2006 Elk Grove suffered a 12.9% median home price reduction. Consistent with the larger market, prices have not bottomed out and indicate further signs of decline. Some area experts suggest prices will continue to fall by another 7-10%. The proof comes in the actual sold prices and concessions made by the seller to sweeten the deal by request of the buyer. Buyers in this market are not too interested in negotiating with a firm seller. Falling in love, blindly, with any particular property is a thing of the past with inventory remaining high. If you are serious about selling then you need to concede to our present market and price your home or property accordingly. Forget what has happened in recent past markets.

A pattern that I have seen shows that sellers are generally paying the buyers closing costs and often reducing the sales amount by another $10,000, even when the property may be the lowest in the area. Keep in mind, too, that these concessions do not show up in sold figures. Therefore, the net offer to the seller is often less than the actual sold price.

Note that the largest numbers in statistics are the expired listings and withdrawn listings. Both of these categories are often shuffled back in as active listings, compounding the actual number of DOM for actives, pending sales, and solds, alike. In addition many sellers have become serial marketers using agent after agent attempting to obtain an unrealistic selling price. These properties and sellers have had their sale sign out for a really long time. There are a large number of properties that never sell or have been on the market for 6 months or more and a sizable group that have been marketed for over a year.

The best predictions for the future at this point indicate that prices will continue to be flat or fall another 10% with 2008 being a year that prices may start to appreciate once again. Historically speaking, real estate has averaged an annual 5% increase in value.

Regardless, if you buy or sell you need a qualified professional in your corner helping you with all the details of preparation, counseling, and marketing insight in regards to your real estate and property needs. Call me with confidence as I am your area expert and I make it my business to know what is happening in real estate in your neighborhood.